where do 'big ideas' come from

I was asked by Benjamin Bakhshi a great question related to today's posting. while I replied in the talkback section I realized it was worth to post it in the "Nature of Business" (NoB) section although just to start the conversation with other corp readers as to their experiences.

"Shai, here is a question: Do you think 'big ideas' in the world manifest because of large corporations, or because of smaller entrepreneurial businesses?"

My answer read pretty close to the following (I came up with the parallel metaphor to evolution theory after my original answer):

Benjamin,

From my experience in large corporate environment the big ideas usually start along one of three paths pretty much like evolution theory:

• Emergence of market demand (usually manifested through one of your smaller competitors proving that the market wants a new product) - see Prius. In some cases this is the equivalency of one species eliminating another one by being more adapt - Think of the effect of refrigiration on the ice shavers service providers. In general any business that replaces people with an appliance wins.

• Bottom up innovation - a few engineers (usually a handful at most) come up with a breakthrough idea, and build it in their after hours. If they have enough momentum to survive, the idea gets viewed by corporate leaders who are either strong enough to approve it or strong enough to protect it until approval. This is the beauty of emerging traits - re-combination of the current organizational genome that produce a super-baby. As a general rule of thumb the bigger the market share you have in the segment where the innovation happened the lower the exec support you would get for disruption

• A disruptive technolog that meets a strong visionary leader who knows how to apply the technology to solve an age old problem the company struggled with in the past. Once the problem is re-addressed and solved the big question the corporation needs to solve is how to scale production and go-to-market - which is where the large corporation can beat the small up and comers, even if they have a time advantage over corporate. In this case we are looking at bio-engineering - an understanding of the function of a certain new gene that allows us to create a superspecies through applied science. As a general rule of thumb here - the closer the leader is to a founder the higher the probability he picks the right choice.

finally, if you allow me to cheat, one of the main path through which innovation happens in large corporate is through acquisitions - either of ready products or of 'big idea' people...scaling from there is pretty easy for corporate - all you need is to integrate well and let the start up thrive inside while slightly reducing chaos over time. I used to call this a retro-virus, which was the role I played at SAP - re-awakening the great genetic material in a body that is much larger and much smarter only slightly dormant for a while. I guess in this experiment the body is very much awake, even smarter but the retro-virus has been pushed out of the body after it is no longer percieved as needed...At least I am free to infect other domains again.

what do you guys think? have other experiences? better metaphor?

Comments

[Oded Roth]

Hindsight may be found in Clayton M. Christensen’s book: “The Innovator's Dilemma.”

The Wright brothers are the classic example of small entrepreneurs who beat the large corporation engineers. The way to fly high might start at bicycle mechanics.

Oded

[Ori Matalon]

Peter Drucker discusses this issue in his book "Innovation and Entrepreneurship"; he says that there are seven sources for innovation:

1. An unexpected event in the market – great success or failure of a product /service.
2. Incongruity.
3. Process need.
4. Changes in industry structure or market structure.
5. Demographics (population change).
6. Changes in perception, mood and meaning.
7. New knowledge.
(You can read more on: http://www.amazon.com/Innovation-Entrepreneurship-Peter-F-Drucker/dp/0887306187 )

Ori

[Deepak]

Hello Shai:(This is paraphrased from an email I sent you a week or so ago. Seems to synch with today’s WSJ story?)

A response to your “retro virus” story.

SAP was slower to the internet/ CRM/ portals trend during the late 90s, as I recall. The key, at that time was imbuing the firm with a dose of innovation (but not transforming completely). Hence your hire as the outsider for an infusion of innovation and the establishment of SAP Labs (?) as a loosely-coupled entity (right?).

But, my sense is that there were two adjustments that made this work - one on your
part and the other on SAP’s behalf.

On SAP’s side, would you agree that rather than require you to buy into their approach
and culture to get you acculturated, SAP allowed you to pollinate the environment
with the outsider’s approach and new ideas. In other words, SAP’s accommodation
was to allow you to keep you identity rather than homogenize.

On your part, I suspect the accommodation was - that you bought into the business
and strategic zeitgeist of the large corporation. That is, while keeping your innovative zeal, you understood that this was not about transforming SAP but to continue to sustain and leverage things that had made SAP what is was - while innovating in certain localized domains.

These mutual accommodations seem to have been at the core of the marriage that lasted
this long.

And perhaps one or both of these things were starting to break in recent times…..?

[Padmanabha Rao]

Isn't the trend nowadays to remarry one's divorced spouse?

There's an idea Shai.

[Shai Agassi]

I am trying hard not to get into the debate (and harder not to start laughing at this comment). There is no "Steve Jobs" in this one...

[Padmanabha Rao]

The Jobian model is outmoded; it's too long winding and slow :-D

I was thinking of the Andre Agassi model actually!