Big Companies Need Small Companies in their Open Innovation Ecosystems

Corporations that are taking the lead in open innovation are hoping to gain an advantage over their competitors as they will get access to a more diverse inflow of opportunities, which can lead to faster and better innovation. Specifically, as they look toward smaller companies to bring within the orbit of their open innovation program, corporations understand that small companies bring these advantages to the table:

• Small companies often are at the leading edge of breakthrough or disruptive innovation. Breakthrough innovation – that is, innovation with potential to be a real game changer – can be exceedingly hard to achieve in a large, bureaucratic organization where people work in silos, have their own turf to protect and are wedded to the status quo. In contrast, entrepreneurial companies are often founded based on a breakthrough idea that the founders are passionate about and deeply committed to. They may lack the sources to bring this breakthrough to market, however, so they need the resources the larger company can provide.
• Small companies can take risks that large companies can’t afford to take because the bigger entities have to protect and defend their established core business operations. The price of failure for the small, agile start-up is significantly less than that of a large corporation. At this level people tend to embrace risk, while the larger companies may have cultures that don’t support risk taking at all.
• Smaller companies are often closer to the markets they serve than large corporations are to their markets. As a result, small companies can be effective in helping large companies obtain a better grasp of changing needs within a market and better insights into innovations that might meet those needs. Smaller companies may also have developed ties with sub-markets that corporations have not been able to reach. This again offers more opportunities for innovation.
• The approach and mindset of those operating in small businesses can provide a breath of fresh air to large corporations that are set in their ways, bound by tradition and afraid of change. Innovation requires agility, something many large corporations lack and many small companies have in abundance.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation