Culture of Creativity, Brainstorming and Innovation

Why do two companies with the same type of product in the same industry turn out to be so different? Let me share with you an example that recently unfolded before our eyes.

Company #1 started in 1994 and was one of the pioneer companies in their field. They were wildly successful. They were heralded as a new breed of company after only few years in business. They crushed many of the other early entrants in their industry.

Company #2 started in 1998 as a company that was initially funded by a government grant to index books for public libraries. During the library project the founders noted that the most popular books were often frequently referenced in many other books. They designed an algorithm to index the references as well as the books. This allowed them to rank the popularity of the books in the library by how many references a book had in other books. This concept of relevance became a basis for a new technology for ranking all sorts of information. This new concept of ranking based on relevance vs. traditional methods of indexing changed how data could be found by ranking of relevance.

The companies continued to grow on different paths. One company seemed to become intoxicated with their early success and began to morph into more of a traditional company business model after other successful companies in related fields. They even hired a big time CEO from one of these traditional companies.

Company #2 focused on their new technology hiring the brightest people they could find, which was easy to do during the .com bubble popping in 2000-2002. Both companies survived the Internet bust but by taking vastly different paths.

Company #1 continued to grow but at a much slower rate. Company #1 allowed their employees to work one day a week on anything they found interesting. Out of this culture of creativity, brainstorming, originality and innovation comes huge new ideas as well as some real bombs.

Fast forward to 2008-2009.

The headlines read:

August of 2008 Yahoo (Company #1) turns down a $42B offer from Microsoft. Nine months later the founder/CEO is fired and a new CEO is hired to save the company. The stock plummets 80% from the time of the Microsoft offer shedding tens of billions of dollars of value. The new CEO strikes a deal with Microsoft for no money invested (down from $42B) but a partnership to join forces and share revenue in order to compete with Google on search.

Google (Company #2) continues to build market share and innovate and commands nearly 70% market share of the Internet search market. Google ranks as the company that took the shortest time to become a billion dollar company. In fact, in March of 2009 Google’s market capitalization of $108B surpassed GE’s (a 100 yr old company and considered the platinum standard for all blue chip companies).

Same business, different philosophy. It is amazing what the right vision, focus, attitude and bright people can do.

Although your company, or the company that you may build in the future, may not be a Google, you need to consider the lesson of these two companies...be staid and traditional or focus, innovative and create a culture for brainstorming and the expectation that everyone that you hire be optimistic and think outside of the box and then reward that behavior.