What innovative tech companies do that others don't

21 September 2023

Tech companies can be a great source of inspiration for non-tech companies trying to be more innovative.

There are many well-known examples of tech companies with a proven track record of innovation:

Apple (iTunes, iPhone, AirPods, Apple Silicon, AirTags)
Amazon (AWS, Kindle)
Microsoft (Windows, Xbox, Azure, GitHub acquisition)
Google (Google Search, Google Ads, Gmail, Google Maps, YouTube, Android)
Tesla (disrupted the automotive industry with batteries, AI, and smart manufacturing)
SpaceX (disrupted the space industry with reusable rockets)
Netflix (disrupted the DVD renting industry)
Nvidia (GPU, gaming, supercomputing, AI)
OpenAI (ChatGPT of course)
Stripe (online payment)
Sonos (disrupted Hi-Fi industry with connected speakers)

What can we learn from them? Let’s try to identify the best practices shared by most of these companies.

Their top management includes at least 1 or 2 members with a role and background focused on technology and innovation.
They have a story about their next big step. For example, Microsoft next big step was the cloud, and now it’s AI. That story is what drives high valuation multiples, motivates employees, attracts talents, and keeps customers excited.
They decide and move fast. For example, six weeks prior to the iPhone’s release, Apple replaced the plastic screen with glass (source Wikipedia).

They invest simultaneously in short and long innovation cycles. For example, short is next iPhone, long is Apple Silicon.
To grow through innovation, they think big and maximize upsides more than they minimize downsides.
They see experimentation as a key to innovation, but only on big bets — “dreamy” ideas that “customers love, could become very large businesses, generate very strong returns, and have a decent change of enduring” — to not degenerate into running many small experiments on small bets (source HBR).
They combine internal innovation and open innovation, reinforcing each other. For example, the iPhone became possible thanks to multi-touch touch screens.

Teams are focused and dedicated to a product. They don’t context switch between different products.
Teams are empowered with ownership and autonomy. The expectation is to solve problems that the business and/or the customer has, not to complete assigned work.
Teams are customer obsessed.
Teams are composed of cross-functional team members.
Teams have product managers, not project managers.
Teams show progress through demos, not slides.

They invest in attracting, hiring, developing, and retaining the best talents they can.
They promote a career track for “individual contributors” like engineers and designers, acknowledging and rewarding their contribution, without pushing them to the management track. For example: senior engineer (equivalent of manager), staff engineer (senior manager), principal engineer (director), senior principal engineer (senior director), distinguished engineer (VP).
Engineers communicate and share publicly with engineers from other companies, via blogs, conferences, meetups, open source projects, social networks like Twitter, discussion forums like Reddit and Hacker News, etc.

Collaborators can choose to work on Windows, Mac, or Linux (and they can get the hardware they need for their role).
IT is acting more as an enabler than a gatekeeper.