It's interesting to me to think about the challenges of innovation within any organization, in particular a profit seaking enterprise. While small companies have the potential to innovate by virtue of their size and large companies have the ability to put capital directly towards formalized innovation strategies, there's a gap in the middle where it is a bit harder to drive change. If you have a small number of people, trusting that team to do what is best for the organization is really driven by hiring decisions. If you are large, you can set up a R&D function or implement corporate-wide processes for identifying and fostering valuable ideas. If you are in the middle, you lose a little control over who gets hired (not that you don't try to get the best people possible). Mid-size companies also don't typically have the capital available for dedicated research activities.
CIO Magazine recently published an interview with Tony Scott, the CIO of Microsoft, in which he talks briefly about their innovation strategy. Two interesting things to note: first, Tony makes a point that Microsoft tries to foster a culture of innovation, but at the same time it is important to remember that the company also spends large sums of cash every year running Microsoft Research. While there are certainly some skeptics that believe that Microsoft has become too large (for some time now) to really innovate and that they have only really driven major changes to their product set through aquisition activity, but I think that we might just be asking for too much from one organization. Sure, they are going to do things that are in line with what other market players are doing... but I really do like their Live Mesh platform strategy.
To me, the real question is how do you drive innovation without large budgets or small teams. Thoughts?
