Innovation, Ellison, and YouThe death of innovation has been greatly exaggerated, but there's something to be said for knowing where innovation ends and commodity takes overThe Harvard Business Review (HBR) sometimes gets things spectacularly wrong. Remember when an article by two business school professors held Baan up as an example of how to do successful acquisitions in the technology arena (Saikat Chaudhuri and Behnam Tabrizi, "Capturing the Real Value in High-Tech Acquisitions." HBR, Sept.-Oct. 1999)? Even then, it was clear to those of us in the know that Baan, in its acquisition of Aurum Software, CAPS Logistics Inc., and other erstwhile companies, had little or no interest in integration. These acquisitions were, unfortunately, all about boosting Baan's stock price in order to fund other investments, despite what we read in HBR. Innovation and HBRSo I wasn't very surprised when HBR highlighted an article by Nicholas Carr that suggested that innovation in high tech was dead ("IT Doesn't Matter," May 2003). Those of us in the innovation business quickly jumped to the defense of our livelihoods: This isn't exactly the happy story we want to hear as we try to dig out of the worst slump since the evolution of high tech. Carr's thesis was simplistic, and therefore somewhat of an easy target: Technology is now infrastructure, and infrastructure doesn't impart competitive advantage any more than a new interstate highway makes for more competition between trucking companies. Carr is right, up to a point — the point at which new applications, built on top of noncompetitive infrastructure, add the innovation needed to be truly competitive. Your financial software may be more infrastructure than competitive differentiator, but that high-end order tracking and reconciliation system built on top of your receivables module may actually win some customers away from your competitors. Multiply that possibility by all the Web services, composite applications, and just plain new software still emerging from the primordial soup, and you've got a healthy argument in favor of innovation. The fact that Carr misses a huge segment of the software industry's raison d'etre is to be forgiven: HBR, as I said, sometimes gets thing spectacularly wrong. Innovation and Larry EllisonBefore I decamp smugly to the innovator's higher ground, I have to admit that Carr is partly right. And that part explains a lot of what I think Larry Ellison has been up to in the last few years — not to mention in the last few weeks of my writing this column with his power grab for PeopleSoft. Ellison has consistently downplayed the innovation card in high tech over the last two years, claiming that all the real innovation in software is over. Biotech, not high-tech, is the place you want to be, Ellison has said on numerous occasions. I always check the balance in my savings account before I try to argue with Ellison — there's something about the man's success that adds tremendous weight to his words. And in this case he's both right and wrong. Where he's wrong is in how easy it will be for biotech to provide an innovative sandbox to rival software's — the patents on development technologies in biotech are so restrictive that innovation isn't controlled by the free market or access to capital but by big corporations such as Monsanto and its patent lawyers. But Ellison is right about a key issue in the evolution of technology innovation, one that is fueling his merger-and-acquisition activities as it gives aid and comfort to HBR's beleaguered Mr. Carr.
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