It never ceases to amaze me how companies can make the same mistakes over and over again. I have participated in a number of start-ups that always start out with a focus on creating a new product. The environment is ideal for creativity, people are motivated and rewarded not by money, but by shares and the fact that they are creating something new.

The link below is to a unique presentation that describes what seems obvious to me, but seems to have escaped managers at many larger companies.  I had lunch with the CEO of a company last week who noted that it is common practice for the board to replace the executive team as a company grows. Oddly enough, it is usually around the time when the executive team is replaced, when things start going off the rails.

Board members are usually people who have participated in successful companies, so why is it that they seem to want to change the guard? Companies where the guard remains the same like Newbridge, RIM, Apple seem to be able to postpone the decrease in innovation, keeping the environment the same.

The transistor was invented at Northern Telecom during a period where the company promoted time to allow employees to pursue their own special projects. Google has made a number of advances taking the same approach. In each case, new management teams halted the process and the innovation stopped. Shortly after the innovation stops, the brightest minds move on and the company starts it’s death spiral.

This video cites the academic research that backs up my observations.

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