Today’s op-ed in the New York Times slamming Microsoft for its lack of innovation got me on this train of thought. (I do think MSFT has the opportunity to innovate, but that’s another post.)

There is a clear difference in DNA between companies that innovate and companies that don’t. A big piece of that is what I call “DRM thinking”.

“DRM thinking” is when you knowingly pit yourself against what your consumer wants, throw barriers in the face of usability, ignore market realities, and continue to convince yourself it’s okay.
DRM as it was applied to digital music is an unbelievable example of refusal to look at the whole picture. While labels and technology providers developed multiple forms of DRM, created differing levels of licensing and access for the consumer, and in general spent a whole lot of time trying to “get DRM right”, it was completely useless tech and a huge waste of time.
Anyone who wanted a perfect digital copy of a record without any copy protection whatsoever could just walk into a big-box retailer and spend $9.99 for the CD. (CD copy protection was tried, but there was never any indication that it was ever going to work, and it didn’t.) This went on for years.
Barring your front door doesn’t work very well if there is no back wall on the house.

DRM thinking is what holds back companies from innovation.

Microsoft laid off about 800 people today. One of them was my friend and former Napster colleague Don Dodge. Don was a Director of Business Development in the Emerging Businesses unit, which is a fancy way of saying he evaluated startups mainly for possible acquisition by Microsoft.

I walked around TechCrunch 50 once with Don. He was inundated by the attending startup peeps. Don’t let anyone tell you that they’re too cool to want to be bought by Microsoft.

You can read what Don has to say about today in his blog here . What struck me most, besides the fact that Don now gets to write his own ticket in tech and do any one of a million things, is that he says he’s never had the time to think about what he might want to do. And it’s true for most of us. We’re rushing from city to city, country to country, and barely have time to tend our home lives properly (and some of us neglect that too). “The gift of time”, another ex-Napsterite, Milton Olin, used to call it. You get that gift when a lunch cancels last minute or you have that weekend at home after all. Being fired sucks. But if you’re smart and capable and know how to make the most of your skill set, it can also give you the gift of time and another, priceless gift – that of perspective. Being fired is the best thing ever to happen to many people I know.

My Napster colleague (our VP, Product Development) Don Dodge has become a startup guru, running the Microsoft Startup Zone and conducting some of the most clear-eyed assessments of newcos I’ve seen, and doing some very cool angel investing (Zink is one). I had a blast last September at Techcrunch 50 sitting with Don in the “blogger zone”. Here’s Don’s take on the newcos at DEMO this year:

http://dondodge.typepad.com/the_next_big_thing/2009/03/best-of-demo-09.html