Innovation and Destruction
Many years ago I heard the story of how Dianne Greene lost her job as the CEO of VMware. Those of us at VMware were totally surprised by her exit. For years we heard rumors that she didn’t get along with Joe Tucci. But we assumed VMware’s independence and continued success secured her job. But she indeed lost it despite leading one of the most innovative companies in enterprise IT. How can this be?
In 2008 Microsoft Hyper-V’s launch was imminent. We at VMware felt a visceral, existential threat from Microsoft. VMware’s board of directors was regularly asking Greene for her strategy for defeating Microsoft. “We will out-innovate them,” is what she said. And while this could succeed (and arguably did) it is fair to say that “more of the same” is not a strategy. It’s an overly simple response to a complicated problem.
It was some time after that Paul Maritz was asked the same question. “The way you beat Microsoft,” he said, “is to make them fight where they are uncomfortable.” And from that position a strategy of developing a platform for next-generation applications for followed. The board liked that and replaced Greene with Maritz shortly thereafter.
Recently I have been thinking about this story and the role of innovation in competition. How it is that despite VMware’s incredible track record of innovation before Maritz its leader lost her job. If leading an innovative company is not enough to please stakeholders, can innovation alone ever sustain a company? Was Greene's idea of the future sufficient to carry VMware through the storms ahead? How far can a company that innovates go without a proper strategy? On the other hand, to what extent can a company succeed without innovating?
This line of thought carried me through several late discussions with friends. About the hidden ways successful companies innovate. About the strategies our leaders articulate that are, rightly or wrongly, weighed against their value in their role. And how innovation makes and breaks companies as well as our careers.
Innovation is present from the largest multinationals down to the the individual. Technological improvements can drive a business and shape our careers and they move so fast that innovation often leaves us without one. Companies and individuals thrive or wither by their ability to out-produce their former selves. I propose that this moment of reflection will help me and may help you chart the course of your future years.
Richard Rumelt in his book Good Strategy, Bad Strategy relates a story of the strategy Steve Jobs used in the late 90s to turn Apple around . In response to the question, “what will you do next?” Jobs reportedly told the author, “I’m going to wait for the next big thing.” That next big thing was the iPod.
This anecdote frames a larger discussion in the book about good strategy. And Rumelt argues that much good strategy comes from the simple premise of predicting and exploiting windows of opportunity. Maritz’s response to VMware’s board of directors is a version of this idea. Greene’s was not.
Innovation is an accelerant, an engine driving good strategy. But without a strategy behind the wheel, innovation is at best a defensive weapon. It can sustain a product line but rarely (with notable exceptions) grow new businesses. This because success requires, in addition to flawless execution, a window of opportunity. And without direction even innovative teams are unlikely to find themselves in such a window.
The next three parts of these musings will summarize my thoughts on innovation and success. The best of product creativity happens at small companies. Yet the big companies and their investment arms have the money. The market agrees with this and the lack of new business creation at large companies is driving VC valuations to dizzying heights. (Just ask Pure Storage’s investors as they contemplate a down round.)
But under these covers we each will be forced to out-innovate our former selves. To challenge in the evening the person that woke up in the morning. And if it doesn’t feel like you’re struggling to creatively destroy yourself every day then someone else is doing it for you.
Part 2 of 4 to come.
Post A Comment:
0 comments: