Why aren’t Large Companies Innovating?

Photo by Matt Ridley on Unsplash

1. They already have products

Large companies have existing products & customers, and more importantly, they make revenue. When companies have these, the last thing they’ll do is to change something, i.e. innovate.

2. They try to do everything efficiently

Innovation is never straightforward, it always comes with risks—experimentation, mistakes, trial & error, and failure, most of which is not encouraged in large companies.

3. Employees have job descriptions

People in large companies have their own job description, which often is narrow and hardly has the word “innovation” in it. And most of them are paid to execute processes without changing anything. While this is very effective to attain efficiency, but hardly any innovation comes out of it.

Why are Startups able to Innovate?

Startups innovate for the simple reason that they don’t have any of what large companies have. Their sole purpose of existence is to innovate and disrupt incumbents or create new markets, by offering radically innovative products. Because only by being innovative, Startups can exist, sustain, scale, and grow.

  • They are flexible—they don’t have a tall hierarchy and rigid processes that could potentially stop innovation.
  • They have high risk tolerance, as they have very little to lose if something goes wrong.
  • Startups seldom think about operational efficiency, and it doesn’t make sense for them to be.
  • Startups haven’t had past successes that they can cling to, they need to experiment and figure out what works and what doesn’t.

How can corporates be innovative?

One of the best ways large companies & industries can innovate is through collaborating with startups, like co-developing products, equity investments, acquisitions, etc.

I write about Self-Development, Skills, Learning, and Innovation.

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