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Innovation from corporate mosh pits

September 21, 2006

Last October, we posted a story about companies looking to set up internal Skunk Works type operations, Motorola, was the most vivid example as it was its breakaway unit that developed the Razr. The idea is that these units are given autonomy, funding, space, etc that is independent from corporate HQ, so they have the freedom to innovate.

This trend seems to be spreading to companies that have been widely considered to be leading edge innovators in their own right. The most recent interesting example is Yahoo, who has just created a new unit called Brickhouse, which is being led by the founder of Flickr, Caterina Fake.

It’s a sign that the Web 1.0 giant is in desperate need of two things;

1. New ideas.

2. Something hip, cool and interesting to keep its best employees motivated and prevent them from leaving to join Web 2.0 start-ups.

This is probably also a big issue for other Web 1.0 players as well and we can expect to see similar units being developed or already in “stealth existence” at the likes of Amazon, Expedia AOL, etc.

When we looked at this development in October, our observation is that nothing less than true autonomy will make these new ventures successful. If they are separate, but still governed by the rules and standards of HQ, they will fail.

We wish Yahoo the best of luck with this venture and should note that they have just broken a new branding campaign

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