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Wendy is an IFE Agent responsible for aggregating airline news specifically related to Inflight entertainment. She compiles stories relevant to business travelers, airline industry folks, marketers and tech geeks. IFE News doesn't create original content, but rather posts compelling editorial from global media outlets.

Boeing Vs. Gogo: Five Ways Austerity Promotes Innovation

Boeing Vs. Gogo: Five Ways Austerity Promotes Innovation

It’s common wisdom that wealthy families should limit the allowances they give their kids. In fact, we all should. Make them work summer jobs and even take out student loans. Deprivation builds character. Give your child unlimited funds and she’ll never have a tough choice to make, never learn to save or value a dollar.

Many large, successful companies would do well to heed the same advice. They lavish product-innovation teams with funds, instilling the wrong values while seeding inferior products. Excessive budgets and bloated teams can destroy self-sufficiency and create an environment where tough choices never have to be made and product decisions need not be value based.  Good decisions are rarely made at an all-you-can-eat buffet.

 When I have worked on start-ups I’ve been amazed by how much we create out of so little. Once a company has grown up, the converse becomes true. It’s amazing how little we can innovate despite having so much.

Start-ups often have no choice but to bootstrap. They must work quickly and use resources efficiently. Big companies should find ways to do the same.

Remember Connexion? No? Here’s why: In 2001 Boeing BA -0.69% launched Connexion, an in-flight Internet service. Problem was, the bulky Ethernet-based system cost $500,000 to install in each plane. It cost $30 for passengers to use. Boeing’s open checkbook led to an overpriced and costly product. Connexion had been shut down completely by the end of 2006.

Nowadays you can get Wi-Fi on most planes for around $10. The leading provider? A former no-name company called Gogo that reports $230 million in revenue and went public earlier this month at a price that valued the company at roughly $1.5 billion.

Not to pick on a great company like Boeing, but what if large organizations were able to encourage successful innovation at a pace to match their disruptive rivals?

Here are five tips for harnessing austerity inside resource-rich companies:

1. Keep product teams small, with limited resources.

2. Give them lots of autonomy—no reporting to anyone.

3. Allow them to work with customers from the beginning. Don’t bury them inside a corporate lab, and don’t be embarrassed by them.

4. Make it clear that they will be judged on the success of the product they are building and nothing else.

5. Give them unreasonable timeframes and reward them even if they fail.

Today, everyone is talking about innovation and how we should invest more it—everyone, that is, except the start-ups that are rocking the world with their innovations. They’re just trying to get by and have some fun. We could learn from their example.

Speaking of which, next month I’ll expand on this idea and dig into more examples of how not enough is just right. I hope you’ll feel free to suggest a few examples you think I should cite in the comments area.

 

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