Menu Close

Why big firms struggle with innovation – and what they can do about it


Large, mature corporations are designed around the execution of delivery, rather than the art of discovery. For that reason, they don’t excel at innovation. They are driven by profit and efficiency, which tend to get in the way of innovative developments.

This is an observation of Maxwell Wessel, writing for the HBR.org Blog Network.

He asks how big companies can empower their corporate innovators to bring their ideas to market, how they can avoid wasting vast amounts of money on projects destined to fail and how they can leverage their unique position to create meaningful returns and potential growth.

In answer to those questions, Wessel suggests the following:

1) Create autonomy. The author cites Clayton Christensen’s seminal work, The Innovator’s Dilemma, which makes the point that disruptive innovations require autonomous business units to be pursued properly.

Wessel adds that this solution applies not just to disruptive innovation but also to business model innovations.

2) Incentivise for long-term viability. While unleashing assets to create value through innovation, leaders must ensure their innovators build sustainability.

3) Test to learn. By testing ideas early and often, hypotheses about the market can be turned into proven results, or be abandoned before losses become too great.

Ask questions such as: can the new asset offer a solution for customers, and can it be profitable?

4) Use your brain. Wessel offers the example of Alfred Sloan, the late CEO of General Motors, who was renowned for his ability to maximise return on investment (ROI) but still invested in efforts towards innovations that the numbers alone could not justify.

How Big Companies Should Innovate
Maxwell Wessel