How large companies innovate is an increasingly hot topic these days, and Steve Blank penned some thoughts on the subject yesterday. This piece I found particularly interesting:
A startup is a temporary organization designed to search for a repeatable and scalable business model.
A company is a permanent organization designed to execute a repeatable and scalable business model.
In other words, large companies find innovation difficult because they are set up to execute, not to innovate. That was fine from the industrial revolution until the last five to ten years, but now the pace of change is so fast large companies have to innovate as well as execute. The problem is that there are no good models of how to do that.
The first answer for many was M&A, and that remains a good route, but is very expensive.
Those in search of cheaper solutions tried skunkworks projects but found they usually get killed off by the mothership. They are now turning to partnering with the startup community, sponsoring accelerator programmes and making acqui-hires.
I don’t think we’ve found the final answer yet, but I suspect it will lie in taking best practices from the startup world and adapting them for larger companies, which are, for example, less resource constrained. It will also require large company executives develop some new modes of thinking about experimentation, and failure and success.