Who Innovates Better: Start-Ups or Big Business?

15 Feb

Entrepreneurial start-ups have to be innovative. That’s how they survive and grow. But are smaller, newer companies more innovative than their larger, more established cousins? Some may think so, but I disagree. It’s not size nor newness that makes some companies more innovative than others. Here are the factors that I’ve found to be most important.

Factor One: Pressure to Perform

Any new entrant to a market, or any company that wants to introduce a new solution, must differentiate itself from existing players. The company must persuade customers to switch from their current suppliers and solutions. This forces the entrepreneur to innovate effectively. By contrast, larger firms can often coast for years on the strength of their current offerings, their client base and reputation.

Factor Two: Mindset

Large organizations tend to draw individuals who are risk-averse and happy as followers. Entrepreneurs embrace risk and often swim against the current. Therefore, innovators are often attracted more to self-employment rather than to steady employment.

Factor Three: Resources

Here, the advantage lies with large enterprises. Entrepreneurs may get ideas, but corporations have the ability to conduct research, to experiment, to attract top talent, to turn ideas into workable solutions, and to implement or sell innovative solutions.

No matter how large or small your organization, you can put pressure on yourselves to innovate; you can foster an innovative, risk-tolerant environment; and you can apply your resources intelligently to the task of innovation.

Linked Resource: Anthony Ferrier’s white paper compares small and large companies and offers suggestions for fostering innovation.

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Posted by on February 15, 2016 in Uncategorized


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