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Why Don't Big Companies Innovate More?

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This article is more than 10 years old.

I'm not sure I agree with the premise of the question. I will give you my perspective as Vice President of the Samsung Open Innovation Center. Yes, we are a large corporation but we, and many companies like ours, are pushing very hard on making new ideas come to life in the world of technology. Samsung spends over $10 billion annually on research and development, and employs 50,000 talented and driven individuals to accelerate the pace of innovation. You might have seen in the news that Samsung is developing 5G technology – which is hundreds of times faster than 4G. Samsung is also working to release flexible displays. Lots of other cool products in the works. In addition, at the Samsung Accelerator (Samsung Accelerator), we will be unlocking innovation in apps and tools from promising entrepreneurial minds.

To your question – I don’t think big companies innovate less per se, but admittedly there are unique challenges to keep in mind:

Big companies have more involved processes: it takes longer to create a new project and see it through to launch. There are budgets to set and track, and if a product is lucky enough to make it all the way to production, there are marketing plans, QA, or production lines to build, etc.

You don’t want to risk jarring your customers: customers get accustomed to a certain type of product and interaction; that consistency and good user experience are what drives loyalty. Too much innovation within a certain product line can be dangerous.

Most big companies operate in complex ecosystems: most companies are not vertically integrated and therefore have complex supplier, distributor, and customer relationships. One big complex organization is difficult enough to navigate, but doing it across an entire value chain is even more difficult.

Reputational risk: the “halo effect” that surrounds all of the great products that made the company successful (and large) in the first place could be fleeting if a few bad product introductions hurt the overall company reputation.

Law of big numbers: if  big company produces a new product that has an ‘enterprise value’ of $500M, the overall size of the company dwarfs that accomplishment. As a result, a new idea that becomes a $500M company will, by definition, receive more attention from the press and consumers.

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