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Innovation Big and Small

Chapter 1 - The Adventures of Chuck & Roger

It’s four o’clock in the morning. Roger gets up from his laptop to walk to the dorm-size refrigerator in the corner of the makeshift office. He pulls out a Mountain Dew, downs a sizable swig, and then places the can at the end of a row of six empties that have accumulated beside his keyboard during the evening. Adjacent to his desk sits a pyramid of empty Mountain Dew cans – an art project in progress, a monument to a month of Roger’s late-night work-a-thons, all aimed at getting the product ready for tomorrow’s big customer demo. Beyond the Dewamid lies a sleeping bag containing Roger’s office mate. He had lasted until 2AM when he kicked off his own regression test run and then crawled in for a nap. Roger has instructions to watch the job and wake him if it finishes.

Caffeine, cold liquid, and carbonation re-open Roger’s sagging eyes. His monitor locks back into sharp focus again. His latest unit test run will be done within a couple of minutes. If it passes, he’ll check in the files, kick off a build, and head home for two or three hours of real bed rest before trying to make himself look semi-professional for the presentation at 9AM. He doesn’t want to be too slick. People expect a lead engineer at a startup to have a certain patina.

If the demo goes well and the customer issues a PO, it will provide the real-world validation that the venture capitalists are looking for in order to proceed with the third round of funding. The funding is key. Without it, the company will close down within weeks. With it, they’ll have the resources they need to bring the product to market. Roger is confident that, if that happens, the company will be acquired at a premium within two years. He’ll be set to retire at 26. Roger’s wife of two years sleeps soundly alone at home. She hasn’t had more than an hour alone with her husband in over a month, but she’s patient with the temporary hardship. She understands what this means for their future.

Five and a half hours later, at nine-thirty, while Roger is starting his make-or-break demonstration, wearing his blue blazer over a polo shirt with jeans and converse sneakers, another engineering deadline is approaching. In the next building over, home to a product development team from a multi-billion-dollar public corporation, Chuck is running late for work. His oldest daughter toddles after him down the hallway toward the day-care center, teddy bear in tow. Chuck mentally blames the company for his tardiness. If they’d expanded the day care facility like they’d promised a year ago, he wouldn’t have to drop his youngest kid off at the other place every morning until his day care spot came up on the waiting list. Chuck swings past the company fitness center and slots his name in for racquetball at noon. He can play for an hour, shower, and still get to the cafeteria before they stop serving at one-thirty. He’ll be done with lunch by two fifteen and back at his desk in time for his two thirty weekly program review meeting.

Chuck is a bit annoyed by the program review. For the past four weeks, Aaron, the guy that runs the meeting, has let the customer support people drone on incessantly, and the waste-o-thons have been running over two hours. Not only does that chew up valuable time for twenty people, Chuck thinks, it also only gives him ten or fifteen minutes back in his office to finish up his e-mail if he’s going to get on the road before five – in time to coach his son’s little league. Chuck resolves to mention it to Aaron’s boss next week when he goes to give feedback for Aaron’s performance review. At worst, it’ll apply some pressure to get the meeting reined in. At best, it’ll help knock Aaron down the promotion ladder below Chuck.

For the next two hours, however, until noon, Chuck wants to try to be productive. He’s been trying for over a week to find some quality time to spend with his debugger so he can knock off that high-priority beta customer bug. It really needs to be fixed before he leaves for the sales kickoff event in Vegas next week. With all the meetings and design reviews, however, there just hasn’t been any time to get real work done. Actually, given the number of meetings and policies and reviews, Chuck doesn’t understand how any actual engineering work gets done around here at all. For some reason, though, the stock’s been doing well lately. (Another division’s product has hit a home run in the market.) If it stays high for another year, Chuck’s options will be vested and he can sell off enough to pay off the credit cards again and maybe make a down payment on that new ski boat. It’s worth sticking around for, for sure.

One year from now, Chuck and Roger will meet. After a successful beta release, Roger’s startup will have made enough waves in the market to attract the attention of several potential suitors. Chuck’s corporation will have won out in the long run, dropping a modest forty million to acquire Roger’s six-person company. Chuck, having beaten out Aaron for a promotion to engineering project manager, will become Roger’s new boss after the acquisition. Chuck’s old project will have been cancelled after numerous delays, and the big corporation will be introducing Roger’s brainchild to the mass market instead. The product will be a hit and will sell over two hundred million dollars over the next three years.

Six months after they meet, however, Chuck will fire Roger. Threatened by Roger’s superior product knowledge, intelligence and productivity, Chuck will manage to find numerous examples of Roger’s failure to fit into the culture of the big corporation. Roger’s status reports will be spotty and sometimes off topic. He’ll skip as many weekly project reviews as he attends. He’ll get into frequent technical arguments with fellow engineers.

Roger will leave big corporation with two million dollars from the acquisition. He’ll have to sue to get it, because he will be fired before the vesting date. It won’t be enough to retire as he had hoped. Within a year, he’ll be working at a new startup.

