Why big companies don’t innovate?

Making money

The goal of a big company is to make sure it operates efficiently and satisfies customers. It is a natural stage in a company’s life cycle which can be characterized by several stages. At first, a young startup’s success depends on how well it identifies market problem and how good solution it finds. If the the problem is big enough and solution matches it well it gets funded. In its adolescence the work on the solution continues and the startup grows in value and starts making profit. The success of the company starts to be defined by the profit it makes. From this point on organisation and processes are being designed to secure an existing business model.

More money more problems

More money more problems says a hip hop classic. The bigger the business, the bigger the effort required to sustain growth says Ian McAllister, Director of Product at Airbnb.  As the organisation expands it creates more complex and involved processes designed to secure profit. Operating flexibility is reduced and prescriptive processes are being created. It simply takes more time and effort to create a new product and see it through to launch. Also big companies have more to lose, which results in a certain amount of conservatism. Customers tend to get used to products and innovation might result in loosing them.

Welcome to the jungle

If a startup is an oasis on a desert then a big company is a jungle in an even bigger jungle. In other words most of the big companies are complex organisations per se and operate in a complex ecosystem.  Innovation requires the involvement of many different departments across the organization which often have their own agendas, budgets and priorities. To get through to them takes a lot of time; to inspire them to contribute enough requires a very strong leadership. You will never own the future if you care what other people think says Cindy Gallop; try living by this motto in 50000+ employee organisation. Impossible, Sherlock?

What to do?

Big companies are designed to make money, and there is nothing wrong with that. The problem occurs when the corporate leaders hear about the advantage of disruptive innovation and try to copy startup, losing site of what their core capabilities are. So is there any hope for the corporations to be successful at innovation? A good way to do this is through startup partnership and acquisition. According to Steve Faktor as research and development has flatlined in most of the industries, the startups provide R&D features and functions (take a look at this report).

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One of the interesting approaches to discovering startups and teams of experts is flashteams.com – a service designed to promote and discover software teams. It enables BigCo’s to find existing, well functioning teams and startups who can offer an innovative product or service. Flashteams is an interesting platform for searching teams that match the business area, economic segment, or technologies that are of interest for a big company. Unlike many freelancer sites, flashteams.com is a platform for finding small, hard-bitten, and well functioning teams. Many times they offer a unique product or service. On example can be Blastlab a small company that offers a wide range of IoT solutions and IT outsourcing services. You can check out Blastlab’s portfolio here. Another example is RollnCode an innovative team from Ukraine offering mobile expertise for all possible mobile platforms. You can check their portfolio here

 

 

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