There has been a tremendous amount written about 'How to Innovate at Big Companies' but internal development of successful web services are hard to come by. Take Yahoo! for example. Over the last decade, what was the last successful consumer service developed internally? You might say, Flickr or Yahoo! Groups but you'd be wrong. Both of these services came from acquisitions. In fact, the only internally developed service that can be considered successful in my mind is Yahoo! Answers.
This reminds me of an article about Yahoo and product innovation where Caterina Fake, co-founder of Flickr said:
“There are tons of amazing ideas in big companies, and no innovation deficit. But the obstacle to getting things built is mostly process. There is one kind of process developed for building and maintaining large-scale products… And the development processes for that are very different from what it takes to build a new product in a short amount of time.”
Caterina tried to foster the start-up process in an internal incubation lab called the Brickhouse which was recently shut down because it just didn't work. Internal innovation labs are tough because they can never really foster a meaningful lineup of entrepreneurs which I believe to be 'the' critical success factor in a start-up. Additionally, it's very difficult to provide a lot of 'skin in the game' for internal entrepreneurs. So, for the many big companies that are unable to create a culture of innovation and unable to adopt new processes, perhaps they should focus most of their innovation energy outside their four walls by fostering/investing in external development.
There are many ways to do external innovation and I'd be interested in what you've seen as successful and not so successful practices.
