Tim Boot
Innovation has always had a huge role in speeding up society, with the biggest jump perhaps being the industrial revolution. In recent decades, technical innovation in particular has seen an immense increase in frequency due to the rising speed and capacity of processors. Surprisingly however, most radical innovations that nowadays characterize our society were originally invented by small companies or even individuals. Here is why.
Firstly and perhaps most importantly, the biggest difference is that smaller companies or start-ups often have a one product state of mind. Especially if the company is started because of an innovation, but of course in this case the innovation has already taken place. Usually when companies are set up to sell a single product, they will embrace a big risk because they have no stability to fall back to. This might end up in the company’s downfall, but if it doesn’t it might mean instant success. Bigger companies will not embrace this big risk because it cannot afford to lose a big sum in a competitive economy.
Another major factor in innovation within companies is the speed at which decisions make it through to other levels. In very small companies this can happen instantly, for example if the staff is all together having lunch. While taking in nutrients they have a game changing idea and everyone knows about it at the same time. If an employee of a big corporation has such an idea, he has to tell it to his boss after lunch, who might then tell it to his boss afterward. This is an informal way of transferring an idea. A formal way, literally through filling in a form, might take even longer. Companies can often take months to deliver feedback opinion on an idea, a time in which a small company might have already worked out their idea and brought it to the market.
Adding to this, there is also the fact that in a small group of members, everyone has a clear idea of how their company works and what their role in the market is. Perhaps they have all taken part in the foundation of the company and therefore know all about it, which simplifies the process of innovation.
On the other hand, there are some advantages which big companies have over their smaller counterparts in the field of innovation. They might have, for example, a very advanced system of dealing with innovation within a company. If a smaller company has a new idea but is not able to push it forward because of a lack of experience about procedures the innovation gets slowed down or even canceled. Corporations can be much more efficient in this matter. Then of course there is also the fact that large companies have much higher potential funds for innovating.
Concluding, we can see that smaller businesses have a clear advantage when a new, a radical, idea is being formed. Embracing the risk and idea of their new invention they work closely together to form a final product. Where bigger corporations might have a procedural approach to innovation within their bounds, this might get disrupted if an idea is purely radical. This is why bigger corporations are still leading in incremental innovations, but lose to their smaller counterparts when it comes to society-changing inventions.
Source used: https://www.linkedin.com/pulse/innovation-7-key-differences-between-big-small-stefan-lindegaard