As an individual who is notoriously risk averse (just ask James), it may seem odd that I react positively to stories like this one. But in truth, I think that from a corporate perspective, risk is an important – even essential – portion of the equation. Yeah, Business 101, I know.
Particularly in the technology world, I don’t see how you can survive any other way. Where I once was taught that business was ruled by the dictum, “if you’re not moving forward, you’re going backward,” I’ve come to realize that in my chosen profession “moving forward” is best translated as “innovating.”  Why do I think that? Consider what Tim Bray says here:
Nobody—I repeat, nobody—is smart enough to predict where the next big strategic innovation is going to come from.
I really could not agree with that more strongly. The list of innovations that large technology firms have “missed” is appalling: IBM & client server, Microsoft & the internet, and so on. The Innovator’s Dilemma can only partially explain the lack of foresight in these and other cases.
Nor is it strictly speaking a large company problem; consider the “accidental” innovation of Asterisk, PageRank or Red Carpet. The fact is that Tim’s right; as an industry, our ability to predict where we’re going is extraordinarily limited. And if you’re still not convinced, try and explain why Europe and Asia were able to see the promise of the wheel, while North and South America were not. It defies explanation. As does our complete and utter lack of foresight today.
How did IBM not perceive the importance of the operating system that Microsoft did? Or Microsoft not perceive the importance of search that Google did? Are they stupid? Hardly. They’re merely stumbling around in the dark like the rest of us. Blinded by factors both internal and external, the prescient recognition of what is to come is rare. Sufficiently rare, in fact, so as to reward the few visionaries with money – lots of it.
What is a technology firm to do, then, in a world in which they are no more able to predict the course of future events than your average man or woman on the street? Nick Carr’s answer is focus, apparently. He’d have the technology giants “narrow their sights when it comes to innovation,” saying that:
You need to bring the same kind of discipline to deciding where you innovate as you’d bring to any other kind of management question. You want to make sure that you innovate in those few areas where innovation can really pay off and create a competitive advantage and not innovate in other areas where it won’t pay off.
That sounds great, as you might expect from a writer as talented as Carr. Given the above, however, you might see my problem: that plan assumes that you know the “few areas” to innovate – an assumption I believe to be problematic. His entire question – pursued in both the WSJ piece and the comments – is built on that shaky foundation.
If that doesn’t work, however, what’s left? While I don’t disagree with Carr entirely – focus from an innovation standpoint is indeed a good thing – I would argue that Darwin should have the final say. I just spent a couple of hours learning the broader history of IBM’s alphaWorks project, and one of the clear lessons is that outsourcing the task of judging an innovation’s merits has unexpected benefits.
According to one of the talks today, Lou Gerstner’s first two questions regarding alphaWorks were first, what about people stealing our intellectualy property (addressed via license), and second, how do we make money (the answer was: I don’t know). My answer to the second question would be that the function – and value – of alphaWorks is simple: it divorces the valuation of innovation from such threats as internal politics and the Innovator’s Dilemma. By the simple act of allowing, even encouraging, outside input, alphaWorks – like open source (see Derby, nee Cloudscape) – makes the process of innovation at once more democratic (note the small d) and Darwinian (note the big D).
Is alphaWorks the perfect – or only – answer to the problem? I’m guessing you know the answer to that. But if I a.) worked for IBM, and b.) was charged with the task of determining which of my innovations was likely to prove important, I’d sure as hell want help from the outside world.
Disclaimer: IBM is a RedMonk customer, and we’ve done work with Microsoft in the past.
 Note that I do not believe, however, that innovation happens only internally – quite the opposite – as European history amply demonstrates. Think paper, gunpowder, calculus, etc.