A question to ponder: should big companies even try to innovate internally?
I just read an article on news.com interviewing Caterina, talking about her quest to create an innovation incubator within Yahoo.
Now let me first say that I know Caterina and Stewart, not as well as I'd like to, but what I do know is that they are both awesome people. The job Caterina has been tasked with is an incredibly hard one. For some reason or another, the larger a company gets, the harder it tends to be for innovation to happen there.
Certainly, I have no doubt that there are talented people at Yahoo who, given the right environment, have the ability to be extremely innovative. Despite Yahoo's reputation, I've met a lot of people there like Bradley Horowitz that I have been impressed by, people that do seem to "get it". However, my question is this: Should a company the size of Yahoo even be trying to innovate internally, or would it be better off taking the strategy of aggressively acquiring innovative companies early?
My thinking is this... most ideas fail. Rather than investing time and money into 100 failing ideas just to find 10 that work, isn't it better for Yahoo to let entrepreneurs start 10,000 startups, and just buy the 10 that work? Sure they will be more expensive than if they built them in house, but they'd also save money from not building the 9,990 failed ideas. Also, my guess is that an employee of a large company is not as likely to go through the same levels of pain and hard work that an entrepreneur would be. Most people just don't want to work as hard for someone else, and who can blame them?
Even though Yahoo has grown into the entity it is today by virtue of building innovative products, perhaps its future growth path should be driven by its ability to SPOT innovation, not create it. I'm not quite sure what my answer to this question is, it was just a passing thought and I'd need to think some more about it. Would be interested to hear what other's think.