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    • AI Strategy Consulting
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Insights on Strategy and Innovation

9/1/2023

Three Winning Innovation Approaches NVIDIA and Microsoft Embraced

 
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This post first appeared as Steve Wunker's piece for LinkedIn

NVIDIA is on an absolute tear – it’s the best performer this year in the S&P 500 – and Microsoft isn’t far behind. Both are big winners in AI, but the secret sauce is more fundamental. They have remarkably similar innovation playbooks. Look at three approaches that they both embraced:

1. Healthy Core

They started with strong core businesses that generated healthy amounts of cash. If you don’t have that, you’re going to struggle to invest serious sums once they’re needed.

2. Experimentation and Exploration

They opened up to outside, low-stakes experimentation. NVIDIA encouraged outsiders to experiment with its Graphics Processing Units for new uses like mining cryptocurrency and creating AI systems. Microsoft Research embraced extensive partnerships with academic institutions and start-ups. Microsoft also took minority stakes in firms with intriguing technologies, as it did with OpenAI.

3. Clear Strategic Bets

Once experimentation showed the potential of GPUs in AI, NVIDIA went all-in to take a huge lead in this emerging field. Other semiconductor firms, despite their much larger size, couldn’t bring themselves to prioritize the new market. They’re now in a mad, costly scramble to catch up. When Satya Nadella took charge at Microsoft in 2014, he focused the company hard on cloud and created a major new growth engine. In 2019, he did it again by making AI a clear priority when others dithered.

Keep the core healthy, embrace low-cost experimentation and exploration, and then be ready to vastly accelerate investment when conditions are promising but not yet so compelling that everyone else is piling in. That’s how you win in a new market and supercharge your growth.

​
By Steve Wunker

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