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Watt’s Technology
Microsoft tries Orchestrated Freedom
and unleashes an innovation army
By Gavin Chait
Microsoft is due to release its hope for recovering credibility in
the smartphone market. Windows Phone 7 will have a tough
job. Apple’s iPhone is the benchmark for style and sophistication.
Google’s Droid phones are now widely distributed and have overtaken
US sales of the iPhone.
The critical factor for many in buying a smartphone is now the
availability of applications to run on this poly-communication and
entertainment device. Apple’s 100 million iPhone owners have made
five billion downloads of some 200 000 different applications.
That disguises a lot of asymmetry. The top 10 percent of paid applications
dominate and have made most of the $1.5 billion spent on
such software. The most popular are established games companies
like Electronic Arts and Activision, as well as a few independent
developers. Many of the independents—like Tapulous, producers of
Tap Tap Revenge, now owned by Disney—are being bought out by
the majors.
Microsoft has taken advantage of this consolidation by paying the
most popular developers to port their software across to Windows
Phone 7. Microsoft is now going further. The company’s 90 000 employees
will each be receiving a new Windows Phone 7, and a little
extra. Employees at most companies are subject to strict anti-moonlighting
provisions. Anything you develop while an employee becomes
the property of the company you work for. Unsurprisingly, this tends
to limit innovation.
Faced with the choice of receiving no benefit from a potentially
lucrative idea, or having to quit a secure job in order to develop
it further, most people opt to stay put and do nothing. Great ideas
never happen because employees are unwilling to part with them
unless rewarded.
Microsoft has now opened the floodgates. Any employee who creates
applications for the new phone will keep all the benefits of that
creation. Microsoft doesn’t want any part of it. This is a long-awaited
innovation: orchestrated freedom.
Companies are permanently in search of innovation and ways in
which to motivate their staff to spur such creativity. At the same
time they encumber their employees in a drowning morass of redtape
that stifles their freedom. Corporate ambition is channelled
upwards into fulfilling mandatory targets that can result in career
advancement. Pay increases come from climbing the corporate ladder
to higher positions of authority, not from innovation.
A person who identifies a way to increase the efficiency of a work
process for everyone gets little by way of compensation. A person
who regularly over-achieves his/her personal delivery targets—no
matter how inefficiently—can get a performance bonus and a promotion.
Many companies have attempted to stimulate innovation through
skunk works or permitted bootlegging. Permitted bootlegging is research
time where technical staff are allowed to spend a certain
amount of their time working on ‘pet-projects’ in the hope that, some
day, there is some return for the company. Skunk works are a little
different, being a group within an organisation given a high degree
of autonomy and unhampered by bureaucracy, tasked with working
on advanced or secret projects. Skunk works are funded, permitted
bootleggers are not.
The famous examples of bootlegging include Post-it Notes, where
Art Fry created the ubiquitous yellow note-pads after being introduced
to a low-tack, reusable adhesive developed by his colleague,
Dr Spencer Silver, a chemist at 3M.
The most famous current proponent of bootlegging is Google,
which has set aside 20 percent of its employees time for ‘Innovation
Time Off’. However, such promotion must be aligned with employees
needs if it is to be successful.
In 2001 Shuji Nakamura famously sued Nichia Corp for two billion
yen. His patent for the blue LED, which consumes less energy
than regular light bulbs, helps rake in over 50 billion yen a year in
revenue for Nichia Corp, where Nakamura worked for 20 years. But
Nakamura only received 20 000 yen for each of the dozens of patents
on inventions he developed at Nichia. He quit in 1999 and took
a job with the Materials Department at the University of California,
Santa Barbara. He ultimately received compensation of 840 million
yen (approximately $9 million) in 2005.
In the Harvard Business Review, Chris Trimble of the Tuck School
of Business takes issue even with Google’s much hyped endeavours.
“It sounds expensive. Very expensive. For sake of argument, let's say
60 percent of the cost structure in your organisation goes to salary
and benefits. If you were to allocate 20 percent of each person's
time for innovation, it would immediately cut 12 points from your
margins. Twelve points! Even if you cut it down by extending the 20
percent policy only to a subset of employees, those are huge numbers.
Could it be worth it Will the investment pay off in the long run”
Google claims the fruit of its innovation programmes are Gmail,
Google News, Orkut and AdSense. Orkut is a failure, Gmail and News
don’t do anything for their revenues, and the entirety of Google’s
income depends on AdSense. Given that Google has 23 000 employ-
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