Navigating Risk: From Crisis to Innovation
November 9, 2010 Leave a comment
A big challenge for many companies today emerging from the financial crisis is retaining their ability to innovate new products and services. The typical view is that the larger the company, the harder it is to innovate. Why is that? It seems counterintuitive given the vast resources of larger companies compared to their smaller competitors. This issue was recently highlighted in an article on CNN.com. Here are the views of a few who have examined the issue in greater detail.
Can companies grow and continue to be creative and innovative? Or will smaller operations always have a monopoly in the new-ideas department? “I don’t think there’s any reason why you can’t be as big as Goliath and as nimble as David,” said Jim Andrew, a senior partner at the Boston Consulting Group, which publishes a yearly list of the world’s top innovative companies in conjunction with Bloomberg Businessweek. This year, Apple, Google, Microsoft and IBM led the list. Facebook and Twitter were nowhere to be found.
“Big companies have a tremendous number of advantages that should allow them to actually be, I would argue, more innovative than a given smaller company,” Andrew said. The tech giants tend to have a wide range of products or services to offer — meaning they can take bets on new ideas without risking their entire business, Andrew said. Start-ups, in contrast, tend to base their future on a single product or concept. They bet big, but most of them “end up dying,” said Karim Lakhani, an assistant professor at Harvard Business School. “They go out there, they try different things and then there’s a large, large failure rate,” he said.
Both Lakhani and Andrew said it’s easy for big companies to get too comfortable and forgo the risks that are necessary for innovation to occur. “As companies get bigger that latitude [for employees to be creative] often unfortunately gets taken over by more rigid management structures and more rigid philosophies,” Lakhani said.
For those interested in exploring this dilemma further, mark your calendars for an upcoming workshop that will help you navigate the risks associated with innovation. On January 11 & 12, Wheelhouse Advisors will conduct an executive workshop entitled Navigating Risk: From Crisis to Innovation. The workshop will be held at the highly renowned Old Edwards Inn & Spa in beautiful Highlands, NC. For more information, email Navigate@WheelhouseAdvisors.com or call 404-805-9203.