Is it really true that large businesses struggle to innovate?

Updated: Oct 4, 2018

Today innovation is everyone’s business. No matter what job or role people play in their organizations, they are always expected to do better with less. With this, corporates and big organizations are usually fail to bring innovation to life. They realize its importance, but they face a challenge to successfully position it to be part of the DNA of their businesses.

Looking at the global business landscape, compared to corporates and large businesses, it is obvious that startups are the ones able to drive innovation efficiently; they are able to find disruptions, generate new ideas, and materialize them quickly across all the business domains. In its own, this raises a fundamental question on the reasons that stand behind their inability to innovate, though the financial muscles that they enjoy.

In his book "The Innovators Dilemma", Clayton Christensen summarized three key reasons why large businesses may find it difficult to innovate:

  1. The Established Mechanics (Organization Level): Having an organizational established process, is always good. It helps the organization to move systematically with a high degree of transparency. However, innovation is about introducing something new that might not be absorbed smoothy by the existing models and mechanics of the organizations. Sometimes, an innovation may break the whole system of the company. A scary thing that most of us would worry from getting into it.

  2. The Compensation Model (Individual Level): A new thing will take time to materialize. This is what innovation is about! However, the compensation models of individuals, depend on the present achievements rather than the future and promised ones. Moreover, many of the KPIs that are defined by organizations, are linked to financial objectives; which means people have to sell something and deliver it in order for them to be compensated. Unfortunately, coming with an innovation might not be the best vehicle that enables them to achieve their targets and receive their rewards!

  3. Listening Closely to Customers (Customer Level): While we learn all the time how to gatehr the customer's requirements and comply with them, it is proven that this leads to the continues repetition of what we offer. The fact that customers usually know, and can only describe what they experienced before. When listening to customers closely, this creates what it is called the "Me too" offerings which does not help organizations to be differentiated from their competitors.

As a sumamry, we can conclude that large business struggle to come with innovation. they need to find a way to alter their existing process to accomodate changes, enable their compensation models to welcome innovations, and to change the way they interprete their customers' inputs.

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