Why is it so hard for big companies to innovate?
We have all heard the question before. It seems like big technology companies have everything needed to be successful innovators. They have the budget, the resources, most have great talent, and they have the access to customers for both review of ideas and selling access. How could they lose?
With all of this against them, one would think that startups could never survive, or possibly thrive. Yet, the startup community is stronger than ever. In fact, it is a rarity that any large company will generate consistent successful disruptive innovation. Yes, big tech companies will generate some hits but, outside of Apple (and only since Jobs returned), I don’t see a single big tech company that could claim innovation as an internal competency.
I believe is it for one simple reason. Most companies assume, incorrectly, that R&D creates innovation when, in fact, there is simply no data that has linked the amount of R&D spend to the level of innovation. Simply put, spending more on R&D does not automatically yield innovation.
Think about it. Research is generally very open-ended and tends to look at improvements at the core of technology. Development, especially at larger companies, is strongly influenced by customer feedback and product enhancement requests. Both of these elements of R&D are very important to technology businesses but neither in their basic form will yield innovation.
So, what is lacking?
I believe that successful internal innovation within larger companies can be accomplished if the company can enable just 4 things within the organization.
I will try to blog soon with more detail on these 4 items. You will note that “Investment” is not on my list. I didn’t include it because, within the scheme of most company’s budgets, the amount of funding needed for innovation is very very small.
Successful innovation in companies (and even in Governments) IS NOT, in general, a spending problem; it is not even a technical problem; I believe it is mostly a process problem.