Discussion on "Why Big Companies Can't Innovate"

In the Gerber example referenced at the beginning of the article by Maxwell Wessel, the effort to innovate fell flat because they maintained a focus on operational efficiency which is typical for companies with more mature products.  One point that Wessel makes is that just because an idea makes sense operationally and financially, it does not necessarily mean it will result in a success.

I feel that an important takeaway here is that no matter how large or well established the company is and their existing products or services are, they have to somewhat go back to the beginning in order to innovate effectively.  It’s absolutely critical that the proposed product or service clearly identifies a problem in the market and matches it to a solution.  Without this alignment, there is little hope for success.  To take that even further Wessel describes the fact that venture capitalists are looking for interesting solutions, not just run of the mill.

As a consumer myself, I couldn’t agree more.  When I look at purchasing products that are new to me, I can honestly say that it comes down to more than just pure feature or functionality.  I’m always looking for that next thing that will make me feel good about the product as well as what it can do for me.  With mature organizations, the focus tends to be around profit and increasing the bottom line than it is reaching out and validating with the market.  This is in contrast to start-ups that spend a significant amount of upfront time identifying, testing, and validating.

In order for this philosophy to work and for a company to reap the benefits, the organization has to allow for some existing groups to function differently or to put new groups in place in alignment with the revised goals.  As companies mature, this type of shift is extremely difficult to undertake when the culture has not been formed to think that way.  I have found this within the company I work for where the lack of alignment between different groups restricted the ability to innovate.  This was a case where the company may have seen much better results from their initiative if they had enlisted different staff rather than the same people that had been working on the mature product and had developed a certain culture as a result.

Another example given in the follow-up segments to the article was with Xerox.  This example points to failure on Xerox’s part as a result of poor commercializing.  Very similar to how Gerber tried to limit risks and reduce cost by operating the same way with a new product, Xerox attempted to reuse their existing salesforce in order to push out their new (and very different) product.  I’ve witnessed some tremendous improvement in my own company as a result of better alignment with our customers and their industry.  With a dedicated approach and techniques designed for that given market/customer, we have strengthened relationships and instilled confidence in our customers that we are striving to meet their needs rather than just making a profit.

Lastly, I found another article that discusses innovation among large corporations based out of work from MIT (http://miter.mit.edu/article/driving-innovation-large-corporations-i-challenges-faced-large-corporations).  The article discusses the challenges that large companies face in trying to be more innovative.  In particular, the idea that there is a fear of cannibalization resonated with me.  I think this is a good point that wasn’t explicitly called out in the other article.  This is a dangerous aspect of releasing new products that is discussed a lot in my business.  However, the underlying factor in this conversation still goes back to understanding your customer and knowing what that issue is we are trying to solve.  Without that understanding, companies run the risk of dealing with customers that don’t see the value and are not willing to pay for something they can’t justify.