On August 2, 1985, as Delta flight 191 approached Dallas-Fort Worth airport, it was rocked by wind shear, causing the plane to crash. Aboard was Philip Estridge, the man who helped bring the IBM PC to market in record time. With Estridge went one of the boldest and most successful experiments ever attempted at intrapreneuring.
Soon after his death, IBM folded its famed Boca Raton, Florida-based PC facility back into the mother ship. Over time, Big Blue lost its engineering advantage to Compaq and a host of others, and the company is now a mere shadow of its former self in the PC market, where it once commanded the lion’s share of attention.
The fact that IBM even considered a separate, autonomous division to create a new product for a market in which it trailed badly was a miracle in itself. Most large corporations are loath to give any executive that type of freedom, for fear of stirring the politically motivated middle management masses.
Yet it’s that very autonomy that sets entrepreneurs apart from their larger, deep-pocketed brethren. The ability to make decisions quickly and act on instinct is something most Fortune 500 companies lack in spades.
Middle management, armed with Harvard Business School matrices and endless reports generated by so-called insight groups, is typically grid locked in political battles with other divisions to get their flawed, focus-group-research-imbued opinions heard.
Most development teams lack the ambition and bottom-line responsibility to really create “insanely great” products, as Steve Jobs puts it, and the result is a flood of me-too products that would have never seen the light of day if product management salaries, not only bonuses, were directly tied to product performance.
The market is rife with examples that show a complete disconnect with consumers. Software manufacturers heap on the features, despite a 25-year-old chorus of user pleas to keep things simple. Prestigious automobile manufacturers BMW and Mercedes-Benz bet their fortunes on massively complex navigational systems that have severely impacted their reliability ratings.
And with a primary selling point being resale value, both German auto makers have done untold damage to their reputation with gee-whiz features that, in BMW’s case, have made some models simply inoperable by normal human beings. Yet because they stand virtually alone at the top, particularly among those who consider Japanese luxury automobiles an unpalatable choice, their sales figures belie the trouble ahead.
To be sure, there are brilliant concepts that occasionally prove that each rule has its exceptions. Dutch Boy Paints revolutionized the paint business with its inventive plastic paint “can,” complete with pour spout and twist-off lid. But the idea was the province of one singularly feverish brain. And the designer’s consumer-friendly message was able to penetrate top management, which, in many instances, is a nigh impossible job.
Then there’s Campbell’s Soup at Hand, a brilliant concept that rides the trend of time compression, which dictates that any product that takes too long to fuzz over is doomed to failure.
And a 10-year-long battle cry of “traditional marketing is dead, long live ROI” — first uttered by P&G Chief Edward Artzt in 1994 — is finally starting to have an effect at the world’s largest marketer. Crest Whitestrips, Febreze, and Swiffer show that with sufficient “pummeling,” marketing and product management can get it right. But the energy required to stimulate corporate creativity could be put to better use.
Sony COO Ken Kutaragi was able to create Sony’s Playstation, largely independent of Sony, while leveraging the company’s legendary brand name marketing the videogame. Nintendo and Sega never recovered. Playstation is now responsible for virtually all of Sony’s net profit. Kutaragi’s new job, recasting Sony’s core consumer electronics business into a Playstation clone, has reportedly met with great resistance from Sony’s now-lethargic engineering management.
Early indications are that Kutaragi has succeeded in slowly correcting the course of a company once renowned for its innovation. Sony has thrown down the gauntlet by slashing list prices on its latest line of plasmas, removing that stubbornly inflated premium Sony products once used to command. Its new Qualia television interface also shows Sony is finally starting to embrace the busy consumer, adapting a PSX video game-like interface to help viewers navigate menus faster, a coup in a market where time is more valuable than money.
The reason that most business scholars can count large corporate successes on one, maybe two hands, is largely due to the absence of killer instinct at most large organizations. Recommendation: Rethink your internal process for innovation and create your own “Boca Raton.”
While there’s no guarantee that an autonomous division will succeed, there are a few factors that work in its favor. In this day and age of rapid product cycles, time-compressed consumers and super-busy executives, no product should take longer than a year to bring to market. Freeing your designers, engineers, and product managers from endless, unproductive corporate meetings, should shave at least three months from a typical 18-month cycle. And that’s a conservative estimate.
But the largest productivity boost will come from providing sizable incentives to your intrapreneurial team to feed their killer instinct and motivate them to succeed and win. Don’t let the memory of Philip Estridge go to waste. Reinvent your company today.