Innovation: Craig Mundie, head of research for Microsoft on how his company approaches innovation

Craig Mundie, chief research and strategy officer for Microsoft.

It’s been fashionable for years to knock Microsoft for not being hip, cutting edge, innovative. etc. Choose your dart. The folks at the Redmond company have heard it all. Google gets all the buzz these days when it comes to innovation and reinventing products.

But, of course, the picture is more complex. In its most recent fiscal year, Microsoft spent $8.2 billion on research. That sum makes it one of the largest research organizations in the world.

Earlier this month, the man who runs Microsoft’s research, Craig Mundie, went on a tour of colleges for a week and spent a day at the University of California at Berkeley. I heard him speak to a gathering of faculty, researchers and students for about an hour. And I got to spend about 30 minutes interviewing him later in the day.

As part of that longer conversation, I asked Mundie about how a comany like Microsoft, which a lot of big legacy products that it’s trying to protect, approaches innovation. I’ve pasted his response below. Also, I’ve uploaded a clip from the interview in the podcast player on the left.

Here are Mundie’s remarks:

“I think there are several different components for retaining that capacity in a company. One part that Bill had the foresite to do, and that I’ve always supported is to have a pure research function, which is a place where some significant number of smart people are tasked with being subject matter experts and pursuing things that don’t have any immediate product requirement. And so that builds up and sustains the ability to disrupt or respond. And certainly provides, in many cases for us a steady flow of things that we can use to refresh, or incrementally improve some of those legacy products that you mentioned.

So, there are three aspects. The healthcare one, That’s more of a disrupt. And we took in stuff from both the research world as well as other development activities to do that. It’s a new business.

Many, many features you would find, version by version in our traditional products, have their genesis in the research group. And there’s a big program of technology and transfer that we really work hard to shepherd that tries to accelerate that transfer of ideas for new technologies that represent incremental solutions to problems that exist in those products.

So the help system for Microsoft Office or Windows, you use to be able to just search by words. But now you go to the box and type a natural language question in and it parses the question and gives you different alternatives you can select from and that can get you more help. And that ability to convert that from a text look up to a natural language query came from the research guys. And that’s just a tiny example. There are literally hundreds of such things.

And then there are the responsive ones where if the market shifts in a particular direction, a lot of times our ability to be responsive in a timely way, and remain a player in evolving areas of the market comes from the fact that we have that research capability. So that’s one part.
The second is that you have to have activities, or places in the company where people who are less risk averse can congregate, if you will. And where you have what it takes to let them start and try new things.

And so, as I said, part of my job for more than 15 years was to be a place in the company where we could do start-ups inside the company. And so while other people do that, and the product groups do a little bit of that themselves, I probably started more new business activities in 15 years than the rest of the product groups have combined. And so, that’s another thing we can do to create a place for that.

And then the other is how management characterizes the problem for even established business groups over time. We work harder and harder to get them to deploy people against future questions in their products space that are not strictly limited or confined to working on the next release.

Taken together, these things give us that capability to innovate both big and small and over sustained periods of times. And in the face of unknown.

So to sum up, Microsoft puts innovation in three categories:

1. Big disruptive innovation that can change a whole market and create big opportunities.
2. Little innovation that incrementally improves current products.
3. Defensive innovation that allows the company to quickly to respond to unforeseen changes.

On a practical level, the company also provides space internally for employees who are more entrepreneurial to experiment. And part of that includes having someone like Mundie, who can protect and champion these efforts. And that’s important, especially if those new ideas might conflict with current practices.

Now, it may be unrealistic to think newsrooms are going to create their own research outfits. The reality is that much of this may fall to colleges and universities. But the bigger issue here is (whatever your feelings are about Microsoft and its products) that the company makes continued innovation a priority.

That’s something every newsroom needs to do. And it would seem that simply by identifying the employees in the organization who are “less risk averse” and bringing them together, and giving them some modest support to experiment and try new things, would be a good place to start.

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