What Does It Take for a Company to Maintain Innovation?

After reading an interesting article in Harvard Business Review, “How Microsoft became innovative again”, I wasn’t so much prompted to wonder how the company has managed to transition from selling shrink-wrapped boxes of software under the dead hand of Steve Ballmer to once again be an interesting company under Satya Nadella; and instead on the nature of corporate innovation cycles. And more specifically, about whether the Steve Ballmers of this world are a precondition for the Satya Nadellas to emerge.

Innovation in companies is often the result of a moment of inspiration, typically at the moment of the company’s inception. This is usually the case with big tech: the idea of creating an easy-to-use computer was behind Apple, just as the idea of creating a search engine with a different mechanism based on off-page criteria instead of on-page gave rise to Google. However, the evolution of the two companies from that point on was very different, which means that today, Apple is still ranked among the most innovative companies in the world, unlike Google.

Microsoft is a similar case: the possibility of creating the operating system for a computer that IBM turned into a standard gave birth to the company and turned it into a virtual monopoly, but Steve Ballmer’s disastrous management and lack of vision relegated it to a position where the company practically stopped innovating, until Satya Nadella arrived and revolutionized it again.

Could he have done so if, previously, Steve Ballmer had not had the dubious merit of turning the company into a textbook example of how things should NOT be done? Now, seeing Microsoft return to being a major player in areas such as search engines is not just the result of having closed a deal with OpenAI, but the fruit of a consistent track record of innovation maintained over several years.

What is it that allows some companies to maintain innovative dynamics over time, while others fail to take advantage of their position and stop innovating? Obviously, this is not simply a question of ideas, but also (and sometimes more), one of execution. But in one way or another, some companies succeed, and continue to apply principles and a culture of innovation that give them an advantage that consolidates and becomes part of their identity, while others are unable to do so. One of the best parallels I have seen in this regard, or perhaps one to which I am particularly sensitive because of my Sciences background, is the analogy of evolution: how advantage corresponds not so much to a stroke of luck, an inspiration or an opportunity, but to a way of doing things that ensures the right characteristics for those kinds of moments to continue to emerge.

While Microsoft has been able to keep developing innovative lines — and missing out on others, of course — and Apple, for example, is able to reinvent a product category every so often, and other companies remain anchored in what was their original innovation and end up simply defending the fortress, with no apparent capacity for reinvention or the creation of another successful line.

Many cases need to be seen and studied to understand this. But undoubtedly, Microsoft, a company I have followed closely since 1998, is one of the most interesting, because it is one of the few companies that has been able to lead a return to innovation through a strong cultural change, a truly difficult challenge.

Innovation models. Easy to define, but very difficult to sustain and, above all, to implement. But certainly capable of making a difference.

(En español, aquí)

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This post was previously published on MEDIUM.COM.

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