Saturday, December 10, 2011

3 Types of Innovation-Structured [Apple], Unstructured [Amazon] & Open [Google]

I  had the opportunity to survey (in person, one-on-one) about 60+ entrepreneurs in India, who were founders and chief executives at leading eCommerce companies at the BVP cocktails & drinks last week at Delhi. I asked them to identify who they thought were the leaders in product (technology) innovation.
Not surprisingly, Amazon, Google and Apple were top of mind. Most opinion polls would point to the same “winners”, in no particular order. Each of these companies, I believe, innovates very differently though. Their approach, the kind of people that need to be hired and the systems and processes to support the innovation to be brought to market are vastly different.
The cultures at these innovation monsters are now widely known, but in parts. I formulated a broad conceptual model of their fundamental different approaches towards innovation and thought I’d outline that to spark debate.
I believe that to successfully innovate you need 3 (I know this is obvious, but bear with me) qualities: Vision, Strategy and Execution.
The Vision tells you where to go, Strategy; how to get there, and Execution takes you there. The question is whether these qualities are in one individual or you need 3 different people performing these functions
Before this misleads you, let me clarify that this is not a Google v/s Apple v/s Amazon showdown. I’m not going to announce a winner at the end of this. Apple, Amazon and Google have established the 3 broad, modern approaches to product innovation:

Structured (Apple)

apple logo 3 Types of Innovation Structured [Apple], Unstructured [Amazon] & Open [Google]
At Apple, innovation looks like a structured and methodical process. It starts top-down. Their model is repeated in their journey from iPod to the iPhone to the iPad.
They have a single (arguable, but not defendable) visionary, few strategists and several focused people who execute. The kinds of people that Apple hires consistently are those that execute well. Only one or two of the people (visionaries, strategists) know all aspects of the thrilling project.
With this kind of model, communication tends to be controlled. The important part of their story is that they have not strayed too far away from their core markets of consumer electronics & computer systems.

Unstructured (Amazon)

amazon logo 3 Types of Innovation Structured [Apple], Unstructured [Amazon] & Open [Google]
At Amazon I believe, innovation starts with a few individuals beyond the C suite.
This type of company begins by taking look at large green-field areas where disruption is possible and has multiple visionaries in each field. One could argue that there’s a single visionary (Jeff Bezos), but I counter that they have many more visionaries than Apple does based on the sheer number of new areas they pursue for innovation.
The responsibility of vision is more shared among multiple leaders than the structured approach at Apple. There’s more breadth in their market approach and they tend to look at disruptions with the approach to take systematic experiments. Typically companies who like the unstructured approach towards innovation will hire many visionaries and strategists in each field and empower them to pursue their vision backed by good (but not extraordinary) execution focused professionals.

Open (Google)

google logo 3 Types of Innovation Structured [Apple], Unstructured [Amazon] & Open [Google]
At Google, the approach is much more open (or chaotic). They have a plethora of projects starting every single day, and they’re all out in the open. This is why when they hire, Google looks for natural innovators – people who can be visionaries, strategists and executors all in one.
This model is the toughest to hire for in any company. Getting these “rock stars” is not only difficult, it’s impossible to keep them working towards the vision within a larger framework whose vision is not necessarily aligned with the overall objective of that company.
This approach produces the most number of experiments, and the sheer quantity of innovation is tremendous, hence the number of failures is also significant.

Which approach is best suited for technology startups?

Most startups (90%) tend to have both their visionary and strategic thinker be the same and focus on hiring people that execute brilliantly. Hence, you’ll find the requests for “rock star” programmers, or “kickass” marketing folks.
Since most startups tend to have a single guiding vision at the beginning of their venture, I believe the Apple approach is best suited at the early stages of the startup, followed by a maturity towards either the Google or the Amazon model eventually if they wish to expand to multiple markets.