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6+1 Reasons Why Large Technology Companies Fail to Innovate With New Products

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One of the reasons why startups succeed introducing new products, services in the technology world compared to large incumbents, is their ability to execute quickly with limited resources. Virtually zero bureaucracy/politics combined with tons of dedication and enthusiasm a startup will execute quickly! Agreed that not every startup succeeds but the ones that succeed combine innovation with execution helped with a little bit of luck!

But why do large companies fail (and in the context of this post – large means a publicly traded technology product company responsible for shareholder return), in general, to innovate or introduce new & commercially successful products & services? Here is why I think that happens, and  in no particular order of priority:

1. Silos within mid to large companies leading to duplicate efforts, lack of sharing the knowledge of what works and what does not work

2. Product Developers isolated from consumers or potential customers by layers of people – Product Managers, Program Managers, Business Development

3. Time to market, inability to move quickly to changing market requirements (may be an effect of #2 above?)

4. Lack of domain expertise, especially, when product requirements are converging with multiple domains (thinking Mobility combined with Video – a handset not just for calls but for watching video as well!)

5. Not big enough – the fixed overhead of running a large organization prevents it from entering relatively small markets – it does not pass their formal or informal ROI benchmark

6. Short Term Horizon – financial results for the next quarter drive design & development, rather than strategic product innovation

Bonus Reason:  Absence of tiered product development model – either build it or NOT! (the decision to build an innovative product is based on internal and mostly theoretical analysis which results in a Yes or No)

This inability or lack of prototyping phase makes introduction of new ideas, products challenging. This is true especially when the company has to deploy a hardware product (and not just software in the cloud) to trial the new idea/concept with its customers.

I will share my thoughts on how to implement rapid prototyping using specific examples in future posts meanwhile I would love to hear from the readers if you know of any good examples….

[Disclaimer: There are exceptions to rules and observations .. an obvious exception to my observations below is Apple, and there could be many more, so read on keeping in mind that these are observations on why large companies fail to introduce innovative products and make them commercially successful.]


Written by Ashu Joshi

July 11, 2010 at 7:30 pm

Posted in General

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