Firstly, I am extremely bullish on the innovation CAPACITY of large companies (enterprises).

Let’s start with a fact: For most of the past three decades, investments made by the entire venture capital sector totaled less than the R&D and capital expenditure budgets of individual large companies such as IBM, GM, or Merck [Source: Architecture of Innovation by Josh Lerner , 2/24/2014].

Let’s stop and analyze the following:

1. Entire venture capital sector (tens of billions of dollars) is less than
2. Organizations within companies such as IBM and GM (huge internal investments)
3. Per company, i.e. a GM, IBM or Merck

Wow…amazing!  This is WHY I love large corporations. The potential is simply massive!

So, while we admire and are in awe of venture capital firms, the notable huge enterprises actually spend more PER COMPANY than VC’s combined.

Let’s absorb this.

Next, the inevitable and what fuels my passion to disrupt large enterprises to innovate for more: Why is it that we see cutting edge and daring innovation from the start-ups funded by the VC’s constantly vs. corporate R&D? Why is corporate R&D bashful to experiment much more rapidly, introduce products faster, fail safer and be much more agile & diverse in their portfolio? Why does the process in big companies stall the productization of innovation by these companies? In last week’s blog , I compared SIRI vs. Watson and questioned why we had not seen many mini-Watson’s in the commercial market?

In ProVoke, I discuss one of the main reasons for this occurrence, which is large companies not wanting to digress focus and fear that the entrepreneurial process may impact the sales/revenues of existing massive product lines.  For example, Microsoft may fear that any digressions into the cloud model may impact the multibillion dollar outlook product sales on the PC. Result: By being a late comer to the show, it took a HUGE back seat to Amazon, who went in experimenting, learning, failing, succeeding, evolving and now owning the market. Blackberry stuck to its old model and is now barely surviving!

Start-ups by nature are founded and funded based on the notion that they are cutting edge, experiment heavily, and evolve rapidly. With a technical bench far (extremely) inferior to a large corporation, they set daring visions, take positions on topics and DRIVE technology to build the necessary ecosystem for their success. Remember, Tesla is a new comer. Yet, the ecosystem to support Tesla and the ‘want’ of the car was there far before there was a dealership. Oh, and the dealership is a swanky upscale store in the mall, where you can walk by with your latte and choose to buy the hottest next car…

Start-ups don’t have conventions to break and processes to change. However, corporations need to evolve and allow their massive technical capacity to shine. To do so, we have to stop being patent-centric, and become far more innovation-centric. Innovation= new products introduced to the market. Be more concerned about speed to market, vs. perfection. Be less focused on FOCUS and more driven by enthusiasm and market perception. Fuel the what-if fire that has been dampened by years and processes and procedures!

Once we change the mindset around patents and corporate R&D, and when we are willing to use the brilliance in the companies, corporations can and will drive the global innovation and investment landscape. The dialog is just starting and the process will have obstacles to overcome, but it is essential.

Note: Intellectual Property is invention. Not innovation. Innovation happens when we productize IP and the market consumes our products! We have to try. We will loose a few and then win big. Unless corporations make these huge bets, they will remain invention centric and not innovation centric.

And unless we do this, the hot new talent is not going to consider the large corporations, rather the hottest App company that just got an infusion of $50M from VC’s.

Also, let’s remember that relic companies such as Motorola, Kodak and many others, when they were drowning, had fire sales on their IP. I think Kodak is still trying instead of owning the space of photography platform.

Let’s Disrupt | Innovate | Lead