Who can innovate more: the small or the large company?
Q: We’re a large but local company. We’ve been following your series on innovating and agree with you that it’s today’s engine of growth. We haven’t grown over close to a decade and believe it’s because we have not innovated.
During our strategic planning the other month, our strat planning facilitator who’s an MBA professor told us that we could not innovate because our size has made us very bureaucratic and conservative. He recommended that we should start doing things like a small company so that we can be flexible and open to change.
For five straight days last week till Friday, those of us who take our lunch at the company’s executive dining have been busy discussing the issue. We’ve gotten no clear answers to these two questions. First, is it true that the small company can be more innovative than a large one? Second, is it really size that is the barrier to our getting innovative?
We’ve asked our strat planning facilitator but he said he has done his job as a facilitator. He added that it’s not his responsibility to serve also as our entrepreneurship consultant. So will you please help? Just give us your thoughts on our questions.
A: It’s an old and popular fiction in the business community to believe that the large company cannot innovate. It’s amazing how this fiction still prevails today and in your case it even came from your MBA professor.
Let us say outright that size has nothing to do with your company’s or any company’s ability to innovate. Because more than 90 percent of the population of companies is small, most businessmen expect that by sheer number, there should be more innovators from those 90 percent small companies. However, there are simply too many large entrepreneurial and innovating companies that can challenge this fiction.
We invite you to look at, for example, Forbes Magazine’s 2013 100 most innovative companies in the world. After going over that list, what is it that you find most conspicuously missing? There are no small companies in the list.
Then look at those large but very old and established companies who have remained in the list as “most innovative.” There’s, to just mention a few of them, Estee Lauder as no. 15, Hershey’s as no. 28, P&G as no. 30, Colgate-Palmolive as no. 32, Anhauser-Busch as No. 45, L’Oreal as No. 48, Kellogg as No. 54, PepsiCo as No. 58, Unilever as No. 63, and so on. What does this mean? It radically redefines the issue. It’s not just a question of who can innovate more. It’s a question of who can innovate more and at the same time innovate continually on a sustained basis.
You said you’re a large but local company. So let’s shift to the local scene. Since the ’80s up to the first three years of 2000, the Senior MRx-er served every so often as a marketing and marketing research mentor to the senior executives of Unilab’s ethical and consumer divisions. That long-term experience left the lasting impression. Unilab has been and still continues to be one of the most, if not the most innovating and entrepreneurial large, local company. Just think of its many billionaire and multi-millionaire brands like Biogesic, Alaxan, Ceelin, Enervon C, RiteMed, Vidastat, Aspilet, pHCare and several others.
You also said or your MBA professor said that you’ve grown bureaucratic and conservative. But you should know that so have Unilab and several other large local companies that nonetheless are still continuously innovating. What we’re saying is that if bureaucracy and conservatism exist in both innovating and non-innovating companies, you have to admit that lack of innovating and continuous innovating simply cannot be traced to size.
So, what’s the true barrier to innovating and continuously innovating? That true barrier is in wrong marketing decision-making. Those who fail decided to bet on an innovation that was a wrong product which was in the wrong market segment and introduced at the wrong time. Consider the case of Centrum Vitamin when it first came into the vitamin market in the ’80s. It was the wrong vitamin product because the supplement market then was owned by the two leading brands. Enervon C, the dominant market leader, was the consumers’ “during-the-day” energizer while Revicon, the threatening No. 2 brand was the consumers’ “reserved-energy” vitamin. Centrum decided to sing the positioning song of “stamina and strength.” While research showed it was a consumer need, consumers themselves said that Enervon C and Revicon already provided for that need. However, two decades later, Wyeth reformulated and relaunched Centrum. Now, it sang a different positioning song as the vitamin that’s “complete from A to Z.” That was the right positioning in the vitamin market which has changed. It’s a market that research showed was now looking for an “all-in-one” supplement.
Finally, what can we imply from the reality that innovating can succeed in both large and small size companies? It’s obvious. Any company of any size can innovate. They can successfully innovate if they really want to, and if they persist in the effort and do so continuously. But remember, it is in the persistence and the continuous where the small has the disadvantage versus the large. Even with the will to innovate, the small do not have the resources to support on a continuing basis what the will wants. We repeat and say then that it’s not an issue of who’s innovating more. It’s about innovating more and innovating continuously.
Keep your questions coming. Send them to us at [email protected] or [email protected]. God bless! To discover how to get mentored by Dr. Ned, visit www.NedMarketingAcademy.com.
