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Strategies for Driving Innovation in Large Organizations

Author: Elias Björnestål

Apr 8, 2022

“The calculus of innovation is really quite simple: Knowledge drives innovation, innovation drives productivity, productivity drives economic growth.” - William Brody (born 1944), Scientist

Innovation is essential for the growth and success of any company. Long lived companies have managed to overcome and finding new s-curves over and over again. The S-curve is a concept used to describe the trajectory of innovation and growth over time. It's made up of three key stages:

  • an initial stage of slow growth for a new service or product,

  • followed by a period of rapid growth,

  • and finally a stage of maturity and eventual decline.

The concept highlights the importance of ongoing innovation for sustained success, as businesses must continue to innovate and adapt to extend the maturity and growth stages or (eventually) find new s-curves to jump to. Or slowly die.

The average lifespan of a fortune 500 company is decreasing decade after decade. When the environment changes faster and faster it is harder and harder to keep up with the competition. In a survey of 677 executives CB Insights 41% say they are at high risk of disruption.

The benefits of innovation

Except the long-term criticality to innovate to survive there are also many immediate benefits for a company.

  • Increased competitive advantage: Innovation may allow a company to differentiate itself from its competitors, making it more attractive to customers and giving it a competitive advantage in the marketplace.

  • Cost savings: Innovation can lead to new processes, technologies, and products that are more efficient and cost-effective, resulting in significant cost savings for a company.

  • Improved customer satisfaction: Innovation can help companies identify and meet the evolving needs of their customers, resulting in higher levels of customer satisfaction and loyalty.

  • Increased revenue: Innovation can lead to new products, services, and business models that can generate new revenue streams and help a company expand its market share.

  • Talent attraction and retention: Innovation can make a company a more exciting and dynamic place to work, helping to attract and retain top talent who are drawn to companies that prioritize innovation and creativity.

The business case for innovation is pretty clear but why do large organizations struggle with it?

The challenges of innovation

It takes energy and resources to keep innovation alive in a company. From the beginning a new company is usually driven by an entrepreneur with a vision to change something for the better (innovate). However, when the company grow up it is usually optimized to draw value from that innovation not to invent new thing.

Some of the main challanges to innovation are

  • Bureaucracy: Large companies often have complex structures and processes that can slow down decision-making and hinder innovation. These structures exist to protect and streamline the current s-curve.

  • Risk aversion: Large companies may be hesitant to take risks on new ideas or technologies, preferring to stick with what has worked in the past rather than investing in unproven innovations. This might be to the lack of knowledge, time and/or incentives in the organization.

  • Lack of resources: Innovation requires significant investments (e.g. in R&D, education, bonuses, alternative cost to placing all time on maximizing the current business) which can be challenging for large companies that may be constrained by budgetary constraints or competing priorities/lack of focus.

  • Lack of strategy and vison: Often, top management may not fully understand the importance of innovation or have a clear vision for where the company should be heading. This can result in a lack of focus and resources being directed towards innovation initiatives, as other short-term priorities take precedence.

Guiding principles for an innovation strategy

There are numerous strategies that companies can adopt to become more innovative. The choice of strategy should depend on the company's ambitions and prerequisites, such as their current resources, capabilities, strengths and weaknesses, organizational culture, competitive landscape, and leadership.

There are some important trade-offs to keep in mind before developing a innovation strategy.

  • What mix of incremental, adjacent, and radical innovation should you have? Incremental innovation typically involves improving existing products or processes, whereas radical innovation may involve creating entirely new services or business models.

  • What emerging technologies or trends could potentially disrupt your industry? Are there any indications or evidence that such disruptions are already occurring?

  • How much resources are you willing to place behind our innovation initiative?

  • Risk vs. reward? Innovation involves taking risks, and not all new ideas will be successful. How much risk are you willing to take?

  • Long term vs. short term focus? You will always have to balance between optimizing the current business and investing for the future.

  • Should we guide innovation initiatives tightly (e.g., a strategic focus of cost cutting initiatives) or let creativity run free (e.g. Googles 20% time for emplyees to focus on any innovation)?

Strategies and tactics to become more innovative

There is not a one fit all strategy that works for all companies. Some are easier to implement, and some are more challenging but might be more rewarding in the long term. Some are just plain wrong for your organization.

We have divided some common strategies into three categories build, buy and partner. Many organizations have a mix of the different strategies.

Build your own innovation capability

  • Leaders need to lead: It is essential for leaders in a company to prioritize innovation and lead by example. Leaders need to demonstrate their commitment, set clear goals for innovation and provide the resources and support necessary to achieve them. Furthermore, leaders need to be willing to take risks and and be willing to experiment with different approaches, even if they are not sure if they will succeed.

  • Establish an innovation lab: Create a dedicated innovation lab or hub that is responsible for researching and developing new ideas, technologies, and products. This lab can serve as a central hub for innovation activities, providing resources, tools, and training to support innovation initiatives across the organization.

  • Foster a culture of innovation: Create a culture that encourages and rewards creativity, risk-taking, and experimentation. Encourage employees to share ideas and collaborate on innovation initiatives and provide training and resources to support their efforts.

  • Invest in R&D: Investing in research and development is critical for driving innovation in large companies. Allocate resources and budget to support R&D initiatives and ensure that the organization is constantly scanning the market for new technologies and trends that can drive innovation.

  • Implement a system to manage innovation: Establish a portfolio management process that allows the company to assess and prioritize different innovation initiatives based on their potential impact and strategic fit. This process can help ensure that the company is investing its resources in the most promising and strategically important projects. Complement this with proper training, tool set and incentives.

  • Establish metered funding of projects: Metered funding is an innovation funding approach where resources are provided gradually and incrementally, rather than all at once. It reduces risk by assessing the viability of the project at different stages and allows for frequent evaluations. This helps organizations make informed decisions about when to invest further and when to cut their losses.

Buy innovation

  • M&A team with funding: Buying startups and innovative companies is a strategy for driving innovation for some large companies. It provides quick access to new ideas, technologies, and talented employees. However, it can be expensive and time-consuming. To mitigate risks, companies need a clear innovation strategy and must evaluate potential targets carefully. They may also need specialized resources for successful integration.

Partner up and source innovation from outside your organization

  • Partner with startups and external experts: Partnering with startups and external experts can bring fresh perspectives and ideas to the organization. These partnerships can provide access to new technologies and markets, as well as opportunities for collaboration and knowledge-sharing.

  • Encourage open innovation: Open innovation involves working with external partners, such as customers, suppliers, and other stakeholders, to co-create new products and services. This can help companies generate new ideas and insights, as well as build stronger relationships with key stakeholders.


In conclusion, innovation is crucial for the growth and success of any company. However, large companies face several challenges to keep innovation alive, such as bureaucracy, risk aversion, lack of resources, and strategy. To promote innovation, companies must adopt suitable strategies based on their current resources, strengths and weaknesses, and competitive landscape. There is no one-size-fits-all strategy that works for all companies, but companies can build, buy, or partner to innovate.

Get in touch with the author!

Get in touch with the author!

Get in touch with the author!

Elias Björnestål

Management Consultant | Strategy & Business Development

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We are a modern data and technology-driven Management Consulting Agency committed to excellence.

© 2020 - 2023 Dyve Group AB (559291-2496). All Rights Reserved. Made by Dyve Studio.

We are a modern data and technology-driven Management Consulting Agency committed to excellence.

© 2020 - 2023 Dyve Group AB (559291-2496). All Rights Reserved. Made by Dyve Studio.