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Can big organizations innovate? Yes.

One great misnomer about innovation is that big organizations can’t do it. There are many stories of great innovations done by big companies. We love entrepreneurial stories and small is beautiful philosophies, but there are many great inventions from big, and old, organizations.

Many of the greatest technological innovations of all time, landing on the moon (NASA), the creation of the first PC, mouse, personal network and laser printer (Xerox), and the development of the Internet (DARPA) all took place inside of large organizations. Then of course there is the ENIAC (first PC), the first jet engines (RLM), and countless other inventions created, or successfully made into products, by various large organizations throughout history.

I’m not saying innovation is easier in large companies (although occasionally it is) – I am saying that the size of an organization is rarely a deciding factor: it’s the organization’s attitude towards change that matters. For example,  If the CEO of SuperBig Inc. decides to pay $1mil to any employee who prototypes new product ideas, guess what he’ll have? Lots of hard working people willing to take risks with new ideas. Alternatively, if the CEO yells at people for taking chances, and pays bonuses exclusively for complacent status-quo behavior, he’ll never see innovation no matter who he hires, what he says or what books he reads.

One hypothesis is innovation hinges on two things:

  1. Willingness to take risks
  2. Commitment to hard work developing new ideas

Both are hard to achieve in any sized organization. Talent, resources, and luck are irrelevant if no one is taking the risk of pursuing something new  (#1) and working hard to make them pay off (#2).

There are many caveats. Risk aversion is rampant in big organizations, but a small team in a big company that is successfully lead by someone comfortable with risk, and capable of managing large company politics,  may be free from the problems the rest of the company suffers from. There are enough examples of innovations by (small or medium sized groups inside) big organizations to render size a less important variable than is commonly believed.

Instead of lamenting “my company is so big it never innovates” – a more accurate complaint is “my boss’s decisions don’t reward people with ideas for positive change”.