April 13, 2012Doug Hadden
Doug Hadden, VP Products
The term “innovation” is overused by technology companies – particularly large enterprise software vendors. (I’ve written about the limits of innovation as companies dominate markets in Software Innovation: “The Witch is Dead” and ERP Innovation: Is that all there is?) It’s become cheesy. I had an interesting Twitter exchange with Ray Wang, the CEO of the Constellation Research Group about the nature of technology “innovation” these days which seems to be about acquiring companies:
@rwang0: so as I said last night.. today was a big #acquisition day. hope everyone got what they wanted & customers can rest peacefully #futureofwork
@freebalance: @rwang0 I acquired some cheese today, but didn’t write a press release on how I agreed to acquire the cheese. Next step: move the cheese.
@freebalance: @rwang0 also planning to acquire olives& pickles to package as cheese appliance & then call it #innovation to solve BigCheese problems
Mergers and Acquisitions = Innovation?
Don’t get me wrong – small companies who get acquire often have disruptive and innovative products. The process of acquiring companies is not particularly innovative. Companies are acquired to fill out a product footprint, acquire customers or move into new markets. What gets my goat is that the acquiring company, particularly in the enterprise software space, markets this packaging of acquired products as “innovation”.
The two largest enterprise software companies seem to be fighting a war of words about who is the most innovative for “big data”. In my mind, it seems to be an argument of whether packaging pickles and olives with cheese is more innovative than stuffing cheese into olives.(And then trying to tell us that we suffer from a big cheese problem – we’ll be no longer competitive with “little cheese”.)
What did these two companies do other than package:
- Business Intelligence software from acquired companies
- Database technology from acquired companies including use of open source SQL and NoSQL software
- Hardware to accelerate performance
I don’t have a problem with the notion that the appliances peddled by these companies ares applicable to many markets and will perform better than previous solutions. I don’t believe that this represents breakthrough innovation because:
- Almost all or all of the components were acquired
- Embedded databases have been around for a long time
- Database scaling has been somewhat perfected by commercial Web 2.0 and Cloud providers
- Hardware applications to accelerate software performance have been around for some time (and customers have often been forced to leverage hardware to overcome software inefficiencies)
One of these big ERP companies, after an acquisition overlapping with a current product offering committed to “selective innovations” with the now-to-be-obsolete product. Is that even possible? Like: “we’ll select inventing the wheel and the thermos but skip the internal combustion engine.”
Not to mention that the other big ERP firm has released software intended to aid integration among all the acquired software and are calling that “innovation”. That’s not innovation – that’s plumbing!
I’m not suggesting that packaging and integration is easy. It’s difficult stuff – almost the equivalent of the Apollo 13 oxygen solution – except that the parts are well-known with integration methods and there is no parts scarcity. There’s a time constraint, though: announce the product 6 months to 6 years before it’s really available.
Let’s make “Innovation” less cheesy
Technology vendors should sign up to an “innovation” in marketing code of conduct by using the following terms:
- Disruptive Innovation: when it is new, different, patentable (but not an alternative to a different way) that can shake up an industry
- Incremental Innovation: when significant improvements are made to an existing product that opens up new markets or inefficiencies by orders of magnitude
- Design Innovation: where an existing technology category is shaken up by something more effectively designed (like Apple innovation)
- Cleverness: when technology packaged or integrated in a different way (think sandwich rather than bread and cheese)
- Enhancement: when improvements to products were made