Today's guest in our Entrepreneurship and VC class was eBay CEO, Meg Whitman. We get a fair share of CEOs visit us at Stanford, but I found Meg to be especially sharp and eloquent.
In class, I asked Meg the following question: "In strategy class we learn that companies are typically either great at executing or great at innovating. When I compare what the eBay's site does now to what it did five years ago, it's not much different. How do you think about innovation at eBay and, indeed, is eBay an innovative company?"
Essentially, she said sort of. In her mind there are three types of innovation: evolutionary, synergistic, and revolutionary.
Evolutionary innovation: These are incremental changes a company makes to its core business. eBay is constantly doing stuff like this, often behind the scenes, which is why the general experience is much different now than in 2002. eBay, like many big, well managed companies, does this well.
Synergistic innovation: These are innovations formed by bringing different companies and services together. How eBay has done this is by letting sites speak with eBay, Skype and Paypal. So eBay has allowed other sites to access its product listings, Skype may be integrating with other services such as Yahoo IM, and Paypal can be used by smaller commerce sites. Meg feels that eBay has been a leader in enabling others to leverage its services.
Revolutionary innovation: These are major disruptive companies which change markets, like Skype, YouTube, Paypal, and, indeed, eBay. Meg's belief is that these types of companies do not emerge from within larger companies like eBay and should therefore be acquired.
Sorry for the long post, but I don't have time to write a shorter one.