Process or Practice - Two Paths to Innovation

Every organization wants more innovation – but how to best produce it? Some believe innovation results from creating the right environment to enable inspiration and invention among employees. Innovation is left up to individuals to create in their own unique ways. But few managers are comfortable with this hands-off approach to creativity. Surely, many managers ask, the key steps in the innovation ‘process’ can be executed in a consistent and repeatable manner? They believe that if you create the right process, support it with the right measures and incentives and innovation can be produced just as an assembly line spews out widgets.

John Seeley Brown, ex head of the famous Xerox PARC refers to these competing approaches to innovation as process and practice. Today, two of the most prominent companies in the IT marketplace – Microsoft and Google are embracing these opposite innovation strategies. Microsoft is pushing hard to increase its innovation capacity through the introduction of a process to manage and coordinate its new product development. Google on the other hand drives innovation through selected practices designed to motivate and enable individuals to innovate as they best see fit in the belief that smart creative people will naturally collaborate and innovate if left to their own devices.

In its early years, Microsoft was known for a free-wheeling and entrepreneurial style. But once it became big and dominant, it has slowed up. Now it has introduced processes to help speed things up and make new product development and other innovation-related activities more consistent and productive.

But this move to embrace process is apparently causing much frustration and some dissension among employees. Some feel that they are spending too much valuable time complying with the innovation management process instead of innovating.

One Microsoft employee puts the situation bluntly in a posting on his blog entitled “Satan’s Process Excellence” :

“We spent so much time filling out forms, creating reports, and attending meetings to explain what we were doing and to learn how we should be filling out forms and formatting our reports, that it took twice as much effort to accomplish anything. Process is killing Microsoft. Don't get me wrong - the old days were a bit to loose and wild out here in the field, but things have swung so far the other way it is ridiculous. There is no room for individual ingenuity. The Process Beast (in the field its goes by the name Seibel) is all about sameness and oneness so that managers can spend less time leading and directing and more time staring at spreadsheets. And it sure as hell has nothing to do with customer focus or doing right by our customers. The smart, energetic go-getters Microsoft used to hire are being replaced or forced out by ‘process drones’. Microsoft will look in the mirror someday very soon and see a circa 1980s IBM staring them in the face.”

The root of Microsoft’s current challenge may be found ironically in its incredible commercial success. Last year it made approximately $13 billion in profit on just under $39 billion in revenue. That’s a nice 33% profit margin – most of it generated by its legacy Windows platform and Office products suite. Radical change seems hardly necessary when you’re making these awesome numbers. But dark clouds are on the horizon. Growth has slowed to single digits for the first time ever. In its efforts to coordinate and extend its own products and platforms Microsoft has become increasingly slow and ponderous. New products take half decades to develop. As a result Microsoft is starting to lose some of its best talent and many in the company are concerned for its future.

Google on the other hand seems designed for speedy innovation. It emphasizes experimentation over regimented processes to spur innovation. Like a university, its key executives hold open ‘office hours’ every week so that staff can bring issues to them and be mentored. It also allows individuals to work 20% of company time on their own personal projects. Google’s approach to innovation seems to be a critical differentiator in this battle to attract and keep talent. The company is on a roll attracting the best and brightest programmers and computer scientists – even poaching some of these individuals from Microsoft.

Google and Microsoft provide a stark contrast in their approaches to innovation. Microsoft is older, bigger and operates in more mature markets. Given its profitability, many would say it is natural and indeed smart to focus on its cash-making businesses. A process-approach to innovation makes a great deal of sense for them.

Google is smaller, younger and still finding its way in emerging markets. A practice-approach to innovation fits it perfectly. But as the company gets bigger it will begin to experience more pressures to adopt repeatable processes and measurements.

In the battle for market dominance, Microsoft is the aging champion and Google the young
talented upstart. Both companies have battalions of brainy, dedicated people. The winner of
this tussle between tech titans could very well be determined by which innovation approach –
process or practice - better engages and channels the passion of talent into the best
performance.