How Microsoft’s ‘Garage’ Keeps Its Innovative Spark Burning

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How does a company as large as Microsoft keep its innovative spark alive? At the “Strategies for Success in the New Era of Connected Ecosystems” conference hosted by Wharton’s Mack Institute for Innovation Management, Todd Rawlings, the senior quality manager for corporate business excellence at Microsoft, expounded on the new models for institutionalizing innovation. Afterwards, he spoke to Knowledge@Wharton about how the technology giant makes sure to stay on the cutting edge of innovation.

An edited transcript of the conversation appears below.

Knowledge@Wharton: How do you spark innovation at such a huge company as Microsoft, especially once it’s big and established?

Todd Rawlings: It’s definitely a challenge. I was just [reading a magazine that was reporting the top 50 most innovative companies] and didn’t see Microsoft listed … so it’s difficult to spark and maintain successful innovation in a company as large as ours. But I do think we’re doing some things at Microsoft that are interesting and may lead us to getting on these lists in the future.

What I’d like to talk about today is a grassroots innovation movement called the “Microsoft Garage.” And in some aspects it is what you might envision, an actual ‘Garage’ space. In fact, the original Garage had a garage door, opener and everything. Now we have many spaces for innovation and ‘Maker’ projects in Microsoft offices all over the world.

It draws in people from all disciplines of Microsoft, whether they’re engineers – which most of them are — marketing people, testers or folks like me that come from the process quality world, and we all can come together with ideas, make things and fail, learn and try again.

We can basically take our ideas from concept to something that might be added to an existing product line. Or maybe it’s something that is given to customers to try and later is made into a product. The Garage started out six years ago as an employee-driven, grassroots idea, and now it’s been embraced all the way up to our CEO, Satya Nadella.

Knowledge@Wharton: Where do those ideas that you work on in the Garage bubble up from?

Rawlings: They come from people’s passions or start from problems. “So I am experiencing a problem; I’m uncomfortable in a certain area of my work and I want to solve it.” Or, “I see a customer problem and then I’m feeling that pain, too, and I want to solve it for them.” Those, I think, are the initial sparks.

“It’s difficult to spark and maintain successful innovation in a company as large as ours.”

Then, what we try and do in The Garage is mentor those people. We try to give them the tools that they might need, whether that means physical tools or code-type tools or even marketing tools and idea-creation tools.

Knowledge@Wharton: So what does innovation look like at Microsoft, and does it need to have an immediate return on investment (ROI)?

Rawlings: I should clarify something here. While there’s a Garage, and 10,000 people are involved in hacking ideas in it at any one time around Microsoft, we also have Microsoft Research, which comprises 1,000 very focused individuals, many with Ph.D.s, working on specific areas and ideas that are maybe five, 10, 15 years out [to fruition].

The Garage tends to be a little bit closer in, maybe one to five years out. We bring the people in and when they need a tool, we’ve got these spaces that they can come into right on the Redmond [Washington] campus and also on [Microsoft] campuses around the world. All the 3-D printers and the laser machines and anything that they might need are given to them. Then, when an idea emerges that has some real potential, it is sometimes picked up by Microsoft Research, and I’ve got some examples of that, if you’d like.

Knowledge@Wharton: Sure, I’d love to hear about those.

Rawlings: There was an idea that was raised around how to improve data centers, because right now, some of our larger data centers take up many acres of space. They can use upwards of 160 megawatts of power. And that model doesn’t work in areas like Singapore. You can’t just go and get acres of space anymore, yet we still want to bring computing close to the people. Because believe it or not, as fast as fiber is, there’s a delay there when you’re across the world, and people don’t want delays, they want their information now.

The idea came out initially as a paper to design a new type of data center that could be compact, put near 50% of the population of the world, and also to be a greener type of data center, one that used renewable energy sources and dissipated its heat more naturally. This became the idea for an ocean-based datacenter [Project Natick] and initially came out as a paper within Microsoft during something we used to call Think Week, and then it became a Garage project.

Different ideas will progress different ways through the system, but this is how we did it. I had the good fortune of working with one of the advanced development folks in the data center, so he and I came up with this idea and kind of pushed it through. We got some interest during the Hackathon from some senior people in Microsoft Research.

