Friday, September 11, 2009 - The Progress & Freedom Foundation Blog

A Bing Skunkworks: a Solution to Microsoft's Innovator's Dilemma?

I've noted that Google and Microsoft both face what Clayton Christensen famously called the "Innovator's Dilemma" in trying to handle disruptive innovation in search technology. But noting Microsoft's innovations in bringing social functionality to search with its "Ping" tools in Bing, I pointed out a few days ago that, "Microsoft, with less to lose and without a huge installed user base to worry about annoying by violating Google's 'Prime Directive' of elegant simplicity, may have an easier time introducing 'disruptive' innovations to search than Google."

The trick will be for Microsoft to find ways of promoting radical innovation from inside, despite the forces of inertia inherent in any large company. One way to do that, as I noted, would be by imitating Google's "20 percent" program. But a more radical way would be for Microsoft to make Bing a "skunkworks" much like Lockheed Martin's original "skunkworks," Xerox's Palo Alto Research Center (PARC), AT&T's Bell Labs, GM's Saturn Motors--or Microsoft's own XBox. That's precisely what SEO guru Rand Fishkin (CEO of SEOmoz) suggests Microsoft needs to do to "get serious" in an interview with Affilorama:

I think Google['s search market share] could be reduced from like 85% to like 75%, and you could see Microsoft, basically Bing taking over 25%. I don't think they'll get more than that. I don't think they have the ability to do it. Until or unless they are willing do with Bing what they did with Xbox.

So Microsoft had, you know, the game market was well established - Sony competing head to head with Nintendo and other players like Neo Geo coming in and this kind of thing and how is Microsoft going to win this? They didn't know the first thing about it, you know, they weren't in this field. So what they did with XBox is they made it a startup. They didn't even put it on Microsoft campus, they made it a different team of people who were only reporting to Xbox people, they basically built a separate company. The fact that it was owned by Microsoft just means that they get the benefits of the cash and the relationships. That's extremely powerful. The fact that they're unwilling to do this with search tells me they're not serious about it. Right? So you might hear like Steve Balmer and other executives from Microsoft say like "search is very important to us, we're really serious about it". I think it's like "serious to them" and I'm using air quotes here, like serious to them in the same way that Google says "competing with Microsoft Office is serious to us". It's just sort of like, "Oh yeah?! You're going to fight us there, well we're going to fight you on this front!" Like, serious my ass. I just don't see it.

If they do serious and spin it out, I'll be interested - I'll be very interested if it becomes it's own startup if it becomes like its own XBox, that kind of thing, that could be exciting - that could be interesting.

posted by Berin Szoka @ 12:15 PM | Advertising & Marketing , Innovation