Innovation - Why The Dinosaurs Need The Pirates

By Author: Larry Tang
Total Articles: 512
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Recently I read an interview on Larry Page; co-founder of Google, and most of his answers were simply brilliant. Larry Page - http://money.cnn.com/2008/04/29/magazines/fortune/larry_page_change_the_world.fortune/index2.htm.

He speaks a lot about Innovation and the why there needs to be more risk taking behavior in technology. Risk taking was what leaded to all the great inventions of the last century and it is needed to drive us into the future. Here are two examples of innovation which were brought on by non-traditional means that have changed the way we view the world;

"When Thomas Edison invented the phonographic record player, musicians branded him a pirate who was out to steal their work and destroy the live music business. That opinion prevailed until a system was established so everyone could be paid for royalties; a system that formed the backbone of the recording industry and which is still in place today.

Edison, in turn, went on to invent filmmaking and demanded a licensing fee from those making movies with his technology. This caused a band of film-making pirates including a man named ...
... William to flee New York for the Wild West at the time, where they thrived unlicensed until Edison's patents expired. These pirates continue to operate there, albeit legally now, in the town they founded: Hollywood. What's William's last name? Fox. (Fox Film Corporation)."

- Excerpt from http://music.guardian.co.uk/pop/story/0,,2278736,00.html

"Pirates brought pop music to the UK In the 1950s - despite the best efforts of Elvis - there wasn't much to listen to on UK radio besides the shipping forecast. The radio waves were seen as being far too powerful to be turned over to the people so there were no commercial stations. Instead, the radio was used for broadcasting news and education by the BBC, with only Pick of the Pops on the Light Programme catering for pop fans. That all changed when European pirate radio ships like Radio Mercur took to the seas in the late 1950s, broadcasting Rock'N'Roll to Europe from huge radio masts attached to old fishing and military boats anchored in waters outside state jurisdiction. The pirate sector exploded in the Beatles-fuelled pop boom of the 1960s when Radio London and Radio Caroline, along with other, smaller stations, raised their masts, making a ton of ad revenue in the process. These new stations reached millions of people across Europe; people who liked being able to listen to free Rock'N'Roll on their radios. European governments realized this was a battle they couldn't win - there was too much support for what the pirates were doing - and that they couldn't close them down without offering an alternative. So they did the only thing they could; they decided to co-opt them. Commercial radio soon became legal all over the continent and many of the pirates were able to go legit and set up on land. In the UK, the BBC hired DJs from Radio London (such as Tony Blackburn and John Peel) and created their own imitation which they called Radio 1. Rock'N'Roll radio was here to stay."
- Excerpt from http://music.guardian.co.uk/pop/story/0,,2278736,00.html

Those two examples show how "Pirates" innovated and helped an industry evolve into a more profitable future business. The main point is that innovation, 95% of the time, comes from unconventional means. It requires thinking outside the box. That's what Google does.

In the article mentioned Page talks about Google's 70%,20%,10% splitting of resources. They use 70% of their resources for the core-business, and 20% to projects adjacent to the core-business and the remaining 10% go to unrelated projects. He mentions that all the innovations and projects like Gmail, Google Doc have come from the 10% that is unrelated to their core-business but has allowed them to strengthen their reach. They eventually become adjacent to their core-business and continue to give Google the brand strength they have. Page admits that it's very hard for them to even get the 10% of resources to new outside projects because they have a hard time explaining it to stockholders who are only after ROI ASAP. Even when the 10% creates a new branch of revenue stream, stockholders will be weary of venturing further. Fear grips them and it grips all of us. But that still doesn't stop Google from innovating.

"Google proposes an almost joyous antidote to mediocrity, a model for smart innovation in challenging times."
- Excerpt from http://www.fastcompany.com/magazine/69/google.html

"How does Google keep innovating?
One big factor is the company's willingness to fail. Google engineers are free to experiment with new features and new services and free to do so in public. The company frequently posts early versions of new features on the site and waits for its users to react. "We can't predict exactly what will happen," says senior engineer Nelson Minar."

- Excerpt from http://www.fastcompany.com/magazine/69/google.html?page=0%2C7

Why Does Google Keep Innovating?
Interesting enough, it keeps innovating out the fear that two guys in a garage are going to build the eventual Google Destroyer. That's how most of the big companies start, that's the reason when The Orion Patent for a new way to search was created, Google went to war with other search engines to buy that patent. Otherwise they would become the dinosaur IBM of this generation.

If a company simply stays on top of the industry, stays in tune with the newest and latest technology, they will be able to join trends and potentially partner up, if not buy out the new innovative competition. However this is easier said than done.

Innovation can create problems in established industries. The RIAA for example is fighting pirates/innovators that would have their music products become free. This is our generation's Rock'N'Roll Pirate on ships at sea battle.
"By short-circuiting conventional channels and red tape, pirates can deliver new materials, formats, and business models to audiences who want them. Canal Street moves faster than Wall Street. Piracy transforms the markets it operates in, changing the way distribution works and forcing companies to be more competitive and innovative. Pirates don't just defend the public domain from corporate control; they also force big business and government to deliver what we want, when we want it. It's an argument worth considering. Would we have iTunes, eMusic, Amie Street, and the Amazon digital music store without the pressure brought by the pirates? It's hard to say definitively, but piracy has certainly given the entire digital download experiment a sense of urgency. Recall the earliest, label-controlled experiments like PressPlay and MusicNet... and shudder. How much innovation would the labels have allowed in the music space without the pressure of KaZaA, Gnutella, and especially the original Napster?

- Excerpt from The Pirate's Dilemma: How Youth Culture is Reinventing Capitalism - http://arstechnica.com/articles/culture/book-review-2008-05.ars/1

Readers might ask why I am closely tying Google to pirates/innovators. Everyone in the programming world knows that Google in fact was a pirate ship; like Apple was/is (Apple did have a pirate flag literally flying outside their main headquarters in the beginning days). It used open source programs and information to create a search engine with a simplified revenue ad model. Then they innovated it to the point where it created a brand loyalty and became one of the most powerful service companies of the world.

Just like William Fox did for Film and Hollywood, The founders of Google did the exact same thing for the Internet. The end result in both cases created a better solution for the good of mankind. People who think outside the box are able to create an audience that wants its services. Toyota is doing that for the auto industry with higher gas mileage cars, Apple did it for the desktop, Karl Benz did it for the modern automobile and Thomas Edison; well what didn't he invent?

What does all this have to do you with your business or company? A LOT!

Some of the most respected and profitable companies in the world know the benefits of innovation, using non-conventional means, watching trends and new emerging technologies. Without it, they could not move forward and continue to be profitable.

Unfortunately the truth is that most people fear any change. It can stop them dead in the tracks. So companies get stuck in a rut of doing the same processes, the same marketing, the same advertising and become stale. Then one day a new kid on the block comes along with some innovating new features, pirated process and starts taking market shares away. Now the stale company has to hurry up and innovate or be left in the dust by the new competition. That's the story the phonebook companies were facing when the Internet came along, and countless other stale companies.

The only way we can innovate is by thinking outside the box and at times, outside the accepted rules.