Then they took our idea and helped us to patent it, and recently, they’ve actually built some submersible datacenter prototypes. So that’s kind of the progression. I think the next step for the submersible datacenter is that we’ll be producing a second phase prototype this summer and hopefully proceed with a marketable product after that.

“The Garage started out six years ago as an employee-driven, grassroots idea, and now it’s been embraced all the way up to our CEO, Satya Nadella.”

Knowledge@Wharton: Do you at times act as a venture capital company and invest in companies that might be small start-ups with some interesting technology that fits in with what you do or may give you ideas of what you should be doing?

Rawlings: As a company, I would say yes. And Microsoft is pretty well known as someone who acquires quite a few companies, depending on the technology. But I would also say that a new direction for us, innovation-wise, is the Garage, and it’s primarily internal-focused … There is an external Garage area on the Microsoft website where you can go and download some of the apps that are being developed in the Garage.

One product in particular that is on the horizon is a set of sensors for the agriculture world. It started out because Microsoft is growing a lot more of its own produce in-house using hydroponics. The thinking there is better quality food, better quality employees. Also, the fact that much of our produce, especially in these winter months, is coming from way south, so there’s a huge trucking cost and there’s an environmental impact, as well.

So we created some sensors that allow these farmers — urban farmers, if you will — to better monitor their crops growing on all these towers around campus, because there’s only three of them, and they’re growing in, say, 50 different buildings. If a pump goes out, the plants die, because they’re not using soil. This is an example of something that Microsoft has been helping us with in small ways. I wouldn’t say that it’s fully funded. We’ve had to scrap and scrape, but we are finding funds. But again, I would say that that sort of incubation stage is an area where we still have some work to do.

Knowledge@Wharton: What would you say are the biggest hurdles that you have to overcome in trying to innovate?

Rawlings: First of all, one hurdle is just getting the word out that there is such a place. Because people have ideas and they don’t have a channel, necessarily, to move on them, to advance on them. Getting that message out that there is a Garage and that it’s OK to spend part of your time working on it — I think that’s still a challenge. We’re getting more and more help, because Satya is starting to address that and talk more about it.

The other thing is that I think people start to develop ideas and they work on them very, very diligently, but they don’t necessarily see that there are two or three other groups also working on similar ideas, and if they would all come together, they’d have a great chance of success. So that’s a challenge, too — making sure that everyone knows all the projects that everyone else is working on. And you would think that a communications company like Microsoft would do that, but when you’ve got 3,000 projects sometimes — and this is what happened in our Hackathon last summer — it’s difficult to really know what everyone else is doing.

“As an executive, you have to think many chess moves down the way.”

Knowledge@Wharton: What advice would you give companies facing the challenge of digital start-ups that might be coming at them to take away part of their business? Obviously, this is something you’re dealing with all the time.

Rawlings: The most important thing is to get this innovation process established in your company. I’m really trying to drive home … this concept of commitment to creativity from the highest levels. At Microsoft, we have that commitment all the way up to the CEO.

You have to commit to it for a period of years before you can expect a whole lot of ROI to come out of it. The early people who get involved may be just super-creative and want to experiment, make a laser-etched block for their kid. It’s not necessarily something that is going to have immediate benefit for Microsoft. But that person who made the block might then be teaching the next person who comes in, who 3-D prints or etches something that becomes the new Surface docking station or another revolutionary new product. As an executive, you have to think many chess moves down the way. The investment in this is so important.

The second one is confidence-building. If you’re committed to the creativity, you’re building the confidence level in your employees that their ideas matter, that their ideas are worth something. So, as they engage with the Garage, they get mentored. They’re boosted up, they begin to understand the growth mindset, and they feel like they can become inventors within the company.

The last one is around connections. When we have a Hackathon, a lot of times, people from a wide variety of disciplines will come together, people who have never met before, and I learn about them and they share their ideas. All that synergy through the connections comes together and creates even more value. These are people then that when I go back to my team, I can call on in the future, because I know that I could depend on them during the Hackathon. They delivered.

A lot of times, I believe, you get that diversity through people who have come together and connected in that way. So the commitment, the confidence building and the connections are, I think, the three main areas that a company needs to consider when they’re going after innovation.

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