IT-conglomerates: start innovating again please.

One of the drivers behind my ideas for setting up business around some promising new technology solutions is the current lack of innovation I see from the big IT-conglomerates. Analyze their press releases, key notes at user groups and the articles in the industry press: most of it is old wine in new barrels, or do you think that “Cloud” is a really new thing? I even start to miss an occasional new hype. Temporary silence, sign of the times or an industry finally getting mature?

I see three main reasons for the cooling down of innovation at the IT-conglomerates:

1. Too big
   Sheer size and the digesting of mergers and acquisitions are an obvious recipe for inward focus and a standstill of innovation. Keeping all blood groups aligned, all (extra) management layers satisfied and internal procedures compliant takes more than a working week gives you time for. The alibi of creating and “innovation laboratory” is not enough. Yes, it shows to the shareholders that an innovation budget is set. No, since there is no fostering of innovation by the business, most ideas die in isolation and the business value is at best coincidental.
2. The people
   I think most senior executives are too busy with maintaining growth, optimizing profit and shareholder value and sometimes forget to spend time and attention to innovation. We have seen good and bad examples but currently I miss a bit the Rowdy Yates‘ of the industry (for those a bit younger than me: the angry young cowboy from Rawhide, played by Clint Eastwood). They certainly had their darks sides but the people in range from Bill Gates to Shai Agassi, just to name two, did create new visions and did invest in new things. The current generation, with all due respect, is hampered by the corporate straightjacket.
3. The market
   Maybe IT is finally seen as becoming mature and we don‘t want too much innovation. The struggle organizations have to keep up with the upgrades of an ERP solution even once a year and the fact that investments in IT have to be amortized first before new things are allowed, are surely indicators the market is a bit tired. Also people start to question the real business value of huge investments in hypes like SOA and Web2.0 for their organizations, supported by the fact that alternatives arise from ever decreasing costs of computer power and life cycle extension options for legacy technology. Throw in a bit of recession and you have a nice cocktail called “Sit and Hide”.

In principle I see two ways out:

1. Accept it
   Look at the automotive world: what are the real innovations over the last few years? More safety maybe, not the fact that engines are “15% more efficient and cleaner” (whatever this means) and the myriad of gadgets we all love. The real shift will only be made by introducing an affordable, practical, clean, future proof electric car. Why takes this so long? Because it will dismantle and change not only the industry but a complete ecosystem of oil companies, service sector and tax authorities. You only do that if your current resources dry out and we our killing the planet in doing so. Maybe we must accept that to IT-industry is becoming mature enough that it can get away with a new model or facelift every few years.
2. Outflank it
   Ask yourselves first which business processes could be optimized. Then if this can be done (partly) using the current technology at hand. What is left are those processes that can really profit from innovation and deserve an investment to make it happen. Be sure there is a (small) company out there which can help you if you don‘t discriminate on size, years in business or references. These are risks worthwhile taking of it brings your organization at the head of the pack.

Do you think I‘m a bit cynical here? Do you see real innovation by the big conglomerates? Let me know.

hans.van.nes@results2match.com