Big Firm Innovation: Good Luck!

Tom Peters

My columns are meant to help practicing managers. Yet when it comes to innovation, especially in big firms, I am stymied.

Strategy analyst Mike Kami says that Sears, Roebuck’s “brand new” 1988 strategy is a carbon copy of its 1973 and 1983 “brand new” strategies. Nothing much seems to happen. And it’s been 10 months since IBM’s latest “radical” reorganization. We can expect another momentous upheaval any day, once again aimed at speeding up innovation.

In the 1985 book, Final Cut, the story of how conglomerate Transamerica concocted the all-time movie disaster, Heaven’s Gate, author Steven Bach cites screenwriter William Goldman’s chief observation about Hollywood: “NOBODY KNOWS ANYTHING.” I’d argue for putting Goldman’s line on a plaque to be hung behind the desk of every big firm executive involved with innovation.

Final Cut recently kept me up until 4:00 a.m. It does a top-notch job of capturing the day-to-day process of innovating in sizable firms. Bach was the head of production, later fired, for Transamerica’s United Artists subsidiary. (The Heaven’s Gate fiasco led to the dismantling of UA.)

Political considerations caused a dozen miscues. For starters, Bach failed to express the depth of his initial reservations about the project. As the newly appointed co-head of production, he didn’t want to begin by shooting down his new colleague’s pet project. Subsequently, standard big-company doctoring of bad news led to repeated false optimism. And then there was the equally standard lack of consequences following adverse outcomes; deadline slip after deadline slip led only to frenzied meetings, never decisive action.

But the biggest UA problem was money. Not too little, but too much. UA liked big bets; and Transamerica had very deep pockets. The brakes were never applied, and UA repeatedly stood idly by as Director Michael Cimino indulged his every overdone whim.

The woes resulting from Transamerica’s too-deep pockets are almost interchangeable with the saga of Xerox’s personal-computer blunder, described in gory detail by Douglas Smith and Robert Alexander in their new book, Fumbling the Future: How Xerox Invented, Then Ignored, the First Personal Computer.

Xerox’s Palo Alto Research Center (PARC) is a lovely lab in a lovely setting, the compelling vision of then-Xerox chairman, Peter McColough. PARC was staffed with brilliant minds and awash in cash. Product after pioneering product was conceived at PARC. However, Xerox’s Connecticut headquarters team was preoccupied with turning back the challenge of IBM and Kodak, then Minolta and Canon in the copier business. PARC blissfully trundled on in pursuit of a dream—an expensive toy, which someday would deliver. But someday never seemed to come. Visitors to PARC, like Apple’s Steve Jobs, got turned on by what they saw. Jobs’ exposure to Xerox’s over-complicated, over-expensive Star system gave him essential ideas for the Macintosh.

The book’s epilogue tells the story best, listing the current occupations of former standouts at PARC: One founded GRiD Systems, the successful laptop computer producer; two founded pioneering Metaphor Computer. A trio are senior officials at Apple Computer, and a score more are in key posts at Digital Equipment, Microsoft, et al.

In another book of the same genre, Fast Forward: Hollywood, the Japanese and the VCR Wars, author James Lardner lays out every pathetic detail surrounding the failure of RCA, Bell & Howell, and a host of other big outfits to come up with a commercially successful VCR. The villains are the same: big-firm politics; too much money; too little accountability; grandiose plans; too much complication; too big a bet.

This series of books, mostly about failure, occasionally about success (Tracy Kidder’s classic Soul of a New Machine), warrant more attention than the numerous management texts that lay out the ABCs of managing innovation.

Maybe the term “managing innovation” is part of the problem. It implies the possibility of rules and the reign of rationality. But innovation is hopelessly messy. Any honest recounting of either a simple or a complex innovation project reveals 10,000 unexpected twists and turns—from problems with the science to the vagaries of getting customers to use anything new.

In fact, even the success tales are ultimately discouraging. Soul of a New Machine, for instance, documents the exploits of Data General’s renegade group that developed a save-the-company mini-computer, after the firm’s rich, central lab flopped. But the book mainly reveals the most unlikely set of circumstances that led to this rare success; replication would be all but impossible.

Ideas for managers? Autonomy for business units. Short deadlines. Low budgets. Lots of tries. Focus on small markets. Customers involved from the start. Would-be champions selected for passion and persistence more than for organizational or technical skills. These suggestions have merit, but even the track record of those who have tried them all is disheartening.

In the end, Goldman’s advice—NOBODY KNOWS ANYTHING—may be the best starting point. Acknowledging the frightful innovation pitfalls and giving up dreams of the perfect innovation checklist or the “right” inspiring vision are big steps toward dealing realistically with the top management problem of our age: big firm innovation in an increasingly ambiguous, crowded and fast-moving world.

1988 TPG Communications.

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