5 Reasons Why Global Corporations are Struggling to Innovate


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Thursday, May 13, 2021

Large firms are often finding themselves stuck in a rut when it comes to innovation. Why do businesses with so much talent struggle to come up with new ideas?

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5 Reasons Why Global Corporations are Struggling to Innovate

Innovation is crucial in the world of business, but it’s not always easy to come by. Paradoxically, it seems to be large companies that struggle to innovate more than smaller ones. Despite greater access to talent and resources, global corporations are finding it hard to come up with new ideas.

This is being exacerbated by the ongoing pandemic. Despite 90% of executives believing that COVID-19 will change the way in which they do business, only 21% believe they have the experiences, resources and commitment to successfully do this. Why is this, and what can managers do about it? Here are five of the main obstacles to innovation for global corporations.

Innovation is hard to scale

Large companies work with large customer or client bases, therefore innovation isn’t just about coming up with new ideas. It’s also about working out how to bring those ideas to thousands or even millions of people, and these are two very different skill sets. For example, smart factories are an effective form of innovation, but only 10% of such factories are ready to drive them to scale.

This is why it’s a good idea to have a separate team for innovation scaling. John Bessant, professor and chair in innovation and entrepreneurship at Exeter University, said:

“Scaling is all about other people - trying to put yourself in their shoes, understanding how they might perceive the innovation, how they might perceive the innovator.”

Negative company culture

A company culture doesn’t need to be toxic in order to stifle innovation. In larger businesses, often the fear of making a mistake is all that’s needed to prevent new ideas from being created. If nobody dares take a risk, innovation will be much harder to achieve.

Timothy R. Clark, CEO of LeaderFactor, points out two examples of companies dealing with employee mistakes. In one, staff were punished for showing vulnerability. In the other, they were rewarded. The latter was much more innovative, as it was able to cultivate a culture of “intellectual bravery”.

Large companies and stress

It should be no surprise that stress makes for poor innovators. Stressed employees take more days off and perform worse at their jobs, which prevents new ideas from being formed. Larger companies are already more susceptible to stressed employees, in part because of the distance between the CEO and the workers, which makes innovation harder for bigger firms.

Tackling this can be difficult, as the causes of stress vary from organization to organization. However, one of the chief causes of workplace stress is office politics, followed by a lack of interdepartmental communications. As a manager, these are fixable problems, and tackling them can lead to a real boost in innovation.

Lack of alignment

Big companies are made up of a variety of departments and teams. The more of these there are, the harder it will be to align them all, and this is a big problem; more than half of executives agree that “turf wars” and lack of alignment are the biggest obstacles to successful innovation.

Change in this area needs to come from management. Large corporations often have hierarchical structures in which it’s easy for silos to form. Managers need to look at ways of destroying these silos, enabling teams to work together towards a common goal. It’s also important for everyone to see innovation as part of everyday work, rather than a separate aspect of the business.

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