Large companies seem to be considerably advantaged when it comes to innovation thanks to their unlimited resources to buy and bond together smaller organisations and startups. However this can often be a mirage.
In the past months I have been involved as a creator of small companies, as Business Angel for startups, and also with very large companies in strategic reviews to develop new businesses. Large companies have the great advantage of unlimited resources (at the scale of startups or small companies) when it comes to put together a new business through multiple acquisitions. However at the same time they are probably not the best soil for new ideas (refer the previous post on ‘How Large Should Creative Organisations Be?‘).
Keeping innovation sprouting in a large companies trying to develop a new business by acquisition requires:
- First, a relative isolation of the innovative branch from the rest of the business and its bureaucracy. It needs to remain independent and enabled,
- A certain level of stress to be maintained, otherwise, as I have observed, confort and overhead will grow tremendously without real commercial development.The unlimited resources and cash is a great advantage to develop new businesses; at the same time it can be a bit too confortable,
- An industrial logic to the shopping spree around a driving idea that makes sense,
- Keeping competition for the services offered by the innovative branch to the original business to detect new offerings and competitors,
- Exchanges of personnel between the historical activity and the new activity to produce progressively an understanding; however this must be carefully limited and people from the original organisation carefully vetted for their adequacy.
Developing a new activity by acquisition in a large organisation is no easy fit. It requires a lot of management attention. The ‘ugly duckling’ syndrome is never far. Apply those principles to overcome the issue. Any additional idea?
