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Henry Ford was wrong…


Large IT and telecom companies are starting to get in trouble because they can’t keep up with the pace of innovation. Nokia lost out for missing the smartphone revolution. EMC/VMWare, Dell, HP, Vodafone, Sony, etc. are in danger of not keeping up. Why is it that large well managed companies go under? Christensen’s innovator dilemma explains that disruptive innovation is one of the causes. However there is no longer one specific innovation that these companies aren’t following. There seems to be an innovation tsunami going on at this moment: cloud, big data, IoT, bit coins, mobile, machine learning, 3d printing, Bluetooth, NFC, Arduino, super computers the size of credit cards a.k.a. micro-servers, etc. It feels like an army of innovators from 2100 have been transported to 2015. Big companies seem like native indians defending their land against armies with tanks, drones, machine guns, etc.

However what happens if we look deeper inside big companies and compare them to successful dotcoms? There is a striking difference in how both bring products to market. In small dotcoms designers, product managers, developers, BD/sales experts, marketing experts, business experts and domain knowledge experts are allowed to work together and to bring their skills together. In large organizations everything is structured around functions, i.e. marketing, sales, R&D, etc. Between each department there is a queue. Often glorified in some nice process to request something from the other departments. How many large companies can have a firewall port opened in less than two days at a request from marketing? Look at dotcoms and Google and co! They put new changes in production every day, hour, minute and even second. They can’t live with two days to open a firewall port. Why do companies belief that hiring an army of middle managers putting ridiculous processes in place is productive?
Does it actually work? Henry Ford told the world that specialists, put in production lines, are the most optimized way of working. We have been believing it ever since. However anybody that followed a training on lean will know that folding paper planes is faster if each person focuses on their plane than if they each specialise in one step. Toyota designed the Lexus by bringing experts from different parts of the company into one team. Amazon has pizza teams that are end to end responsible for a cloud service and get split when they can’t eat from two pizzas any more. It is time to restructure companies around bringing innovative products to market, growing market share and milking cash cows. No longer is there room for R&D, sales, finance, legal, etc. to hide behind obsolete processes. We need to see more innovation in large companies. We need multinational innovators or multivators. Lots of large companies are in danger of becoming obsolete. Only those IT companies that have consistently created internal competition and have known when to sell obsolete businesses have survived different innovation waves. Just compare IBM vs. HP. IBM sold its x86 server business, while it still could, in a clear signal to its employees that they better come up with some other innovation to fill the revenue gap. HP on the other hand keeps on milking their printer ink and x86 server business without a clear substitute on the horizon. Digital was bought by Compaq, Compaq by HP. Who is going to buy HP? Unless some Chinese IT vendor is still hungry, HP would do better in creating small tiger teams to find new revenue streams quickly…

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