Maxims of Tech - Rules of Engagement for a Fast Changing Environment … or how to thrive in what is the extreme sport of business By G. Dan Hutcheson
Why big companies don’t innovate: Structured risk aversion It is a mistake to believe that risk aversion or the tendency for meeting quarterly numbers to always trump product development are the primary reasons why big companies don’t innovate. It is not the case because when these constraints are removed, they still don’t innovate. The reason is that in removing the barriers to innovation big companies also typically remove accountability for innovation. Research divisions become big sandboxes where nothing of value is accomplished.
In start-ups, accountability means that failure results in job loss, plus years of underpaid work where your sweat equity evaporates. The reason is that the firm cannot survive if individuals fail. In big companies, revenues continue to come in whether or not there is innovation. Worse, innovation often has little incremental impact on revenues, but the development costs have a large impact on profits. So innovation is subjected to ‘death by meetings’ with too much planning, too many approval points, and too little action.