The Innovation Not-so-crisis, Part II

Kevin Maney writes: People who actually work in the tech industry don't seem to agree with a new book by former Cisco CTO Judy Estrin, Closing the Innovation Gap, which concludes that "we have a national innovation deficit." I solicited responses from some high-level tech folks. Last week, I posted two, from Zach Nelson, CEO of NetSuite, and David Sifry, co-founder of Technorati.

Today, we have one from Paul Wiefels, managing director of The Chasm Group in San Bruno, Calif. From Paul:

With all due respect to Ms. Estrin and her inestimable accomplishments, her argument seems a bit one-dimensional (though I have obviously not read her book).  If you equate "innovation" with the activity and results of technical R&D, then I suppose it could be true that maybe we're not "inventing" gadgets, widgets, software and all manner of stuff as we did before.  For example, if you consider the software sector of the IT world, there's a helluva lot of processes that have already been automated--the fundamental purpose of software.  Now you see big companies like Oracle, SAP and the like acquiring other large software companies as a way of adding to their customer base by combining/extending applications.  I would argue that in this sector notably, there is not the level of native innovation that there used to be--largely driven by customers themselves--who don't want to go through the whole exercise again.

On the other hand, if you consider SaaS, Web 2.0+, SOA and other currently smaller segments of the industry, you see lots of innovation.  What's not clear in all cases however is how these innovations are monetized for both customers and investors. 

Citing the idea that the underlying technology in an iPod (I assume she is referring to flash memory and hard drives) was invented decades ago thereby making the iPod "less innovative" puzzles me.  I would stipulate that Detroit is in real trouble because they have not successfully innovated their way past the gasoline internal combustion engine.  (They bring a "Detroit" mentality to all that they do.  Witness the graft/host disease that developed during the ill-fated Chrysler and Daimler-Benz merger.)  On the other hand, I'm quite happy to drive European Fords and GM products when I travel.  And Toyota is hitting on all cylinders (bad pun intended). 

Cisco acquires companies that have innovative technology for 3 fundamental reasons:  1) they're buying fast time to market; 2) they're taking a potentially disruptive competitor out; 3) they're getting a solution that has previously stumped them.  To me, that's an innovative way of thinking about one's business.  Compared to Alcatel-Lucent or Nortel, shareholders seem to agree.

As for venture community, their business is taking risks albeit with other people's money.  The not so secret secret in the venture world is that most of their investments fail outright or fail to produce the results touted to investors.  But the ones that do succeed typically are HUGE.

I'm concerned about the country too but it's because I see a growing population that will either not be able to use, understand, or afford all the innovations that we and rest of the world can think of.  That's a problem of demand not supply.