OnQ Blog

You have to break a lot of things to have a breakthrough

2015年10月15日

Qualcomm products mentioned within this post are offered by Qualcomm Technologies, Inc. and/or its subsidiaries.

Michael Carney is an Associate at Upfront Ventures, where he looks to back entrepreneurs tackling big problems in areas including retail innovation, financial services, B2B software, consumer internet, and digital media. Previously, Michael was an editor at PandoDaily, and before that a Managing Director at Los Angeles-based merchant bank WorldVest. The views expressed are the author’s own, and do not necessarily represent the views of Qualcomm.

There’s an old corporate procurement axiom that goes, “Nobody ever got fired for buying IBM.” Its meaning is clear, but its implications are complex. Simply put, it’s hard to fault someone for going with a known quantity, but playing it safe can sap the life of a company, especially one founded on innovation.

Pretty much every tech company you've ever heard of began as an innovator, but, over time, most evolved—or devolved?—into a protector. Instead of focusing on creating disruptive products, companies instead focus on maintaining their vaunted positions. This stands as a tremendous threat to the relevance of any company. And it’s an indictment of management for its all-too-common lack of courage, and of public-market investors for demanding short-term wins over long-term success.

Why then, when every executive knows that innovation is essential, does this cycle continue to play out? One answer is fear of failure. There is a phenomenon, which we might call “tech rubbernecking,” in which established companies focus on the carnage around them—be it from internal failures or those of competitors—rather than on the task of driving their business forward. In these instances, it can be near impossible to try something similarly risky again.

Examples abound in which the lack of innovation has been disastrous for previously great companies. While still behemoths, when viewed in the broad history of technology, companies can feel like shadows of their former selves. Whether the lack of innovation was the result of internal failures, or of witnessing other competitors punished for the effort, the results for these former leaders have been predictably brutal.

But, rather than dwelling on defeats, it’s important to instead focus our attention on positive instances. Google, for one, has not allowed its desire to innovate to be derailed by flubs like Google Wave, Google Glass, and the acquisition of Motorola’s hardware business.

Other companies, meanwhile, have been even bolder, revisiting past wreckage and turning it into success. Sequoia Capital, which is among the greatest venture capital firms in the world, was a major investor in the colossal failure and dot-com era whipping boy Webvan, a grocery delivery service. Just over a decade later, with many of the same partners still at the helm, Sequoia backed what seemed on the surface like a carbon copy grocery-delivery business: Instacart. Not surprisingly, the decision earned plenty of criticism at the time. Instacart has since gone on to raise hundreds of millions of dollars in subsequent funding rounds, and Sequoia is now sitting on what, based on a publicly disclosed valuation of $2 billion, appears to be in the vicinity of a 50-times paper return. Had Sequoia allowed a past wreck to paint its future, it could have said, “We’ll look like idiots if we lose millions betting on grocery delivery twice. Let someone else do this deal.”

What can incumbent companies do to encourage this fearless attitude?

One place to start is self-awareness and honesty. It’s easy to say that innovation is a priority, while in practice conducting only what lean startup guru Steve Blank refers to as “innovation theater.” It’s not enough to greenlight a few side-projects or R&D moonshots for the benefit of external perception. If low-risk, low-reward projects—for example Dell’s short-lived smartphone gambit or Nike’s stint in performance wearables—fail, little is lost. More tactically, a host of companies like GE have turned to variations of the innovation lab model, seeking to foster silos of entrepreneurship and creation within their ranks. The reason these initiatives rarely succeed is that they’re too often treated as a hobby, rather than as a core part of the business. If these initiatives get defunded at the first sign of adversity, then the takeaway is that innovation is not viewed as integral to long-term success.

Many large companies could learn from Amazon, which has proven over nearly two decades that it’s willing make large, long-term bets, and to proceed according to plan even when doing so is unpopular externally. There’s a reason why Amazon is today worth orders of magnitude more than its nearest Web 1.0 contemporaries, such as eBay, Yahoo, and AOL.

Innovation may not be the default state of large, established organizations. It is, however, the necessary state for those that wish to continue thriving. It is not enough to hold on to the status quo, to defend legacy business models, or to favor inertia over uncertainty. Innovation is non-negotiable.

Michael Carney

Associate, Upfront Ventures

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