Fast take: How to loose innovation? Free it from a stifling centralized bureaucracy. In January, Nokia reorganized into four platforms: mobile phones, multimedia, networks, and enterprise solutions. The idea was to give potential growth areas both greater exposure and flexibility. A global strategy board ensures that new products match the overall vision.
How it works
Before reorganizing, Nokia was a $32 billion cell-phone monolith. That was great for driving volume, but the homogeneous approach overlooked smaller opportunities on the fringes. Now, Nokia says, each division acts like an incubator, where employees feel free to imagine new products or services taking root. Ideas flow faster, since employees have more opportunities for contact with customers, and an "essential market insights" group is tasked with steering customer insights toward product development.
Challenges
Nokia has lost market share to traditional rivals, and Asian manufacturers are storming the global market. While a recent pairing with Intel could boost Nokia's prospects, the big story is Microsoft and Motorola, an unholy alliance spelling trouble for the entire industry. -- LC
Fast take: Plantronics encourages engineers and designers to work independently of each other, creating prototypes that may never leave the lab. Tech jocks can go wild, freed from aesthetic or commercial obligations. Designers, unfettered by mundane limitations of technology, create prototypes that connect with consumer desires.
How it works
Plantronics asks consumers what they want -- a headset with a range of 500 feet? One that transforms into a stylish necklace? -- then works backward. "JFK sent people to the moon," says CEO Ken Kannappan. "He had a vision, even if he didn't know the challenges. Creating the vision provided a clear path and direction, defining problems that needed to be solved. In the same way, we look at headsets." Plantronics' innovations are taking the form of wireless headsets that work with VOIP; switch back and forth between your cell phone, work phone, and laptop; and, someday, will unlock your doors and start your car with voice commands.
Challenges
Plantronics is an analyst favorite, but rivals such as GN Netcom (which owns Jabra) are still very much in the headset game. Meanwhile, smaller companies like Aliph have proven that all it takes to crack the market is a great design. -- LC
Fast take: Polycom, maker of the ubiquitous SoundStation conference phone, a staple of deal-making bankers and lawyers, is itself expert at acquisitions that stoke its innovation pipeline. That's no small feat, since only half of all acquisitions add value to the purchasing company within three years.
How it works
A 2003 Harvard Business School case study of Polycom's merger and integration process found that for every acquisition the company carries out, 20 are rejected. Hans Schwarz, Polycom's senior vice president for technology, explains that any prospective deal faces two hurdles. First, the target company must be loaded with technical talent. Second, the acquisition must increase Polycom's bottom line within two quarters. Schwarz points to the 2001 purchase of Accord Networks, an Israeli videoconferencing company. Polycom quickly grafted the new products into its existing line while keeping Accord's executives engaged. As one Polycom executive put it in the HBS study, "It was like sliding a card into a slot."
Challenges
The big question, especially as it increasingly bumps up against bigger rivals such as Cisco and Avaya: Is Polycom itself a target for acquisition? "Yes, that's a possibility," Schwarz says, while maintaining that his company plans to stay independent. -- Ryan Underwood
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