Microsoft is buying, subject to regulatory approval, Activision Blizzard for $69 billion. The Internet of Things is white hot and should remain so.
If you want to whistle that huge amount for a company that makes games, you might have to add many octaves to the known musical scale.
Yes, high technology chases anecdotes. The imperative at work here is that if you don’t release your latest game, someone else will. The entry threshold is low and the rewards are astronomical.
If you talk about innovation and creativity, you are talking about the Internet. This means that whole sections of society are not progressing as fast as they could and should. There is asymmetry.
The internet firmament is not driven by market demand, but by a business dynamic that exists in the world of internet entrepreneurship: innovate and create because the internet can create great wealth – and take it away too.
Most non-internet companies – and I talk to quite a few CEOs – say they’re innovative and innovation-driven, but, in fact, they’re not. Most companies don’t need to innovate like the internet giants do. The metaverse is obviously an unstable place.
Most companies seek stability, a plateau where they can manage what has been created by adding to it carefully, often through acquisition. They confuse innovation with evolutionary improvement. The last thing they want is the kind of destructive innovation that characterizes Silicon Valley.
The feverish need to innovate in the world of the Internet is specific to this world. This is because Internet companies are all on a dangerous slope; failure can come as quickly as success. Do you remember MySpace, Nokia, Palm and Wang?
The Internet is global and inherently pro-monopoly. In the internet world, the first-past-the-post system wins the prize money – all of it.
When you have market caps that value a company at $1 trillion, and it all depends on the next innovation not passing you by, you’re going to invest money and talent in innovation because the alternative is known. Whenever possible, you will buy out your competitors, hence the purchase of Microsoft.
With all the money, all the glamour, all the talent, there’s also the fear that some kid in a garage somewhere is inventing the next big thing.
I argue that for the non-internet world, the business dynamics are very different. Most public company CEOs, snug in their C-suites and supported by huge salaries, are looking for a quiet place; a plateau where profits are progressing but there is a certain commercial serenity. For example, Boeing doesn’t want new airframes, it wants improved models.
They won’t admit it, but many companies aspire to be rent takers (collectively called rentiers). They want a stable income with little risk.
Unfortunately, corporate culture, including that engendered in business schools, aims to channel ambition into the rent taking model. We have a corporate culture where ambition is channeled into rising to the top of the established order, not creating a new order.
There are plenty of great minds running established businesses, often established decades earlier, but few who aspire to create something completely new.
The big names in management are many, but the big names in true innovation are few. Almost always, they have to break with the established to create something new, to change the world.
My friend Morgan O’Brien, the co-creator of Nextel, and now the executive chairman of pioneering wireless company Anterix is that kind of innovator who saw new horizons and embarked on their journey.
Today’s standout inventor is Elon Musk. He started as an internet whiz with PayPal and blazed a trail of innovation like no one since Thomas Edison more than a century earlier. He changed the underworld with new subway concepts, changed surface transportation by going electric, and changed space with his rockets.
Thirty years ago, I wrote that the weakness of American corporations is that they are content to make silent films when walkie-talkies were invented. Today, established automakers are determined to manufacture electric pickup trucks now that new entrepreneurs are in the truck market with electric trucks. They never wanted to abandon the internal combustion engine, just improve it a little at a time.
If the dynamics of the Internet and its constant innovation are lacking in most American companies, it must be grafted onto corporate policy. Should the Internet be the source of all major innovation? Carpooling and additive manufacturing (3D printing) are all computer driven – the software at work.
The challenge for the corporate culture is to capture ambition – it never fails – and direct it not towards the greasy pole of promotion, but towards the firmament of innovation.