If Not You, Then Who Should Innovate?

Last week we discussed the role of innovation in a company and I made the point in “Whatever You Do, Don’t Innovate” that big companies should refrain from innovating and instead focus their efforts on bringing products to market and cost cutting. Innovation they would buy from smaller companies who would act as innovation champions. 

If not you then who? 

Obviously that begs the question who should then innovate and wouldn’t big companies come to a complete standstill if they stopped all development efforts? Let’s start by looking at what big companies should do in addition to bringing products to market and cutting costs. Big companies need to chase efficiencies wherever they can as well as make enhancements to existing products. This obviously requires some innovation efforts, but I would term that as small scale or evolutionary innovation rather something ground-breaking that can change an industry otherwise known as revolutionary innovation. They cannot however make a bet on innovation and try to make a living out of it as that would breed too much complexity which most companies find it very difficult to tackle. In general very few companies manage to re-invent themselves from inside hence the need to bring in external innovation from acquisitions. 

Small companies as innovation champions 

Small companies, on the other hand, face a completely different challenge. Bringing products to market requires marketing; sales channels; a back office etc. and especially at an early stage in a company’s life-cycle there is simply not the capacity for any of this. There is, however, a lot of capacity for new ideas and a mindset for making a difference in whatever industry you are in. This would be a natural driving force for wanting to start your own business. So why not make that your core competency instead of dreaming of becoming a big company? Take your idea, make it into something and then sell it off. Very few companies in general manage to go from being small to being big. So the core competency of a small company should be that of an innovation champion. Of course, you shouldn’t be naive. There needs to be a solid business case for your idea that you can sell to companies that want to buy or investors in case you need more money to develop the idea. 

Innovation is a force that drives our society forward 

At the end of the day, there are those who should innovate and those who shouldn’t. Others are better off focusing on other parts of the business cycle, but that doesn’t mean we should kill innovation in general. Without innovation, there is nothing driving forward society, but everyone can’t be world champions at everything which is why a focus is needed. Very few companies manage the full business cycle really well and can continuously renew themselves. I have previously cited in “Transform Or Be Disrupted And Die” that the average age of companies in S&P500 has dropped to just 18 years as of 2012 and there is no reason to believe that this average tenure wouldn’t drop even further. This supports the fact that most companies start with an idea, develop it to its fullest extent, take it through to the end of the business cycle (either as a stand-alone company or sold off to a big company) and at the end of it all the company disappears again. So let those that are great at coming up with ideas do exactly that, but don’t tie them down to a corporate structure while slowly suffocating them. And let those who sell and streamline do just that knowing that they will always be able to buy ideas for their pipeline so they can stay relevant. To me, that is a good division of tasks in society simply asking people to do what they are great at. 

Let me know what you think of these added thoughts on innovation in business. If you like what you read click “thumbs up” and if you have a different opinion leave a comment. 

For more articles about disruption and strategy please see below some of my previous ones and why not click follow to stay current on future thoughts? 

Whatever You Do, Don’t Innovate

What Comes After Must Win Battles?

The Non-Performance Culture

Return On Strategy: How Would You Define It?

Red Flag Management

4 Ways To Lead Without A Burning Platform

Transform Or Be Disrupted And Die

Introducing An Industry Disruption Index 

Anders Liu-Lindberg is the Regional Finance Business Partner for Maersk Line North Europe and is working with transformation of Finance and business on a daily basis. Anders has participated in several transformation processes amongst others helping Maersk Drilling to go Beyond Budgeting and transformed a finance team from Bean-counters to Business Partners. He would love the chance to collaborate with you on your own transformation processes to help you stay out of disruption.