Small businesses and innovation

Here's an interesting little piece of information

Small businesses produce 14 times as many patents per employee as large companies do, and they are twice as likely to turn those inventions into successes, according to a Congressional report.

This confirms the folk wisdom that large companies are good at marketing and small companies are good at innovation. Why is this? Because the large companies have too rigid a structure and bureaucracy to allow for all of the uncertainties that innovating requires companies to bear with. They are too rigid and less forgiving than smaller companies are and they often have gatekeepers in place who have no clue about what is a good idea and what is not. So innovation is retarded or scotched altogether. It usually ends up that large companies buy innovation rather than developing it in-house.

The myth is that companies are these rational little entities made up of rational people who have their own rational way of communicating, creating rational policies and rational results. The reality is that companies are made up of people and often rage with the problems created by people. Smaller companies have less of this and that can make them more flexible.

Of course there are exceptions and it doesn't really have to be that way at all. One of the promises of the team idea was that is would allow for good ideas to percolate around a company. Hasn't happened much at all, I'm afraid. But at least it got the problem more right--the flow of information is the problem in any company. If we really had thinking companies which is possible to do, that information would flow the way it should and innovation would be possible in any company.