Every organization strives to innovate, but few succeed consistently over time. That's why so many once dominant companies hit a peak and then decline. A recent study estimates that 50% of the current S&P 500 will be replaced over the next ten years. Success is supposed to breed success, but it often breeds failure

Yet IBM, Google and Amazon have been able to buck this trend. While most companies are lucky to come up with one major innovation, these three continue to develop breakthroughs and don't seem to be slowing down any time soon. In fact, they seem to be accelerating their ability to create impressive new products and services.

However, they are very different organizations, which vary widely in their cultures, practices, products and innovation processes. Each has developed in its own way and found its own path, but managed to come up with a repeatable model that works. Despite these differences, however, looking at them together can help us uncover some common principles of innovation.

Over a Century of Innovation

It seems that every generation sees IBM falter. It was caught off guard by the minicomputer revolution in the 1980s, outmaneuvered and then outperformed by companies like Microsoft, Intel and Sun Microsystems in the 90s and then pummeled by cloud technologies more recently. Each time pundits declared the firm a dinosaur, soon to be extinct.

Yet each time IBM has emerged once again and, today, it remains profitable and on the cutting edge. It has pioneered technologies of the future, such as artificial intelligence, blockchain, quantum computing and neuromorphic chips and vies for leadership in each of those areas. Not bad for a company that's been around since Woodrow Wilson was President.

The secret to IBM's incredible durability is its Research division, which has won more Nobel prizes than most countries. It begins exploring technologies long before they become commercially viable -- or even have a clear application -- and patiently waits while they mature. When they do, the company is usually years ahead of the competition.

What IBM has understood for a long time is that everybody gets disrupted eventually, especially in the technology business. So it pays to build the ark before the storm. It's always better to prepare than adapt, because by the time you realize you need to adapt it's often too late.

An Integrated Innovation Ecosystem

In many ways, IBM's mirror image is Google. While IBM is old, Google is young. IBM is deliberate and patient, while Google seems to move at warp speed. IBM focuses on designing systems for enterprises, Google mostly sells finished products to consumers. IBM has long fallen out of fashion, but Google is a tech darling.

Yet there is a growing rivalry between the two companies in fundamental technologies, especially quantum computing and artificial intelligence. That's incredibly impressive when you think about it. IBM has been building scientific expertise for decades, while Google has built a world class research effort in just about ten years.

The secret to Google's success is how it integrates a number of strategies into a single coherent ecosystem. The firm invites dozens of top researchers to take a sabbatical at the company every year, which injects top-notch scientific talent. Its 20% time policy pulls in ideas from all over the company and its corporate venture capital operation does the same for the startup community. When an idea has promise, it can be incubated at the company's "X" division.

For example, the Google Brain project started when Andrew Ng, a star artificial intelligence researcher, came to the company on sabbatical. While there, he began working on a 20% time project with Googlers Jeff Dean and Greg Corrado and eventually they moved to the "X" division. In 2012 it moved back to the mothership and now acts as its own unit.

A Unique Culture Focused on the Customer

While IBM has mastered innovating fundamental technologies, Amazon excels at innovating business models. Starting out as an online book retailer, it quickly moved into other product categories. More recently, it pioneered cloud computing, smart speakers and is now moving into healthcare.

What makes Amazon unique is the culture it has built around the customer. While many are happy to pay lip service to the concept, Amazon has built a number of practices that force its people to take the customer's point of view even before a product begins development. That focus then permeates the rest of the process.

At the heart of how Amazon innovates is its six-page memo, which kicks off everything the company does. Executives must write a press release, complete with hypothetical customer reactions to the product launch. That is followed by a series of FAQ's, anticipating questions customers, as well as internal stakeholders, might have.

Executives at the company have stressed to me how the process forces you to think things through. You can't gloss over problems or hide behind complexity, you actually have to work things out. All of this happens before the first meeting. It's a level of rigor that few other organizations even attempt, much less are able to achieve.

Avoiding the Cargo Cult

During World War II, soldiers established bases on remote islands in the Pacific. For many of the indigenous people who lived there, it was their first encounter with manufactured technology. They were amazed by how airplanes would land on improvised strips and bring valuable cargo such as food, tents and manufactured goods.

When the war ended and the soldiers left, some of the islanders established cargo cults. They would mimic the rituals they saw the soldiers perform, such as marching in formation, waving sticks to guide planes in and lighting torches to illuminate runways at night. Perhaps not surprisingly, none of this attracted any planes to return.

This all seems more than a little bit silly, of course. Anybody who thinks that performing rituals will make planes appear out of the sky is missing some very basic concepts of aviation. Yet modern executives often make the same mistake, mimicking the rituals of other, more successful firms, without internalizing the culture and practice behind them.

Make no mistake. Establishing a research division, starting a 20% time program or forcing your employees to write six-page memos will achieve little if they don't align with your own strategy, capabilities and culture. In fact, those things can even be counterproductive, wasting valuable time and effort that could be more productively applied elsewhere.

The truth is that there is no one true path to innovation. Neither IBM, Google nor Amazon has hit on the "right" way to innovate, but they have found the right way for them. It is how those practices have become so deeply embedded into the fabric of their organizations over time that makes the difference.

If you want to innovate, you need to find your own path. 

Published on: Oct 14, 2018