The corporation isn't a sturdy species. In fact, only a tiny fraction reach the age of 40, according to a study of more than six million firms by management professors Charles I. Stubbart and Michael B. Knight. "Despite their size, their vast financial and human resources, average large firms do not 'live' as long as ordinary Americans," the authors concluded.
Making Innovation Happen
A Global Aggregation of Leading Edge Articles on Management Innovation, Creative Leadership, Creativity and Innovation.
This is the official blog of Ralph Kerle, Chairman, the Creative Leadership Forum. The views expressed are his own and do not represent the views of the International or National Advisory Board members. Tweet ______________________________________________________________________________________
Entries in management (138)
SOME people say it is neither big nor clever to drink. Viz, a British comic, settled that debate with a letter from a reader who said: “I drink 15 pints a day, I’m 6 foot 3 inches tall and a professor of theoretical physics.” However, another question about size and cleverness has yet to be resolved. Are big companies the best catalysts of innovation, or are small ones better? Joseph Schumpeter, after whom this column is named, argued both sides of the case. In 1909 he said that small companies were more inventive. In 1942 he reversed himself. Big firms have more incentive to invest in new products, he decided, because they can sell them to more people and reap greater rewards more quickly. In a competitive market, inventions are quickly imitated, so a small inventor’s investment often fails to pay off. These days the second Schumpeter is out of fashion: people assume that little start-ups are creative and big firms are slow and bureaucratic. But that is a gross oversimplification, says Michael Mandel of the Progressive Policy Institute, a think-tank. In a new report on “scale and innovation”, he concludes that today’s economy favours big companies over small ones.
In twenty years of the Internet age, big companies have come to know more about their customers, their suppliers, and their own operations than they ever did, or could. Information pouring in from sensors and points of sale enables businesses to know how to sell things to shoppers before they know they want them, fix machines before they break, reorder stock before it runs out. “Big data,” which McKinsey trumpeted in March as “the next frontier for innovation, competition, and productivity,” is in fact the previous frontier with a new name.
One of Kent's friends — we'll call him Roy — is a master craftsman who owns a small business that makes custom wood furniture. After making some cutbacks in 2009, his little company still employs three fine woodworkers, an office supervisor/customer service rep, and an apprentice. What makes Roy unusual is that when he founded his firm a dozen years ago, he realized he knew nothing about business. And so he began reading serious books on the subject, as well as the Harvard Business Review and two or three business magazines.
I'm now thinking about a larger issue still. If placebo medicine can induce people to release hidden healing resources, are there other ways in which the cultural environment can "give permission" to people to come out of their shells and to do things they wouldn't have done in the past? Can cultural signals encourage people to reveal sides of their personality or faculties that they wouldn't have dared to reveal in the past? Or for that matter can culture block them? There's good reason to think this is in fact our history.