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Foxes and Rabbits 24 April 06 For Comments, go here. Are innovation activities dangerous and distracting for many large companies? An executive in a large technology company expressed this perspective in responding to a previous update on innovation governance.
He sees the corporate world in terms of foxes and rabbits. Foxes are large corporations, who grow by hunting rabbits, the smaller companies that have innovated. He explained:
Think about rabbits and foxes. Foxes hunt rabbits and rabbits eat vegetables. Foxes don’t have the stomach to eat vegetables. …
The same thing applies to corporations. Some corporations are like foxes, they eat companies that live on innovation.
Some companies don’t have the stomach to innovate … In general, large corporations get serious indigestion when trying to innovate. If they spend too much effort innovating and stop paying attention to their larger predators (Wall Street), they will be prey.
The small corporations, like rabbits, have a fast life. Live quick, reproduce in high numbers. Die in large numbers.
Most of the rabbits (fast clock-speed organisms), are simply digested and assimilated into larger corporations [via acquisition]… .
This comment colorfully describes an approach to corporate innovation based on acquisition rather than development. According to this view, large companies don’t need to develop innovative capabilities themselves – they can buy the products of other innovative companies and then use the large-scale assets that they have (like distribution channels) to gain the returns from innovation and justify the high prices they pay for buying innovation.
There have been a number of research findings and product announcements that provide support for some aspects of this view:
These examples and findings demonstrate two things:
· Large corporations can bring scale advantages to product and service innovation. A company like Nektar Therapeutics benefits greatly from using the sales and distribution assets that Pfizer already has in place.
· The traditional source of innovation in large corporations, R&D, is becoming eclipsed by other innovation providers, such as collaborators, employees, and customers.
One thing they don’t show is that innovation itself leads to corporate “indigestion.” In fact, companies like Pfizer are pursuing both “rabbit” and “fox” approaches to innovation – at the same time that Pfizer is licensing in new products, it is also the second largest R&D spender in the world, according to Booz Allen Hamilton.
It’s quite evident, however, that innovation efforts at most large companies are performing well below expectations. In survey after survey, the majority of CEOs around the world express frustration and dis-satisfaction with the results of their company’s innovation efforts.
This may by one of the sources for the “rabbits and foxes” view of the innovation world. There is an understandable temptation to explain the history of poor innovation performance as a function of size or of the general nature of a large corporate environment.
But that explanation is inaccurate. As a range of large innovative companies, from Toyota to IBM to Starbucks, demonstrate, this perspective does not apply as a generalization. Rather than leaving innovation to the smaller rabbits of the world, there’s a major opportunity for many large companies in improving their own innovation performance.
More Information:
Very interesting. Glad you noted Toyota. The rabbit-fox thing is very Anglo culture bound. As we get global, the core innovation question is "what is a company?" That helps us see where innovation really comes from - it is almost never contained within the walls of a "company". Americans have a very single-company view. Most global business is not conducted this way (see Prahalad - Pyramid. See the communist-capitalism in China. See keiretsu. See kaebal. See social laws in Europe. etc.) Innovation is clearly a social process first, and then later a commercial process. Commercial activity is much smaller than social activity. Most unproductive R&D is really overhead spending - not experimentation. See Thomas Edison v. GE. See changes in Cisco in 2001. See Microsoft and Intel failed introductions of new products not on core. Americans still have a mental picture of "business" as separate from "society". When in truth business is simply one of the many manifestations of social behavior. Toyota sees this clearly. Microsoft and GM do not. Innovation is unbounded. Companies are artificial fences of the mind.
At risk of taking the parable too far…
The evolution should be… 1. Rabbits that either stay nimble and move faster than any predator 2. Rabbits that learn how to be large and still stay away from predators (Wall Street’s impatience) 3. Foxes that make rabbit farms (still a nomad culture, that erodes the land and moves on) 4. Dogs (not foxes) that efficiently eat vegetables and rabbits (Toyota, Starbucks, IBM) 5. Alligators that live 10x more than foxes and 100x more than Rabbits
Finally, I agree with you. My explanation is only ‘descriptive’ and not ‘prescriptive’. That the world is fatalistically the way it is does not mean we should remain passive. Each ones has an evolution path… - Gen2 Rabbits - Dogs, omnivorous - Foxes with farms - Alligators fearless king of the swamp
So it will be the survival of the fittest.
All of which, only explains evolution; as much as Darwin only explains the transformation of the species and not the creation of a new species. This whole fable does not explain innovation in itself.
I believe that the central most important problem of innovation is a kernel and has to be studied with big words, such as ontology, psychology, genesis, genius. Howard Gardner, from Harvard http://www.pz.harvard.edu/PIs/HG.htm describes the ‘smarts’. I think he missed one, which is precisely innovation/creativity/disruption. Some people have it and some others just don’t. It is orthogonal to the other smarts. You may want to talk to Howard about that.
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