Law of Big Numbers Kills Innovation

Law of Big Numbers Kills InnovationI just read a comment by Mike Hess in my 15inno group on LinkedIn. Mike is Vice President for Innovation Excellence at Medtronic and he is a very experienced corporate innovator worth listening to.

Mike commented on my blog post on the differences between big and small companies and this is what he wrote:

“Large companies also can become paralyzed by the law of big numbers, that is they are looking for a certain amount of growth and it is difficult to think of many “small” initiatives as the right way to reach that goal, so in the interest of focus and prioritization they will seek out several large opportunities – small companies may find an opportunity the large co discarded very attractive on a relative basis and pursue it with success.”

Mike’s comments took me down memory lane to a longer-lasting consulting assignment that I had with the corporate venture unit in a large Danish company. This corporate venture unit fought hard against the law of big numbers. Their strategy was to keep their small projects at arm’s length from the big corporation itself and to educate the executives on how to see and assess value in small projects with a radical promise.

I have a question for you. What can corporate innovation units do to avoid being sucked into the law of big numbers? The corporate venture unit could keep things at arm’s length because this is what such a unit is often built for and they took on the challenge of educating the executives. What else can be done?

It would be great to hear some insights and experiences on this.

P.S. Unfortunately, the mentioned corporate venture unit closed during the recent crisis, which made me loose some faith in this model for innovation. Check this post: Is Open Innovation Replacing Corporate Venturing?

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Stefan LindegaardStefan 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

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No Comments

  1. james mawson on May 16, 2011 at 11:31 am

    thanks, Stefan,
    most interesting topic – can we cross-promote in Global Corporate Venturing magazine again as a guest comment from you?
    cheers,jim

  2. Jon Bidwell on May 17, 2011 at 5:30 am

    This tension is one that we can never completely eliminate. One technique that I continually use is to remind audiences within my firm, including the C-suite, of how many “pillar” businesses within the firm were created and launched as highly speculative ventures. Some of these go back over four decades…incorporating these case studies in presentations, discussions etc helps restore the sense of perspective. At least in my industry there are virtually no billion dollar businesses sitting around as undiscovered at gold at Sutters Mill in 1848–they have to be conceived, evolved, nurtured and built. A few years of hard work, then the right to enjoy the revenue inflection point is earned.

    History is written by winners and too often speculative gut instincts backed by a few stubborn facts transforms into the amazing foresight to see a huge new business, fully formed, from day one.

    Do the walkback on your firm’s own “pillars” and see how each started.

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