Are Big Companies Better Innovators Than Small Ones?

Here are some lessons that small companies can learn from big corporations about innovation.
CEO, Small Business Trends LLC
March 06, 2012

Ten or 15 years ago, small companies were seen as innovators and big companies were moving slowly to catch up. But time has altered the picture. Today, big companies are becoming more nimble like entrepreneurial firms. They learned a lesson from the dotcom revolution of the '90s.

Big companies have more staff, so more people can devote themselves to innovation. Many employees at large companies have experience at other large companies. Whether the company encourages employees to brainstorm or hires full-time positions dedicated to innovation, those employees bring their experience with best practices at other companies to their current company.

Large employers foot the bill for employee perks such as in-house training or professional-development programs, as well as outside continuing education or degree programs. This exposure to a wide range of disciplines and concepts allows them to look at problems from many angles.

Big companies have legal teams in place to protect their innovations and shepherd them through the stages to completion. When they decide to move ahead with an innovation, they have the infrastructure in place to do so. They have suppliers, manufacturers, sales channels and partners that are eager to help the new innovation succeed.

But, what are the down sides of big-business innovation? Corporations move at a glacial pace. They may be faster now, but “fast” is still a relative term when you’re talking about multinational firms. Getting buy-in for new ideas often takes more time than actually coming up with the concepts in the first place. And internal politics have a way of preventing the best ideas from getting off the ground.

Small companies have the advantage when it comes to innovation. In the closer setting of a small company, employees are often more willing to throw wild and crazy ideas at the wall to see what sticks. And since the buck usually stops with one person (or a few key people) instead of having to go through committee, it’s easier to decide to proceed.

Proceeding is where small companies can stumble. With limited resources in staff and financing, getting a new idea off the ground can be far more difficult and take longer than it does for a big company. And, since small companies are typically obsessed with saving money on legal fees, they may skip key steps that are essential to protect their ideas.

What’s the solution? Here are some lessons small companies can learn from big ones about innovation.

1. Put a system in place. 

Figure out how you’ll generate ideas and how you’ll capture and document them. Decide how you’ll evaluate them and what will happen to ideas that you decide not to use, but want to consider later.

2. The devil is in the details. 

Sometimes entrepreneurs get so enthralled with a big idea that they don’t think it through. Assess not only the idea itself, but also all the factors around it. Consider how the company will make the new product or service, distribute, market and sell it. What are the accompanying costs and the potential profits?

3. Protect yourself. 

It’s worth retaining legal services to ensure that your idea is protected every step of the way. This may seem beside the point early in the process, but decisions made at the beginning can come back to haunt you.

4. Find strategic partners. 

Don’t limit your innovative ideas to what your business can accomplish on its own. Partner with another company that has what your business lacks—whether that’s distribution channels, manufacturing know-how or a crack tech team. Legal protection is key in setting up a partnership, but done right, this can take your innovative ideas to new heights that you couldn’t have reached alone.

Do you think big or small companies have the advantage in innovation?