Posted on April 14, 2010 by Paul Ritchie
Michael Krigsman and I had a chance to chat last week — he recorded a podcast w/ me that will be up on his blog before too long — and thankfully the chat got my blogging mojo going again.
I don’t want to steal our podcast’s thunder, so I’ll focus on a tangent from our call — SAP’s innovation problem. Michael himself has hoped that SAP’s leadership change would help to bring more innovation to market. Ray Wang put it more bluntly in his take on Leo’s ouster:
[T]he issue is not sales. It’s products. Snabe and Vishal will need strong product vision to right SAP and point it in a forward direction. Engineering and products need more attention to bring out trapped innovation at SAP.
“Trapped innovation”… that’s so much of what I saw at SAP. There are many cool technologies floating around, but they don’t fit in the “margin now” mindset that has pervaded the company. The company is stuck in the classic [successful] innovator’s dilemma:
By only pursuing “sustaining innovations” that perpetuate what has historically helped them succeed, companies unwittingly open the door to “disruptive innovations”.
Even worse, SAP had deluded themselves into thinking they were responding appropriately — what was marketed as real innovation was simply new wine in old skins. Exhibit 1 — 2007-2009 versions of Business ByDesign.
Filed under: PMO | Tagged: Business ByDesign, Clayton Christensen, disruptive innovation, Innovation, innovator's dilemna, Michael Krigsman, Ray Wang, SAP, sustaining innovation | 4 Comments »
Posted on July 15, 2009 by Paul Ritchie
Second-guessing oneself is a risk when deciding to leave a leading company, so I needed to ensure that I had no regrets when I left SAP. In particular, I didn’t want short-term personal or “micro” stumbling blocks to obscure great “macro” opportunities in the rest of SAP. Unfortunately, there were too many big picture concerns that nagged at me, at least from my less-than-exalted perch:
- The “Post-Shai” Backlash: The reaction to Shai’s departure was almost giddy in many quarters, which wasn’t a surprise. The real surprise was the scale, scope, and snarkiness of the reaction. A lot of non-Palo Alto folks minimized Shai’s contributions when it was convenient — see Peter Zencke on Shai’s “second tier” involvement with BYD — and blamed him when it wasn’t convenient (e.g, BYD didn’t perform because of NetWeaver).
- Condition of SAP’s Product Portfolio: For those familiar with the BCG Matrix, IMO the SAP portfolio is unbalanced. Nearly all of the SAP portfolio can be classed as either cash cows or pets. I just don’t see enough “stars” on the solution horizon.
- Confronting the Reality of Business ByDesign: Speaking of pets, there was way too much happy talk about BYD for far too long. The funding that was poured into BYD — while SAP increased its margins — came out of the hides of other parts of the company.
This last point highlights the fundamental doubt I had about the validity of SAP’s strategy: Was it still able to produce “stars” organically? A “not-invented-here” mindset only works when you’re still able to invent. It is one thing to miss on product development, it is another to deny the miss.
Leo is certainly aware of this issue, but this unwillingness confront reality has continued to spread IMO. I’m not sure that SAP understands just how much damage it has done to itself by running some sides of the company with a gimlet eye, while other sides seems to be living in the best of all possible worlds.
Filed under: Communications, Leadership, Organizational Change Management, Strategy Management | Tagged: Business ByDesign, Dennis Howlett, Leo Apotheker, Pangloss, Peter Zencke, SAP, Shai Agassi | 1 Comment »