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| THE INNOVATION QUESTION | |
 June 8, 2000  |
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Both sides in the Microsoft antitrust case have claimed to be fighting on behalf of innovation in the fast-changing technology and information field.
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| What is innovation? | ||||||||||||||||||||
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MARGARET WARNER: Paul Saffo, is Microsoft innovative enough for you?
MARGARET WARNER: Rob Enderle, how do you see this question? Do you degree with Paul Saffo that there are two different kinds of innovation here maybe? ROB ENDERLE: Well, yes, absolutely. I mean, Microsoft has been very good about bringing technologies often developed by others to market. That's really their strength, they make, you know, millions of dollars on doing things that other companies that might appear to be more innovative haven't been able to do. But fundamentally here, it's business innovation is what we're talking about, the technology has come from others. MARGARET WARNER: And Jaron Lanier.
MARGARET WARNER: Well, what do you think, let's go to the question raised earlier. What constitutes innovation in this field? Mr. Lanier? JARON LANIER: Well, you know, there's almost a religion around innovation in Silicon Valley, and it's not just inventing a new device. It's really reimagining how relationships work between people, how people think, I mean, it's really quite remarkable, if you think about what's happened with computers. This hasn't been a bunch of inventors saying here's a better mousetrap. It's more like something saying how can I turn the mouse into my venture capitalist. People really radically rethink how to live life, and it's this incredible spirit of optimism that however much we think we understand, however good our lives might be, we can go still further. And that spirit is really what drives the whole enterprise.
PAUL KEDROSKY: I think at a 30,000 foot level it's a fine abstract
ideas of what innovation is. But in practice, I think that innovation
for businesses constitutes introducing new things that people will actually
buy. It's fine to have great gadgets hanging around the labs, but if
you are asking, you know, a company that has to satisfy shareholders
and analysts and everyone else, to introduce these kinds of starry-eyed
things, you're dreaming. I think the reality is that you're going to
see incremental innovations, small things. MARGARET WARNER: All right. Paul Saffo, weigh in on this, what is innovation in this field and what does it take for a company to be innovative and continue to be innovative? PAUL SAFFO: Well, it's a process of taking ideas and convincing a culture to use them. Jaron is absolutely right, and it's a very hard process. We're all fascinated by change, but in fact we hate change. In fact, Bill Gates is just like the rest of us in that regard because he's a man who really does fear change. It is, innovation is the process of swimming against the resistance to change, convincing us all to do things, and it's a very tough business. Keep in mind that in Silicon Valley, vastly more companies fail than succeed. |
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| How does size relate to innovation? | ||||||||||||||||||||
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MARGARET WARNER: And how do you think size affects a company's ability to innovate on an ongoing basis? PAUL SAFFO: Well, the process of innovation is really an ecology, where there are players of all different sizes. Small companies tend to be the ones who propose a new idea, and the large companies are the ones who dispose of it. The small companies bring in the new things, and then either the small company gets large and moves it outwards, or large companies adopt it and carry it forward. There's a role for companies large and small in this. MARGARET WARNER: But, Rob Enderle, are large companies better or less well equipped to continue to innovate?
MARGARET WARNER: Why is that? ROB ENDERLE: Well, primarily because the separation between the people doing the thinking and the conceptualizing and the people that are doing the activity that actually creates product and takes to it market, the advertising campaign, puts the money behind it and drives it through, there are two different kinds of people and somebody has got to kind of bridge that gap. And in a small company you get enough emphasis on actually at least bringing the concept to a product concept that it can then be sold to the guys in the large companies that can take them and actually make that into business plan. MARGARET WARNER: Jaron Lanier, weigh back in on this issue terms of size and maturity of a company.
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| Ferocious competitors running scared | ||||||||||||||||||||
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MARGARET WARNER: So Mr. Kedrosky, let's go back to Microsoft and the impact of this case, if the breakup happens, how do you think it will affect innovation, either by Microsoft or one of the two Microsoft's and the industry as a whole?
