Why Small Companies Have the Innovation Advantage



The article that I found explains the importance of the innovation on the small companies. It discusses the difference between big companies and small companies on the innovation road. The question is why do large companies are not successful by doing innovations but acquiring. Because they have money, existing market share to launch startup easier than the small companies.  So there should be some reasons under that topic, and the author underlines the effects of people, culture, cost, organizational structure, and risk about that situation.

People and culture are the significant parts of the companies. They reflect their companies’ values. And to launch a startup, a company needs to have innovative entrepreneurs which is typically isn’t in a job description for a large company. Big companies generally hire new people, when they need more workforces rather than having people who think and come up a new idea. What is more, people who are working in large companies, generally work to achieve their goal for the company, not for the more. There are of course exceptions in that topic, for example Google forces their employers not to work on their current job but allows them to work on their individual projects. Which makes people more creative and causes them to come up new, innovative ideas. But most of the companies, this is not the case, they want their employers just finish their routine work as soon as possible.

If we look at the cost and organizational structure, the difference is about, because small companies or startups try to beg, borrow and barter to find funds. However large companies reinforce established processes, to accomplish same things at a much slower speed with more cost. That’s why, this lack of money triggers small companies to come up different, unique, solutions to solve the problems that leads to innovations.

Risk is the other important topic, which prevents large companies to give a chance for the new ideas. Instead of taking risk for the new ideas, they would prefer to buy the small companies which are successful for their launch ups.


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