Why Big Companies Can’t Innovate

Maxwell Wessel makes some very interesting conclusions in his article Why Big Companies Can’t Innovate.  The general theme of the report is that big companies can’t innovate because they are not designed to innovate.  Unlike start-ups which are designed to solve customer problems through innovations, big companies have already solved customer problems.  Their challenge now that they have accomplished that is to solve their customers’ problems more efficiently, so they can generate a larger profit.

Wessel goes on to make the argument that there is nothing wrong with leveraging underutilized assets in order to be more efficient and deliver higher profits.  While I agree that there is nothing wrong with this, I don’t agree that this is a good excuse for big companies to stop innovating all together.  I think that every company should have the goal of continuing to delight customers through continuous improvement and a better value proposition.  The only way to do this is through continuous innovation.

The problem with focusing solely on process efficiency and not increasing customer value is that eventually somebody is going to come along with something better than what you have to offer.  If you are standing still, then eventually somebody is going to catch and pass you.  The company I work for now offers a financial bonus to any employee who submits an idea that the company lawyers determine is a good enough idea to file for patent.  If the application is accepted, there is an additional bonus.  The problem with this method is that there are many jobs where there are little to no opportunities to develop a patentable idea, so only a portion of the employees are motivated by this incentive.

I think a more effective way to encourage effective interpreneurship is to have a substantial enough reward system in place that employees are likely to be motivated by.  One idea that comes to mind is to give the employee who thinks of an innovative idea partial ownership of that idea.  That way if the idea is very successful, the company will benefit greatly, as well as the employee who created it.  This would provide everyone with the potential to earn a substantial reward for submitting an innovative idea.