Is Microsoft innovating or playing catch-up?

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The WSJ asks Robert Scoble and Dave Winer to debate the question: “Is Microsoft an innovator?”

The resulting “debate” is more civil than the typical Digg or Slashdot rants on the same topic, but the conversation struggles with similar issues.

What’s innovation anyway? Are we talking about Microsoft Research or existing Microsoft products? Are we talking about competitors and how Microsoft stacks up against them? Are we talking about growth in new and rapidly growing markets or is innovation in well established product lines OK?

Don Dodge also points out that the words invention and innovation seem to be used interchangeably. (I’m not sure if I’d agree with his definition of innovation though. More on this in a minute.)

Trouble is, that for most of us we can’t describe innovation anyway–though we know it when we see it–eventually. Yes, innovation isn’t even something that may be immediately obvious. Innovation may be “too innovative”–so much so that most of us don’t pay attention to it for being too impractical. On the other end of the spectrum, if “innovation” comes too late, it’s equally uninspiring because the business growth prospects aren’t there.

In fact, I think that the big issue here is that people imply “growth” when they talk about innovation. That’s why people so often toss in stock prices and market growth when they talk about who’s more innovative. They aren’t talking about innovation in the strict engineering sense. Notice that with “growth” added to the definition, it’s a huge challenge for an existing, well-established company to be innovative. I think this is a bit of what Dave is getting at–and Don Dodge misses.

Back to Don’s definition of innovation:

“Innovation takes a collection of prior inventions to the next level by combining them with existing products or technologies, and producing a commercially viable product that solves a customer problem.”

The trouble with his definition is that I could easily replace the word “innovation” with the phrase “good engineering.” It’s almost like everything successful that an engineer does could be labelled as being innovative (although Don does qualify it as taking things to the “next level”). I don’t think that’s what most people mean by being innovative. When talking about innovation and Microsoft, people are often also talking about market growth. And this is where Microsoft has a business challenge ahead of itself. Is Microsoft predominantly in a phase where its processes protect its customer base and product line? Or does Microsoft still have the hunger to grow, to morph, to live off fumes of inspiration?

Actually, I think the answer to both of these questions is still yes. Microsoft still invents, innovates, and inspires. It’s just that the “well-established” side of Microsoft is so huge and so successful that it dwarfs how some people view what it’s doing. This doesn’t mean innovation doesn’t exist, nor is not extremely critical to Microsoft’s survival.

So let’s wrap this up with a hypothetical business question: Let’s say you want to do something “innovative.” Would you rather do it inside Microsoft or outside? If you’re looking for the greatest potential return, the safer bet is the riskier one, betting against and competing against Microsoft. Maybe the quest for the home run is why so many people are obsessed with whether Microsoft is “innovating.”