Do you know why Ford can't make a Volvo despite owning the company? Both the the Five Hundred sedan and the Freestyle station wagon are Volvo's made by Ford, and they're good cars, but nowhere close to the originals.
Do you know why Sun can't seem to monetise its research? Niagara, ZFS, Dtrace, these are the world beating technologies you've heard about - and you'll be hearing about stuff like Thumper and Pulsar soon enough, but there are hundreds of other great ideas, like the Piazza impromptu desktop interaction software, that you'll probably never hear about.
Why?
In both cases the answer is middle management response to the forces driving the organization.
In big public companies like Ford and Sun the thinkers, whether in the labs or the executive suite, can turn astonishing new ideas into breakthrough technologies or strategies only to see these defeated by middle management. why?
Well, talk to the roadblocks and what you'll find is that these are mostly sensible people doing a difficult job in which the risk of change, however small it may appear in other eyes, almost always outweighs the certainty of slow decline that goes with just continuing to do what worked yesterday.
Fundamentally the problem is one of corporate incentives: middle management is charged with "execution," getting the job done, bringing in the numbers. Want to lose your credibility at either company? make yourself responsible for a breakthrough product or strategy that fails - in big organizations there's always someone who can retroactively prove he warned you of the certainty of failure if what you do goes wrong; and it doesn't matter if that's a sales compensation policy change, or a part that becomes a million car recall; there's always someone.
In some ways being a middle manager is a lot like being a sysadmin: hands off is best; if it worked yesterday, it'll work today - provided no one changes anything.
Bottom line? Companies like Ford and Sun often innovate through spin-off and acquisition: an acquired technology worked yesterday; for somebody else, of course, but it worked - it's proven, the initial lawsuits are over and it's safe to adopt. So Ford's first generation Volvos are better Fords and crappy Volvo's - the next generation will be closer, and as long as Volvo continues to innovate, Fords will get better too. That's their strategy and Sun's isn't a lot different: some of the most promising people get pushed out of the company where they turn into zealots developing their new ideas, often with back room help from senior Sun players - and then bring those ideas back to Sun along with their own middle managers when Sun buys them back in.
It works, sort of, but it's incredibly wasteful. What we need, what both companies need, is a way to reduce performance pressure on middle management while reducing the barriers to successful innovation. In the short term flattening the management structure does that -because if you can't take them along, getting rid of them works too.
But in the longer term that fails, because someone has to do the management job - so here's my idea: flatten the organization a bit by narrowing individual middle management jobs enough to accommodate perhaps 20% more players promoted from the junior ranks. Then give your newly overweighted mid ranks a slush fund and an additional job: spend 20% of their time working somewhere outside of their own areas in the organization with a clear focus on making new ideas, new technologies, and new strategies work. In other words, reduce the pressure with one hand, and with the other create the conditions needed for an institutionalised, in house, skunk works mentality to spread throughout the business.