MARGARET WARNER: So you don't buy Microsoft's argument that the integration of these two sides of the company is what has made it possible for them to innovate, and actually in a practical way bring those innovations to market? PAUL KEDROSKY: No. In a financial sense I buy that. I understand one side of the business, well both sides have been highly profitable and let them do all kinds of things in terms of enhancing products and bringing new versions of products to market. But at the same time, I don't think that separating the two groups is going to change that. I think you are just going to have two groups with a slightly different focus who will still be competing as aggressively as they can and trying to win as much market share as they can in a fast changing marketplace. None of the things that are driving them really have changed. MARGARET WARNER: Rob Enderle, how do you see this?
MARGARET WARNER: Jaron Lanier, this sounds like a pretty rosy future.
MARGARET WARNER: So Paul Saffo, new wonderful growth, lean and mean?
MARGARET WARNER: All right, thank you all four gentlemen very much. |
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MARGARET
WARNER: Both sides in this antitrust case have claimed to be fighting
on behalf of innovation in the fast-changing technology and information
field. We look at the issue of where innovation comes from and who does
it best with Paul Saffo, director of the Institute for the Future, a
Silicon Valley technology think tank; Paul Kedrosky, a former Wall Street
analyst who teaches information technology and commerce at the University
of British Columbia; Rob Enderle, vice president of Desktop and Mobile
Technologies at Giga Information Group, an information technology advisory
company; and Jaron Lanier, a computer scientist, artist, and author.
PAUL
KEDROSKY: I would. And the tricky thing in all of this is trying to
tie anybody down and get them to answer the question of what exactly
constitutes being an innovative company. And I mean in the broadest
possible terms, being innovative simply means doing something new, introducing
a new product and new services, something that's new to the world. And
I think at that basic level we can all agree that Microsoft has done
that and done that many times. Where things get really thorny, though,
is in people trying to figure out whether or not the things that Microsoft
has introduced are new enough for them or constitute some kind of radical
change in the world and that's where all the debates start. 
PAUL
SAFFO: I couldn't disagree more with Paul. Microsoft is very innovative
on the business side, and Bill Gates may be one of the business geniuses
of this century. But technologically speaking, Microsoft has never been
anything more than a fast follower, that all of their major products
have become because of ideas of other people outside the company. 
JARON
LANIER: They're an embarrassment to the technology field. I mean, everyone
who invents technology thinks of them as a disaster in terms of innovation.
And in fact, if anything, if they had followed the law, if they were
not antitrust violators, they would have gotten nowhere. 
MARGARET
WARNER: Paul Kedrofsky, would you define innovation in that cosmic sense,
in terms of, putting Microsoft aside, in terms of this field? 
We're
not going to see Microsoft introduce a new light bulb, but we are going
to see Microsoft introduce on- the-fly spell checking. We can quibble
about whether or not that constitutes innovation. And, you know, innovation
is very much on that level in the eye of the beholder. But this is the
difference between being a commercial company, doing applied research,
stuff that has to get sold on the marketplace and bought on the marketplace,
and someone else who is doing basic research that maybe some day some
how will be useful for someone. 
ROB
ENDERLE: Well, generally a large company, as it grows, builds up a lot
of people that get good at saying no. By saying no, you really never
are proven wrong because the product never comes out, never goes to
market, it never fails in the market, and so large companies have a
great deal of difficulty taking a concept that is just a concept and
deriving it into a product. They can see a concept that somebody else
has actually created into a product and say hey, that could be successful,
and because of that, drive that through. Buy the product, buy the company
and make that happen. An example would be the strongest labs doing research
in large companies; that's Lucent and I.B.M. However, much of what they
develop never makes it out of the labs and actually to market. 
JARON
LANIER: Well, the cliché is that the tiny startup company is
the one with the new ideas. But I have to say that some of the large
companies have really shown that they can also come up with new ideas.
And a great recent example is Sun and Java. Now Java is a special computer
language that lets programs exist on the Internet that are as powerful
as used to exist only on individual computers. Sun created it, brought
it out. I think one of the problems with Microsoft is actually that
Microsoft essentially stifled its adoption by the world, but nonetheless
there's a very dramatic example of a large company playing the innovation
game. I think most of the dramatic new ideas come from little companies
that then grow big.