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Thursday, December 13, 2007 3:00am — STRATEGIC MANAGEMENT OF IP Game changing innovation, patent strategy and company sizeCan large companies create truly game changing innovation or is it just too hard for large companies? and what does this mean for patent strategy? Andy Grove recently wrote about how GE and Walmart should be going for 'moonshot' innovations - the electric car, and the US health care system, respectively. This has naturally prompted a lot of discussion, not least of which from Harvard Business Review. Bill Taylor at Harvard has blogged about it and subsequently been interviewed on the HBR IdeaCast about his post. In essence, Bill argues that with rare exceptions, large companies can not create disruptive technology that is truly game changing. Instead at best, they can come up with incremental improvements. The exceptions he cites are Apple and IBM - both of which had to have a near death experience to prompt a dramatic rethink. Bill says that almost all of the world's disruptive technologies have come out of small, venture capital backed companies, not large ones. This is all pretty interesting, because there's been increasing pressure over the past 12 months on the validity of patents which cover incremental improvements - based largely on obviousness. In India, section 3(d) is a prime example (and it looks as thought it will spread across Asia). In the US, KSR v Teleflex clearly reinforces this view. So, is Bill right - can large companies come up with game changing / disruptive technologies, or is it all just too hard for them? If that's right, what does that mean for the value of the patents they file as the law of obviousness continues to squeeze out incremental improvements? I'm personally with Andy on this one. Large companies can and regularly do innovate well beyond incremental improvements. They're in a unique position to structure their innovation processes to get the best of both worlds - the resources of a large entity and the pace and creativity of much smaller teams. Provided that they have the foresight and the determination to see it through. What do you think? Post a Comment | Permalink | + del.icio.us 4 CommentsDuncan saidMT - thanks for your great comments, and welcome. I think you're right and I'm skeptical about your second option working in practice. The first option is, however quite doable, I think. Even then, how many large company executives will take the risk of creating a small entity within the organisation and letting it freely innovate? posted on Thursday, December 13, 2007 4:39pm Surendra Vyas saidThe fact is that disruptive innovation wont just happen in a planned way. It happens when either people are left to think free (as in a University) or if the survival of a company is based on a thinking model (as in a startup). However, both these options are unlikely in a large company. posted on Thursday, June 19, 2008 7:06am Duncan saidThanks Surendra What about Google and Zappos? posted on Sunday, June 22, 2008 1:39pm 0 Trackbackstrackback url: http://duncanbucknell.com/trackback.php?id=210 |
 
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MT said
Innovation requires hi-level management attention, because for lower-level players it is just a headache. Disruptive innovations start small, and no management attention is available for anything small. On the other hand, incremental innovation concerns existing large-scale sales, which easily attracts management attention.
There are only two solutions that may work: a separate group dedicated solely to disruptive innovation and has the resources and authority for experimenting and taking risk, or where the top management is made up of outstanding innovators.
posted on Thursday, December 13, 2007 11:42am