One year after that, Chuck will be laid off. Despite his new product’s success, the corporation will downsize by 10% because of shrinking margins in its mainstay markets. Chuck’s position will be eliminated in a management structure flattening. He will be outraged that the company could let him go. After all, his group had launched the single most successful new product the company had seen in ten years. Clearly, Chuck will think, this company does not value innovation.

Many of us in high-technology recognize Chuck and Roger. We’ve probably all known several Chucks and Rogers over the course of our careers. Many of us have even been both Chuck and Roger at various times. Both characters are inevitable products of the cultures of the environments in which they each exist. The high-tech startup and the big corporation repeat this mating dance almost daily around the globe, spawning veritable swarms of Chucks and Rogers.

Innovation in a startup is drop-dead easy. In fact, it’s almost impossible to avoid. Filled with energy, entrepreneurial spirit, and the promise of life-changing rewards, engineers unencumbered by corporate policy, practice, and red tape are capable of almost unbelievable creative productivity. Startups are the engines of technical innovation.

Innovation in large companies, on the other hand, is almost impossible to foster. The Chucks of the world have almost no tangible connection to the fate of their large corporation’s business ventures, and they participate only tangentially in the rewards of its success. They tend to avoid taking the risks required for true innovation, because the costs of failure in a big corporation far outweigh the potential rewards of success.

People like Chuck thrive and survive in their environment by surfing the waves of projects flowing through the enterprise – jumping on the big ones at just the right time to take credit, take a bow, and nab a promotion from their success, and then cutting off to catch a new, better wave before the previous project crashes on the beach. They cover their tracks and boost their odds by sniping at fellow surfers, making sure somebody else takes the blame for each failure, and thus narrowing the competitive field at promotion time. The success and well-being of the company itself are third-order considerations at best.

Most of these big-company projects never make it to market. While many big high-tech corporations tout their technical prowess, their real crown jewels are their marketing muscle and their sales and distribution channels. True innovation is usually acquired from companies like Roger’s. It is far easier for a large corporation to sit on the sidelines and watch several startups break their backs in a race for a new market, and then to dangle dollars in front of one of the winners and come away acquiring a market-proven product than to attempt to develop anything internally through the incredible static inertia of their own “best practices” and procedures.

There are, however, exceptions. A few big corporations actually do manage to foster true innovation and come away with industry-leading products in the process. In the second part of this series, we’ll look at how some larger companies break down the barriers to creativity that naturally occur in large companies. Chucks and Rogers will meet and work happily together in peace and harmony in gleaming utopian office buildings where everyone has plenty of time for productive work, meetings are short and useful, company policies and procedures make people even more productive, and dogs and cats stroll peacefully side by side across the campus lawn. OK, maybe we’re getting carried away, but the point is, innovation can happen in a big company, and we’re going to prove it. Tune in next time.

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Innovation Big and Small

Chapter 1 - The Adventures of Chuck & Roger

Caffeine, cold liquid, and carbonation re-open Roger’s sagging eyes. His monitor locks back into sharp focus again. His latest unit test run will be done within a couple of minutes. If it passes, he’ll check in the files, kick off a build, and head home for two or three hours of real bed rest before trying to make himself look semi-professional for the presentation at 9AM. He doesn’t want to be too slick. People expect a lead engineer at a startup to have a certain patina.

If the demo goes well and the customer issues a PO, it will provide the real-world validation that the venture capitalists are looking for in order to proceed with the third round of funding. The funding is key. Without it, the company will close down within weeks. With it, they’ll have the resources they need to bring the product to market. Roger is confident that, if that happens, the company will be acquired at a premium within two years. He’ll be set to retire at 26. Roger’s wife of two years sleeps soundly alone at home. She hasn’t had more than an hour alone with her husband in over a month, but she’s patient with the temporary hardship. She understands what this means for their future.

Five and a half hours later, at nine-thirty, while Roger is starting his make-or-break demonstration, wearing his blue blazer over a polo shirt with jeans and converse sneakers, another engineering deadline is approaching. In the next building over, home to a product development team from a multi-billion-dollar public corporation, Chuck is running late for work. His oldest daughter toddles after him down the hallway toward the day-care center, teddy bear in tow. Chuck mentally blames the company for his tardiness. If they’d expanded the day care facility like they’d promised a year ago, he wouldn’t have to drop his youngest kid off at the other place every morning until his day care spot came up on the waiting list. Chuck swings past the company fitness center and slots his name in for racquetball at noon. He can play for an hour, shower, and still get to the cafeteria before they stop serving at one-thirty. He’ll be done with lunch by two fifteen and back at his desk in time for his two thirty weekly program review meeting.

