Can large companies successfully innovate?
The popular narrative is the bigger firms become, the less nimble and dynamic they are. Small startups are the disruptors, while big companies are doomed to being static and inflexible.
But according to Gary Pisano of Harvard Business School, this is a myth: large businesses can be just as innovative as startups. But to reach that point, you need to understand the four distinct types of innovation, how to devise a strategy for implementing transformation and, crucially, the importance of an innovative culture.
In this episode, Minds Worth Meeting speaks with Pisano about his recent book, “Creative Construction: The DNA of Sustained Innovation” (PublicAffairs, January 2019). In “Creative Construction,” Pisano criticizes both the fatalism about the ability of Big Business to innovate and the overly simplified notion that to be dynamic, companies need to “be like Uber.” Large, established firms are entirely different from those born as startups; they need to think about innovation in terms of how best to leverage existing strengths rather than undertaking a wholesale (and potentially destructive) disruption of their own business models.
Accordingly, Pisano urges leaders to determine which of the four types of innovation – disruptive, architectural, routine and radical – best suit a company’s position. And, drawing on his widely cited Harvard Business Review cover story “The Hard Truth About Innovative Cultures,” Pisano urges business leaders to recognize the key trade-offs between dynamism and stability that make for successful transformations. He offers a warning specifically to financial services firms about how failing to consider the role of new technologies can impede their ability to innovate.
For more information about innovation, growth and Pisano’s work as discussed in this episode, visit the links below:
- The Hard Truth About Innovative Cultures (Harvard Business Review)
- Large Businesses Don’t Have to Be Lousy Innovators (Strategy + Business)
- Fostering an Innovation Culture: Talent, Discipline and Leadership (The Wall Street Journal)
Visit Pisano’s website: gpisano.com
Follow Pisano on Twitter: @motogp61
Gary Pisano is available for speaking engagements and advisory/consulting services through exclusive representation by Stern Speakers, a division of Stern Strategy Group®.