Hey, What's the Big Idea?

If your company doesn't know, then it may be on the wrong track

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Innovation, the media would have you believe, is everywhere. Fortune magazine recognizes it. So does BusinessWeek. Same with Fast Company, Newsweek and, yes, VARBusiness, too.

Vendors and others also recognize innovation. IBM hands out Eclipse Awards for bright ideas, for example. Amazon.com, as well. Yet for all the Big Ideas around us, the average car produced in Detroit gets no better gas mileage than it did 20 years ago (thanks to big, hulking SUVs), and the average notebook computer still weighs in at more than 5 pounds--much as it did when road warriors first started their careers.

It's funny what Big Ideas attract attention. Remember the IBM butterfly keyboard on the ThinkPad 701C? The device wound up in the Museum of Modern Art, along with a lot of other products that never sold terribly well. But awards and accolades they garnered, just the same.

Innovation, along with the midmarket and VoIP, is clearly hot today. Everyone, it seems, is looking for the next Big Idea. That's a far cry from the past when character actors with fingers as big as hot-dog buns were always asking smaller, better-looking actors incredulously, "Hey, what's the big idea?"

Well, today, the Big Idea is the most prized thing of all. Just ask Cisco. When Cisco CEO John Chambers delivered his keynote address to some 3,000 business partners recently assembled in Vancouver, British Columbia, for his company's 2005 annual partner summit, he noted with pride the success of his company's Integrated Services Routers (ISRs). In just three quarters, sales of those products have topped $1 billion, ranking them among the most successful new products Cisco has ever introduced. You can bet that the team who created those devices is living large today inside Cisco.

When the industry grew like gangbusters, and technology sold the merits of throughput gains alone, companies loved to boast about the percent of sales they generated from new products. A good company could generate as much as 20 percent of its revenue from products that were less than 2 to 3 years old. A great one as much as 30 percent. But in a maturing industry, that's a lot harder to pull off; companies with rapidly growing businesses tend to stop innovating after they release a big hit so they can focus their attention on maximizing sales of that idea. But that's where young companies get old and where fast companies get slow.

So, ask yourself: What percent of the revenue at your company comes from technologies or services that are less than 2 years old? And I don't mean products, either. What I am talking about is real innovation--the iPod and open source, as examples--that gets CEOs excited. If the answer is less than 5 percent, your company is probably in trouble.

A maturing product line or business model isn't the only reason companies stop innovating. Another reason may be because their people grow wary of Big Ideas. Financial types hate them because they are always more expensive than anyone can calculate. Managers hate them because they put a disproportionate amount of power in the hands of subordinates whose contributions might otherwise be modest. And peers hate them because they know that Big-Idea people generally get a free pass even when they blow something. It's generally true in IT that New-Idea people need only hit on 40 percent or so of the ideas they come up with, whereas Old-Idea people have to be right as often as eight or nine out of every 10 times.

CEOs, however, love new ideas because they know they will get them those golden handcuffs, those big options and those happy shareholders they covet. Also, being human--well, most of 'em, anyway--CEOs like to spend as much time with people who think up new things because they tend to be more fun at lunch than people who are studying ways to fix old things. Again: When thinking about the people at your company, who tends to make for a better luncheon companion, your heads of finance, customer support and legal, or your heads of marketing, sales and R&D? Hands down, I'll bet it's the latter.

I once worked for a company that awarded a person with the idea it considered to be the most promising a bonus of $25,000. The first year, it went to one of the smartest women at the company. She bought a fur coat and then moved on. Her idea? Lost a mountain of dough, if I remember correctly, so the company did away with the $25,000 annual prize. Prudent move? You be the judge. Within 18 months, the company closed the division I worked for and lost out on some of the easiest money ever made in this business. The reason: It simply ran out of Big Ideas.

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