How corporate structure can accidentally stifle innovation

“The money goes to the cash cows, not the cash calf,” explains one former Flickr team member. If Flickr couldn’t make bucks, it wouldn’t get bucks (or talent, or resources).

Because Flickr wasn’t as profitable as some of the other bigger properties, like Yahoo Mail or Yahoo Sports, it wasn’t given the resources that were dedicated to other products. That meant it had to spend its resources on integration, rather than innovation. Which made it harder to attract new users, which meant it couldn’t make as much money, which meant (full circle) it didn’t get more resources. And so it goes.

As a result of being resource-starved, Flickr quit planting the anchors it needed to climb ever higher. It missed the boat on local, on real time, on mobile, and even ultimately on social–the field it pioneered. And so, it never became the Flickr of video; YouTube snagged that ring. It never became the Flickr of people, which was of course Facebook. It remained the Flickr of photos. At least, until Instagram came along.

It’s a terrifying tale of how a corporate stifled the very innovation that it had bought, because t’s entire business structure was built around rewarding existing successful businesses, not nurturing the business sectors of the future. Too much management philosophy is rooted in defending and growing existing success. And as long as companies enshrine that principle in their structures, jobs and employment approach, they will not be able to innovate – or profit from buying innovation.