Big firms have a structural problem with innovation…or do they?

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Larger firms have expanded their innovation sourcing portfolios: continuing to take advantage of their traditional sources while expanding their use of open innovation.

MIT Research Report

Bigger firms are believed to focus on the exploitation of existing resources and incremental innovation over the exploration of new products, markets, or ways of working. As a result, they are believed to be more prone to disruption by smaller, more agile firms that are able to innovate faster and more efficiently.

In our research with MIT, we set out to test if these commonly held assumptions can be verified empirically. Our aim was not to assess the difference in innovation practices between startups and large firms. Rather, we wanted to understand whether, as firms grow larger, there is a decrease in innovation efficiency as the literature suggests.

We surveyed 300 companies with revenues of at least $500M from across seven industries and eight countries, which allowed us to look at how innovation practices scale as firms go from hundreds of millions in revenue to tens of billions.

In this paper, we will answer three main questions:

  • Are larger firms more internally focused?
  • Are they less agile than their smaller counterparts?
  • Are they less digital?

We found results that refute many popular beliefs about larger firms.

MIT-Capgemini Research

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