Are the dynamics of innovation shifting in ways that favor larger companies more than entrepreneurial ones?
Ran across an intriguing article in Sunday’s New York Times. The author, Steve Lohr, raised the question of whether current trends may create a shift in advantage in innovation – from entrepreneurial companies to large ones. The argument is that many of today’s biggest problems are in complex fields such as energy and the environment — and that solutions will need to be multidisciplinary rather than the work of entrepreneurial inventors. “The pendulum of thinking on innovation does seem to be swinging toward the big guys,” Lohr wrote.
The article brought to mind for me an interview I conducted with Harvard Business School’s Clayton M. Christensen last fall. An edited version of the interview with Clay Christensen appeared in the Spring 2009 issue of MIT Sloan Management Review – but one point that didn’t make it into the published version (due to space constraints) was a brief observation Christensen made about established companies and disruptive innovation. Christensen noted that he had become ”a lot more optmistic” in the last five years about leading companies’ ability to successfully innovate disruptively, if the management team understands the principles of disruptive innovation.
Still, though, there’s certainly research suggesting that large companies often have difficulty successfully managing corporate venturing programs designed to foster innovative new businesses. As authors Rita Gunther McGrath, Thomas Keil and Taina Tukiainen observed in “Extracting Value From Corporate Venturing,” a 2006 article in MIT Sloan Management Review:
Executives wax and wane in their enthusiasm for launching new ventures outside an organization’s core business. In their more enthusiastic moments, leaders often see corporate venturing initiatives as sources of organic growth and vitally important engines of renewal. However, in their more disenchanted periods executives may see new ventures as high-risk, foolhardy distractions from effectively running the core business. What’s more, such pessimism isn’t wrong. Corporate ventures are risky and they usually do not produce hoped-for results.
What do you think? Are the dynamics of innovation changing in ways that favor larger companies? And are large companies getting significantly better at managing innovation — or not?