Chuck is a bit annoyed by the program review. For the past four weeks, Aaron, the guy that runs the meeting, has let the customer support people drone on incessantly, and the waste-o-thons have been running over two hours. Not only does that chew up valuable time for twenty people, Chuck thinks, it also only gives him ten or fifteen minutes back in his office to finish up his e-mail if he’s going to get on the road before five – in time to coach his son’s little league. Chuck resolves to mention it to Aaron’s boss next week when he goes to give feedback for Aaron’s performance review. At worst, it’ll apply some pressure to get the meeting reined in. At best, it’ll help knock Aaron down the promotion ladder below Chuck.

For the next two hours, however, until noon, Chuck wants to try to be productive. He’s been trying for over a week to find some quality time to spend with his debugger so he can knock off that high-priority beta customer bug. It really needs to be fixed before he leaves for the sales kickoff event in Vegas next week. With all the meetings and design reviews, however, there just hasn’t been any time to get real work done. Actually, given the number of meetings and policies and reviews, Chuck doesn’t understand how any actual engineering work gets done around here at all. For some reason, though, the stock’s been doing well lately. (Another division’s product has hit a home run in the market.) If it stays high for another year, Chuck’s options will be vested and he can sell off enough to pay off the credit cards again and maybe make a down payment on that new ski boat. It’s worth sticking around for, for sure.

One year from now, Chuck and Roger will meet. After a successful beta release, Roger’s startup will have made enough waves in the market to attract the attention of several potential suitors. Chuck’s corporation will have won out in the long run, dropping a modest forty million to acquire Roger’s six-person company. Chuck, having beaten out Aaron for a promotion to engineering project manager, will become Roger’s new boss after the acquisition. Chuck’s old project will have been cancelled after numerous delays, and the big corporation will be introducing Roger’s brainchild to the mass market instead. The product will be a hit and will sell over two hundred million dollars over the next three years.

Six months after they meet, however, Chuck will fire Roger. Threatened by Roger’s superior product knowledge, intelligence and productivity, Chuck will manage to find numerous examples of Roger’s failure to fit into the culture of the big corporation. Roger’s status reports will be spotty and sometimes off topic. He’ll skip as many weekly project reviews as he attends. He’ll get into frequent technical arguments with fellow engineers.

Roger will leave big corporation with two million dollars from the acquisition. He’ll have to sue to get it, because he will be fired before the vesting date. It won’t be enough to retire as he had hoped. Within a year, he’ll be working at a new startup.

One year after that, Chuck will be laid off. Despite his new product’s success, the corporation will downsize by 10% because of shrinking margins in its mainstay markets. Chuck’s position will be eliminated in a management structure flattening. He will be outraged that the company could let him go. After all, his group had launched the single most successful new product the company had seen in ten years. Clearly, Chuck will think, this company does not value innovation.

Many of us in high-technology recognize Chuck and Roger. We’ve probably all known several Chucks and Rogers over the course of our careers. Many of us have even been both Chuck and Roger at various times. Both characters are inevitable products of the cultures of the environments in which they each exist. The high-tech startup and the big corporation repeat this mating dance almost daily around the globe, spawning veritable swarms of Chucks and Rogers.

Innovation in a startup is drop-dead easy. In fact, it’s almost impossible to avoid. Filled with energy, entrepreneurial spirit, and the promise of life-changing rewards, engineers unencumbered by corporate policy, practice, and red tape are capable of almost unbelievable creative productivity. Startups are the engines of technical innovation.

Innovation in large companies, on the other hand, is almost impossible to foster. The Chucks of the world have almost no tangible connection to the fate of their large corporation’s business ventures, and they participate only tangentially in the rewards of its success. They tend to avoid taking the risks required for true innovation, because the costs of failure in a big corporation far outweigh the potential rewards of success.

People like Chuck thrive and survive in their environment by surfing the waves of projects flowing through the enterprise – jumping on the big ones at just the right time to take credit, take a bow, and nab a promotion from their success, and then cutting off to catch a new, better wave before the previous project crashes on the beach. They cover their tracks and boost their odds by sniping at fellow surfers, making sure somebody else takes the blame for each failure, and thus narrowing the competitive field at promotion time. The success and well-being of the company itself are third-order considerations at best.

Most of these big-company projects never make it to market. While many big high-tech corporations tout their technical prowess, their real crown jewels are their marketing muscle and their sales and distribution channels. True innovation is usually acquired from companies like Roger’s. It is far easier for a large corporation to sit on the sidelines and watch several startups break their backs in a race for a new market, and then to dangle dollars in front of one of the winners and come away acquiring a market-proven product than to attempt to develop anything internally through the incredible static inertia of their own “best practices” and procedures.

There are, however, exceptions. A few big corporations actually do manage to foster true innovation and come away with industry-leading products in the process. In the second part of this series, we’ll look at how some larger companies break down the barriers to creativity that naturally occur in large companies. Chucks and Rogers will meet and work happily together in peace and harmony in gleaming utopian office buildings where everyone has plenty of time for productive work, meetings are short and useful, company policies and procedures make people even more productive, and dogs and cats stroll peacefully side by side across the campus lawn. OK, maybe we’re getting carried away, but the point is, innovation can happen in a big company, and we’re going to prove it. Tune in next time.

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