question to innovate

Why is innovation so hard for large companies?

question to innovate

This is the first of a series weekly posts where I will answer a few common questions about innovation. Please feel free to add your own response. Also, if you have any questions you think we should discuss, let me know.

There are many reasons why large companies don’t innovate. But to simplify, it is because most companies are designed to execute, not innovate.

There are a few that do “get” innovation. But, traditionally companies are founded to make money as an outcome, not to last. And, even if companies make money and have both resources and assets, it doesn’t mean that they will innovate. To innovate, you must change. And to change, is something most don’t plan to do or are willing to do.

Most organizations, are not founded with this in mind. I think there is this romantic mindset that you will start off making donuts and keep doing donuts for the rest of your life.

There is nothing wrong with doing one thing for the rest of your life, but there are instances where an innovation changes or replaces the “how” and the “what” of what you started out doing. Donuts may exist forever, but their form, how they are created, delivered and eaten may change.

That is, what I believe, most ignore. There are many ways your business could/might/will change. Change is what we need to embrace and continually strive for.

Your turn, why do you think innovation is so hard for large companies?

Enhanced by Zemanta
  • I’m not so sure size matters – a small company can get “locked in syndrome” just the same if not more so as they can lack the resources needed to change.

    I think the real issue is what your focus is.

    If your focus is specific e.g. making donuts, then while you may innovate within donuts fundamental change can be difficult – difficult to start making cakes perhaps.

    However, if you focus is more generic then change can be easier – this is where the value visions of “delight the customer” or “facilitate learning” are advantageous in the longer term – you can adapt the specifics to meet your generics.

    • Hello Martin,

      Interesting perspective. Yes, I also think there are some industries that are more insulated from change than others, so that must be considered.

      Thanks for the comment,

      Jorge

  • Innovation is slowed because of people. Large companies may have great ideas, support of leadership and the resources to execute. But, large companies often times have long histories, histories with employees who are used to doing something everyday. Employees took their job 20-30 years ago and NOW you’re going to tell them to do something different? To maybe change their schedules? Goals? Levels of risk? Not an easy sell to many. So what might you do? Maybe you bring in people who live an innovation culture, want to drive change and facilitate. And by doing so, you’ve now made the problem worse. It’s tricky balance.

    • Hi Adam,

      I agree. The human element is a powerful deterrent for change. As much as our brains like surprises, getting people to create surprise is different story.

      What have you found are the best ways to deal with this? Yes, it is a matter of culture, but for those who haven’t got an innovation driven culture, how do they start?

      Thanks for the comment,

      Jorge

      • I think you have to look in places you never looked before. Change agents are useful. Maybe you’re not looking for the most experienced person, but rather the least. Someone who hasn’t been groomed a certain way for years and is still ignorant to corporate life. Bring parts of the company which never talk together to make something.

        Every employee can look at small minuscule pain-points during their day and have the power to fix them. A lot of people have/had ideas, but if they are never implemented, even at the smallest level, people kind of…give up. I think simply making people aware of possibilities is a piece.

        • All great points Adam, and ones that are out of the box for most organizations. Do you think Consultants can play a useful role?

          Thanks,

          Jorge

      • I think another option is to relate to them differently than just forcing new on them. At the end of the day, everyone is trying to solve a common problem. If the central issue is made known and well connected to the new idea, then this culture is less invasive and radical that individuals initially think.

        • Hi Tyler,

          Great point! Align their motivations with the collective whole.

          Thanks for the pointer,

          Jorge

  • Large companies find it difficult to innovate because as a firm grows it shifts from an aggressive, growing and attacking mentality into a defensive, protective mentality. Once it reaches a certain size, most large firms seek to protect what they see is their market or turf. They create obstacles to new entrants and they seek to “lock in” their customers. This defensive mindset makes it difficult to change, and difficult to upset or disrupt existing customers. It can be difficult to image entering new markets or segments (risky and uncertain) when existing markets and customers seem “guaranteed”. But conversely, none of these firms are willing to cannibalize their own products, which would undercut current sales. Perhaps the biggest challenge many face is that they believe that they have a long time to profit from existing products. They fail to understand how rapidly the world is changing, and don’t understand that internal change and innovation must at least match the pace of change and customer demand in their markets.

  • Ever interesting topic, Jorge 🙂
    I’d like to add another point to the discussion: innovation can be described as s-curves with certain phases, such as invention, validation and scaling. Steady innovation requires recurring movement along s-curves – including starting new curves = new growth trajectories = change.
    Once an organization has passed through the first s-curve successfully, it has a heritage and something to lose. In contrast, startups start at the outset. Therefore, bigger orgs tend to hesitate to start new trajectories and stick to the existing. They are naturally weak in the the first phases of the curve, such as invention and validation of really novel ideas. On the other hand, they are much better equipped to scale an idea, which is eventually determining for a novel idea to thrive.
    Watch out for my upcoming post on this issue 🙂

    • Hi Ralph,

      Useful analogy which you talk about on your most recent post in Tim’s blog correct?

      For those of you who haven’t read Ralph’s post, here is the link: http://bit.ly/TRIpZy

      Cheers,

      Jorge

      • Yes – larger companies are naturally stronger in evolutionary innovation. But in order to stay sustainable, they also need to accomplish the revolutionary part, i.e. a fundamental change in the way of doing business, when the existing business stalls. The idea is: they may outsource the first phases of the “revolution” – their weak spots – to smaller companies with appropriate capabilities.

  • Pingback: The New 6Ps of Radical Innovation for Large Companies @Medici_Manager @helenbevan | Carlo Favaretti()