The case for how big companies can be disruptive


How can large companies ensure they aren’t left in the dust by nimble start-ups? (Mark Lennihan/AP)

The traditional thinking on innovation is that being a large company hurts more than it helps. Radical new ideas are more likely to emerge from small start-ups that are less restricted by bureaucracy.

Ben Horowitz, who co-founded the prominent venture capitalist firm Andreessen Horowitz, sums it up well: “Big companies have plenty of great ideas, but they do not innovate because they need a whole hierarchy of people to agree that a new idea is good in order to pursue it. If one smart person figures out something wrong with an idea — often to show off or to consolidate power — that’s usually enough to kill it.”

In a report released Monday — “From Digitally Disrupted to Digital Disrupter” — Accenture challenged that notion, and suggested that in the coming years traditional companies will emerge as big innovators in the digital world:

If the last decade has been seen as the playground of the digital start-ups—overnight sensations such as Instagram and Twitter, Zipcar and YouTube, TripAdvisor and Airbnb — then the coming decade will see the emergence of the traditional companies as digital giants.

Accenture chief technology officer Paul Daugherty says he’s seeing a mind-set change as companies put a priority on digital skills and experience, which is creating different results.

“If I look back over the last couple years the large organizations were a little on their back foot with respect to digital,” Daugherty said. “We do see a change in the way big companies are approaching digital — really incorporating it into their core strategies of what they’re doing.”

Daugherty pointed to the example of Tesco, the largest food retailer in Britain. It has created a digital super market in an airport, streams online entertainment and sells its own tablet. And there’s Disney, which is changing the theme park experience through wristbands that will help visitors avoid long lines and receive other perks. General Motors has opened the APIs around OnStar which has led to RelayRides, a ZipCar competitor.

While Daugherty acknowledges start-ups will still disrupt some large players, he says big companies are positioned to change the world in their own way.

“If you think about digital and the potential of it, scale matters,” Daugherty said. “… Like other revolutions, the large organizations do adapt and change their business models, elevate assets and drive the innovation.”

Matt McFarland is the editor of Innovations. He's always looking for the next big thing. You can find him on Twitter and Facebook.
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