Innovation is a subject at the very top of the senior management agenda these days. This is hardly surprising when so many CEOs across all industries regularly re-iterate the mantra of “innovate or die” in the fast-moving highly competitive business environment of today.
The high tech industry has always been revered for its amazing ability to innovate. But most of the real innovation comes from entrepreneurial start-ups, rather than the established players. Large companies like Oracle, SAP, and IBM are built for internal efficiency and economies of scale rather than wacky off-the-wall thinking—they acquire the entrepreneurial start-ups for that. Over the past 5 years these three companies have acquired 100+ companies for exactly this reason.
But now the triumvirate claim to have cracked the elusive innovation code themselves. Oracle has just invited me to attend an event in London entitled ‘Oracle Applications: A New Standard for Innovation’. Apparently this show will help the audience to “harness the latest innovations for business success… ensuring that you gain an enterprise wide strategic advantage—from the front lines to the back office of your business”.
Arch-rivals SAP, still licking its wounds from having to pay out $1.3bn to Oracle after losing a legal case involving stealing Oracle’s IP innovations, has just set up its own innovation centre in Potsdam, Germany creating 100 new jobs. The SAP Innovation Center will collaborate with local universities and educational and research institutions.
“In Potsdam, we want to establish the typical flair and the agility of a young startup and… will enable brilliant colleagues to create beautiful products and break amazing new ground” SAP said. There have been many descriptions of SAP products over the past, but “beautiful” is not one of them. Perhaps this could be a healthy break from the past?
Meanwhile IBM already has a global network of 38 IBM Innovation Centers. IBM continues to emphasise its $6bn investment in R&D per year that yields c. 4,000 patents. Sadly the commercialisation of these undoubtedly fine ideas has been poor, resulting in IBM spending $30bn+ to acquire the technologies of innovative start-ups such as Netezza. IBM plans to spend another $20bn on acquisitions by 2015. This was not exactly what ex-IBM CEO Lou Gerstner had in mind when he wrote his autobiographical ‘Who Says Elephants Can’t Dance?’ book in 2002.
In recent times both Microsoft and Google have also been criticised for falling behind the frantic pace of innovation change in the tech industry. They are elephants now—and why on earth would you want elephants to dance anyway? They have many other redeeming features such as strength, power, and robustness.
From a customer perspective elephants offer reliability and business continuity, and products that will (eventually anyway) work and be supported. The same can’t be said for the innovative ‘black swan ballet dancer’ start-ups in Silicon Valley whose mortality rate is still extraordinarily high.
The message for IT customers is not to expect real innovation from the big players no matter what they say or do—elephants are not built to produce it, and real innovation is no longer part their DNA. For real innovation you are better off scouring the Internet to find out what the visionary entrepreneurial start-ups are up to.