Why innovations in big companies are more obstructed?

Aren't those big companies innovating? Look at the World’s 50 Most Innovative Companies 2012, Apple, Google, Facebook, Amazon, Microsoft are all on the list. Rather than saying “Why big companies can’t innovate?” I would more agree with saying “Why innovations in big companies are more obstructed?”

As is mentioned in the article, profit-chasing developing structure is one essential reason that driven innovations away from big companies. Nevertheless, this could not be the only consideration.

1.   Brand Influence and Reputation

On one hand, big companies can’t afford risk from failure innovation the same as startup companies. Competitors are eyeing looked at them; market consumers are getting restrict toward products and service, brand reputation can be easily vilified.

Let’s take a look at the OS industry. Microsoft is launching Win8 in the next couple weeks, which might be another milestone in Microsoft history, and also a rebirth signal for Microsoft. Microsoft bets that users are willing to have all the way operating system to interact between their phones, tablets, and desktops. If Microsoft can win this gamble, Microsoft will expand his advantage in PC market, encourage App development, and promote other PC manufacturers to develop top-quality hardware for Win 8, as a punch to compete with Apple. However, if Win8 can’t really win users’ love, it would be a heavy blow to Microsoft, because users are already been picky complaining about the existing Windows releases. They can’t bear Microsoft innovate out another trouble for them.

Conversely, startups would not have to worry about this problem. A group of entrepreneurs sharing the same ambition has much less influence on the market at infancy, and market hold relatively tolerant and patient attitude towards startups as well.

2.   Organization Settings

Big companies have jumbled hierarchy to deal with large-scale of businesses and internal resources. Implementation of an innovative project may involve more than a dozen different departments to collaborate. Not only costs but also resources spent can be incredible. Thus, seemingly reasonable organization settings within big companies stifle flexibility, imprison enthusiasm and courageous, and prolong reaction time towards innovation and new trends. On the contrary, small companies have much smaller size of core team members, directing efficiency and take less reaction time before executive an innovation project, which implying higher probability of successful innovations.

3.   Game between Interest Groups & Power of Top Decision-makers

Power boundaries for top decision-makers have great impact on the innovation culture of big companies. Once successfully launching an industry-leading product, some top leaders would more incline to focus on the maintenance of this product, to preserve its monopoly position in the market, until another new product break this monopoly. Some veteran leaders focus on profit when developing business. Others control too much of internal resources with strong authority on the development of the companies. We can see that many big companies are facing this kind of conflicts and dilemmas.

This reminds me an article talking about Samsung's R&D culture, "Designers have lots of unique and creative ideas, but these have to be loved by the top decision-makers. The problem was, because they were so fascinated by the Apple design, these ideas weren't really satisfactory to please the top level," said a Samsung designer. "I think elsewhere top managers respect their chief designer's decision, but at Samsung, they overrule designers and have the final say about what design we go with. That limits our capability. To be better than a good fast follower, Samsung needs a more horizontal culture and to empower designers."

This top-to-bottom cooperate environment is really not conducive to innovation. Some big companies have already realized this problem and are trying to solve their companies. The new Yahoo! CEO Marissa Mayer announced her new Strategy and Vision to survive Yahoo! that streamline process, reduce bureaucracy, and eliminate obstacles to progress the corporate culture and work environment would be a huge part of her plan.

4.   Innovation Responsibility

Many entrepreneurs dedicate themselves days and nights on their ideas with great motivation. Compared with small companies, large companies usually innovative without financial troubles, innovation team members do not have to afford revenue/loss themselves, leading responsibility.