By Judith Clegg Friday, 16 November 2012

Foster small-firm creativity in big business

Judith Clegg examines why it's so hard for large companies to innovate on their own, and offers ways of trying to master the innovation culture.

In his book, the Investor’s Dilemma, Clayton Christensen says: ‘An organisation’s capabilities become its disabilities when disruptive innovation is afoot.’ It’s widely accepted that innovation is a crucial driver of economic growth. But even in a business environment that is screaming out for innovation to counteract the economic slowdown, big businesses are failing because they just didn’t see the changes happening all around them soon enough.

The easy ones to spot are retailers who missed the online boat and lost out to their pure play competitors. But in every sector, there are businesses that are arguably negligent when it comes to safeguarding shareholder value because they are not focused enough on where their market is moving.

Our firm belief is that in order to innovate effectively, organisations need to harness an adverse set of experiences, perspectives and backgrounds.  It is unreasonable (and unrealistic) to ask people in an organisation to throw away everything they know about how they do business and completely re-imagine the sector they work in. 

When big companies and small companies find ways to work together effectively, the result can be transformative for both sides. Big companies can take the disruptive innovation that often emanates from small groups and scale it quickly gaining significant competitive advantage. And the opportunity that comes from a major company as client/investor/development partner can bring about life changing benefits for a small company. So if it’s so good, why doesn’t it happen more often? How can we create more favourable conditions for collaboration?

Customer first: Innovators must keep the user need in sharp focus. This will help to avert the kind of compromise that often comes about in large organisations when there are layers of decision makers and vested interests.

Man up: Fear is one of the main reasons that people in large organisations hesitate to take innovation risks, whereas in small start-ups, there is less to lose and everything to be gained. Make failure an acceptable outcome.

Think big, stay small: The challenge for companies that are built on innovation and market disruption is keeping the entrepreneurial culture even though they have grown large. One route is adopting the mantra ‘creativity loves constraint’. 

Kill the red tape: Bureaucracy and process in large organisations has the unintended consequence of sapping creativity. Find ways to keep invention away from the main business until it is robust enough to survive on its own. 

In summary, even if it feels uncomfortable, it is more important than ever to seek the input of people from outside of the organization in order to stay relevant, and to be certain that if anyone is going to reinvent your business, it’s going to be you.


Judith Clegg, is CEO and founder of innovation consultancy, Takeout.

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