Large, established businesses tend to make a lot of money, so they appear to be the pinnacle of success and capability, but they also struggle with a very fundamental element of business development: innovation. Why do businesses tend to stagnate in terms of innovation and what can small business owners learn from the mistakes of larger businesses?
What Is Innovation?
Before we can go into detail about the limitations of innovation, we need to understand what innovation really is. In the simplest possible terms, innovation is simply the generation and implementation of new ideas. However, there are many different types of innovation and areas in which they can occur.
For example, system innovation occurs when companies completely overhaul the systems and processes they use to operate. Product innovation occurs when a company invents a new product or fundamentally changes the qualities or functionality of an existing product. Companies can even undergo marketing and advertising innovation, launching new types of strategies that allow them to win more attention and sales.
Innovation is a driving force in the free marketplace. Some innovative ideas die because they're not very valuable, but the best innovative ideas stick around. Over time, the most innovative companies tend to become leaner, more efficient, more productive, and more appealing.
Additionally, greater innovation overall means better conditions for everybody; consumers get better products at cheaper prices.
The Multifaceted Innovation Problem
Why is it that big businesses don't invest more in innovation? Why does innovation seem to slow down as a company gets bigger? There are a few possible explanations.
Tradition and Familiarity
One thing to keep in mind is that big companies are usually old companies. Rapid growth is always possible, but the largest and most influential companies of our era are ones that have been around for decades, or even longer. Those companies don't want to rock the boat by messing with tradition and familiarity. If it's the way you've always done things, and that way has brought success, why would you change it?
Disparate Workforces
Large companies also tend to have separate workforces. The team working in Southern California might have a very different mentality than the team coming up with new ideas at corporate headquarters in Montana. It's very difficult to establish a shared mentality across workers who come from very different backgrounds, work in several locations, and have varying duties. This creates push-and-pull factors that make it hard to advance the company in any direction.
Bureaucracy and Committees
Big businesses tend to be driven by bureaucracy and committees. If you're familiar with the expression “design by committee,” you intuitively understand that when too many people are involved, the decision-making process is usually delayed and complicated. There's certainly truth to this; when decision-making is always a clunky process that involves dozens of people, you can't act quickly, which means you can't implement new ideas quickly.
Fear of Change
Some big businesses are simply afraid of change and don't want to alienate their customers and let their employees down by taking a risk on a new idea.
Solving the Innovation Problem
What can you do to solve the innovation problem? If you feel your business slowing down in terms of innovation as it begins to scale, consider the following:
Split into smaller teams.
Big teams and big groups have a much harder time coming up with new ideas and embracing those ideas. But smaller teams tend to be nimbler and more agile. Split into smaller teams while collaborating and treat your large company as many interrelated small companies.
Encourage and reward new ideas.
You have to actively encourage innovation if you want to review more innovative ideas. That means empowering your staff members to come up with ideas of their own and rewarding them when they come up with good ideas that transform the company in some positive way.
Enable ground-level decision-making.
Don't make your employees run every single decision up the flagpole. This is going to slow things down and eliminate some ideas that have a lot of potential. Instead, enable ground-level decision making, empowering your employees to make more spur-of-the-moment decisions and handle simple matters in their own way.
Be more flexible with the brand.
Consider being more flexible with your brand. Just because it's the way you’ve always done things doesn't mean it’s the way you always have to do things, and just because it requires you to compromise some of your brand image doesn't mean you should rule out the idea entirely. Remain as open and adaptable as possible.
It’s impossible to force innovation, in the same way it’s impossible to force creativity as an individual, but that doesn’t mean you have no control over your environment, or that you can’t optimize your business to facilitate greater innovation.
With even a handful of simple changes, you can resist the dominant trend of big businesses losing their innovation potential.
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March 01, 2022 at 06:00PM
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Why Big And Complex Businesses Find It Difficult To Innovate - Forbes
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