For organisations to ‘do’ innovation well they have to be agile and adaptable. Large organisations are often the opposite, slow and rigid. Because of this they find real innovation challenging. But why is that the case considering they have lots of capital, resources and a track record of success?
1. A sufficient long-term horizon
Having a long-term horizon forces companies to sacrifice the things they can improve today (sustaining innovation) versus investing in the future and competing with their own products and services (disruptive innovation). If the company is listed, the performance each quarter is even more scrutinised by shareholders which makes it more difficult to find the right balance between today and tomorrow. Often corporates don’t make large investments in research & development (R&D) because they have to maintain or improve dividend payments.
2. Culture
The culture of large organisations can often be challenging to shape to consistent behaviours. Departments are solid silos, each with their own sub cultures and ways of working. For innovation to work departments have to come together and work as a team. Otherwise the project falls apart in the later stages. For example an idea which the technical team has been working on will be dismissed by the sales team if they can’t find a way to articulate the value proposition to potential clients.
3. If it ain’t broke, don’t fix it
What’s wrong with ‘doing what you’ve always done’ if it makes money?! Companies that have been successful over a long period find it hard to imagine a time in the future where customers will not buy their products or services anymore. We all know the stories of Blockbuster, Kodak, MySpace, Xerox and Nokia. They were leaders in their field but where are they now?
4. Organisational Structure
Since most companies are structurally designed to deliver on their current business model, any innovation that uses a different business model will require some structural changes within the company. Many large organisations are unable or unwilling to cannibalise their current structures to absorb the innovation and take it to scale.
5. Fear of failure
Entrepreneurs are used to failing. In fact, most successful entrepreneurs brag about how many ideas they had that failed. Corporates are different. I haven’t heard many that stand up and share their war stories. Failing lots of times and sharing the learning leads to innovation.