If you look at what a company really is from a different perspective, then it makes complete sense that an internal innovator cannot exist inside any established organization. Let’s examine how any company came to be: it first started with a few individuals with a shared project, who maybe managed to obtain resources beyond their own resources, for example by raising external capital. With these resources, they create a product or service, and more importantly look for customers. They may not find customers immediately, but through a long and painful trial and error process, they will try many different recipes before they actually discover the recipe to find customers. Companies who can’t find enough customers will die. Initial capital is just delaying this fatal outcome. During this first phase till initial success, the organization is very fluid. The company strategy can be completed changed, the product can be completely changed, the production process can be completely changed … basically anything can be completely changed. A newly established organization is fluid and can reconfigure itself quickly, because it is still small, and more importantly it has nothing to lose doing so.
After a recipe to some initial commercial success has been painfully discovered, then the only strategy that make sense is to replicate it to grow the company. The initial recipe will be scientifically and meticulously improved, optimized, refined and scaled in all its components. Possibly by deploying additional capital, because the investment is now much less risky. This is what professional managers do. They perfect the execution of a recipe and balance risks doing so. Because now, as an established company with many shareholders, thousands of employees, suppliers, customers … the company has so much to lose by doing anything risky. Any established company must be risk averse or it will quickly disappear.
Fast forward a decade or more of commercial success optimizing the same recipe with a risk-averse mindset, which still has room for some internal innovation but only of the incremental type, then any company is no longer fluid but solid. If it’s a public company obsessed with short terms returns, then it’s a very dense solid. It is also a large organization by now, with many gatekeepers to company resources. An internal innovator would have to convince all of these gatekeepers for any significant new endeavor. This is clearly impossible unless the internal innovator is the CEO of the company. That's why companies lose their best innovators. That’s why significant innovation cannot be produced inside large companies, but it can nevertheless be brought in via acquisitions ... sometimes from ex-employees who left to start their own company!
What you see as an established company today, you can also see as a “fossil of its past successes”. That’s why an established company cannot be an innovation machine in my opinion. This was not always the case in the past. It’s probably a consequence of contemporary professional management, with too much emphasis on short-term, low risk and immediate returns.
I think there is an interesting generalization to be made here: major innovations cannot be introduced to the market by raising billions to fund aggressive marketing push campaigns. Only minor innovations can follow this route to market, and it’s still risky.
If you define a major innovation as one that will have to challenge the established habits; then first and foremost, diffusion of a major innovation requires time, not money. To be understood, desired and finally accepted by the market/society. That’s why all major innovations I can think of started from very niche applications, and then patiently won neighboring niches, one after the other, slowly improving in the process, till they eventually became mainstream, sometime after several decades. This diffusion process generally spans over the lifetime of several companies. One example here: automobiles, around which our cities were ultimately redesigned.
It’s difficult to rewrite history, but had Segway started small as you suggested … it may have been more successful in the long run, as a concept and maybe as a company. To really change the world with some major innovation, starting small and targeting niche applications is the way to go.
After a recipe to some initial commercial success has been painfully discovered, then the only strategy that make sense is to replicate it to grow the company. The initial recipe will be scientifically and meticulously improved, optimized, refined and scaled in all its components. Possibly by deploying additional capital, because the investment is now much less risky. This is what professional managers do. They perfect the execution of a recipe and balance risks doing so. Because now, as an established company with many shareholders, thousands of employees, suppliers, customers … the company has so much to lose by doing anything risky. Any established company must be risk averse or it will quickly disappear.
Fast forward a decade or more of commercial success optimizing the same recipe with a risk-averse mindset, which still has room for some internal innovation but only of the incremental type, then any company is no longer fluid but solid. If it’s a public company obsessed with short terms returns, then it’s a very dense solid. It is also a large organization by now, with many gatekeepers to company resources. An internal innovator would have to convince all of these gatekeepers for any significant new endeavor. This is clearly impossible unless the internal innovator is the CEO of the company. That's why companies lose their best innovators. That’s why significant innovation cannot be produced inside large companies, but it can nevertheless be brought in via acquisitions ... sometimes from ex-employees who left to start their own company!
What you see as an established company today, you can also see as a “fossil of its past successes”. That’s why an established company cannot be an innovation machine in my opinion. This was not always the case in the past. It’s probably a consequence of contemporary professional management, with too much emphasis on short-term, low risk and immediate returns.