Giant Firms and the Futility of Startup Envy

Innovating at a large corporation isn’t about summoning the spirit of a Silicon Valley garage—it’s about more smartly leveraging the advantages of size.
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Ed. Note: This article was created in collaboration with ?What If!'s Inventing team in the Americas.

Innovation. When you hear that word today, the first place your mind might go is Silicon Valley. You think of names like Zuckerberg and Zynga and products like the iPad and Instagram. Certainly, the place, the people, and the products have gotten the attention they’re due.

But startups didn’t invent innovation. Many established companies—firms that are both large and old, like 3M or P&G—have incredible innovation track records. It’s just that, sometimes, large corporations are slow to innovate on a consistent basis, wasting time and resources in the process. It can lead to startup envy and a futile train of thought: If our multinational would just act like those clever guys in Cupertino, everything would be okay. But lusting after the kind of insights that come from energy-drink-fueled all-nighters is of limited use to mature firms. What’s needed instead is the self-awareness to leverage the advantages of size. What follows are some suggestions based on ?What If!’s experiences in the field.

Look in the Basement

One of the advantages to being big is the most obvious: big companies have more people and more history, which means more ideas. Not all of those thoughts always make sense at the time they’re introduced. They get shelved, migrating to the furthest reaches of wisened R&D folks’ brains.

Access to an archive of past projects can prove invaluable. Take what happened at Whirlpool, for example. In 2004 a concept for a dryer with a steam function was proposed. But it wasn’t what the company wanted to front burner. At the time, the company’s director of global innovation was quoted by Jessie Scanlon of BusinessWeek as saying, “We might say we want 80 percent of new revenues to come from innovations to core products, 15 percent from innovations that leverage or expand the core, and 5 percent from totally new innovations.”

Three years later, in 2007, the fabric care team began working on a relaunch of Whirlpool’s Duet line. The laundry team’s innovation manager reviewed shelved concepts for features to include in the new machines, and in 2008 Duet dryers hit the market with—guess what?—a steam function. Whirlpool’s “I-Board,” which reviews active innovation projects in an annual pipeline cleanup, is also empowered to resurrect tabled concepts.

Keeping tabs on the past can pay future dividends. It can dissuade folks from souring on ideas that take years to be actualized—and it can render mute any cries of, “We’ve tried that before.” That’s exactly right—you did, and don’t you forget it. Now it’s time to put that work to use.

Think with Both Hands

It’s not just about looking on the shelf. It’s about looking at what the other hand is doing. Think of this as a corollary to the previous point: if startups only have one arm to work with because of limited resources, then established entities are ambidextrous.

Take Johnson & Johnson. When the company wanted to innovate around its dental floss business, it drew inspiration from an unlikely place. Ethicon, the world leader in suture technology, is also a J&J division. Ethicon’s notched-suture technology allowed for more effective gripping in certain wound closure applications. It turns out that those notches also make dental floss more effective. Now, thanks to a cross-division engineering team—which spied the parallel and identified the opportunity—Reach “Total Care” uses “Micro Grooves” technology to aid in plaque removal.

Had the left hand not known what the right hand was doing, Micro Grooves never would have migrated to mouths. The worry, of course, is that in an ambidextrous company, the left hand won’t know what the right hand’s doing. Or that, at a multinational like J&J, the better analogy is to an octopus, with tentacles undulating about. So it’s as important for big companies to monitor themselves as it is for them to monitor the competition.

Show Some Patience

Here’s where being slow can be a good thing. Good ideas take time to become great ideas. Large firms can hunker down, wait it out—and even afford to ditch an idea that goes from good to not so good. This doesn’t happen at startups: if the one thing in the works doesn’t come to fruition, everyone puts down the ping-pong paddles and goes home. Enterprises invest; startups bet it all.

Cisco’s approach to nurturing new businesses speaks to this advantage. The Emerging Technology Group protects pockets of people looking for innovation breakthroughs—for two years, five years, 10 years, even longer. It lets them focus on disruption opportunities and leave next-generation innovation to the core business. These folks get $10 million, mentoring, and operate in stealth mode for 18 months. But to whom much is given, much is expected: 75 percent of these incubations are expected to become $1 billion businesses. TelePresence, a high definition video conferencing system, came out of the Emerging Technology Group. In 2011 the division built around TelePresence posted sales just shy of $1 billion.

Big companies get bigger by not holding ideas hostage, by building in a way for employees to take a shot at making innovative leaps.

The temptation for any company is to get caught up in the idea that it has to be a disrupter—that for it to innovate, it’s got to reimagine, reconfigure, re-whatever its approach. The cultural obsession with twentysomethings on the cover of industry magazines can lead to wishing for the impossible. Big companies should be comfortable being big. They have a vested interest in business models evolving, not being erased, and should recognize the advantages their assets give them in support of this mission: the advantage of shelved ideas, operating with both hands, and being patient. Utilizing these strengths is what differentiates innovators who are cumbersome and sluggish from those who wield power with force.

Illustration by Kris Fillon.

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