Companies Buy Innovation Success

The discussion centers around how large companies approach innovation, particularly through a strategy of watching and acquiring successful startups rather than focusing on internal innovation. This perspective comes from conversations with a large company executive about their approach to growth and innovation.

• Innovation Strategy for Large Companies:

  • Let startups do the experimental work
  • Watch from the sidelines without funding the experiments
  • Wait to see what works in the market
  • Once success is proven, either:
    • Acquire the successful startup
    • Partner with them
    • Clone their product using existing distribution and brand advantage

• Benefits of This Approach:

  • Free R&D through watching startups
  • Get more experiments done through hungry, motivated founders
  • Startups will try radical things large companies wouldn't attempt
  • Can leverage existing user base to outcompete if needed
  • Reduces risk and cost of innovation

• Large Company Operational Reality:

  • Only expect 40% efficiency from most employees
  • Keep redundant staff as "insurance" against turnover
  • Focus on incremental improvements rather than breakthrough innovation
  • Maintain appearance of mission-driven culture while being pragmatic
  • Challenge of balancing honesty with necessary corporate inspiration

• Organizational Challenges:

  • Harder to maintain mission-driven culture at scale (50+ people)
  • Need to balance truth with inspiration for employees
  • Must maintain appearance of innovation while being conservative
  • Have to "act like a politician" to keep morale while being practical

This represents a pragmatic but potentially controversial approach to corporate innovation, prioritizing efficiency and risk management over internal disruption.