Why Small Companies Have the Innovation Advantage
Why big companies would rather buy your company instead of launching their own competitive version.
Opinions expressed by Entrepreneur contributors are their own.
When I first started my company, I hit the business plan competition circuit for funding and feedback. At each event, I encountered the same question from a judge or a member of the audience: "This seems pretty simple, why doesn't [insert large competitor] just do this?" My response was always the same: "I don't know--they just don't." The answer was always oddly sufficient, probably because the asker had no idea either.
That question ultimately became rhetorical, in the eventual sale of my company and in general observations on how big companies and startups act. Why do large companies more successfully acquire instead of innovate? They certainly have the talent, the money and the existing market share to launch startups with ease, yet they don't do it very well. What's clearly missing is something in their DNA, but also something in the numbers. As big companies look at growing internally or via a shopping spree, it's important to consider the underlying motivations and math.
Continue reading this article — and all of our other premium content with Entrepreneur+
For just $5, you can get unlimited access to all Entrepreneur’s premium content. You’ll find:
- Digestible insight on how to be a better entrepreneur and leader
- Lessons for starting and growing a business from our expert network of CEOs and founders
- Meaningful content to help you make sharper decisions
- Business and life hacks to help you stay ahead of the curve