Corporate Innovation

Why Even Industry Giants Can Miss the Mark Turning Good Ideas into Successful Ventures

Big corporations, with their mountains of resources, should be nailing every new venture or product idea, right? Yet, sometimes they fumble. I’ve seen this happen in large corporations, and many mid-size scaling companies can also lose their way. Here are a few of the “why’s” from our experience with a healthy sprinkle of real-world examples.

1. Stuck in a Rut

Consider Kodak. Despite inventing the first digital camera in 1975, they doubled down on film, thinking digital was a passing phase. By 2012, they filed for bankruptcy. Big companies can be like cruise ships – hard to pivot quickly when the sea changes. The Fix: Creating approaches to “test and learn” without significant early investment can help prepare a company to double down on bets that are working. 

2. Afraid to Buy in Early

Blockbuster had a chance to buy Netflix for a mere $50 million in 2000 but deemed it too risky. In fact, I even remember speaking to a Blockbuster VP of business development about video-on-demand being a thing, and they told me that “they ran the numbers and brick and mortar will always be more economical.” Yep! They stuck with brick-and-mortar while Netflix soared in the streaming world. The lesson? Playing it too safe and holding assumptions too tight can cost you big.

3. Afraid to Break Old Habits

When Blackberry dominated the phone market, touchscreens seemed like toys to them. By the time they realized their error, Apple and Android had raced ahead, leaving Blackberry trying to catch up. What could have saved them? They probably needed to push faster to get to a better experience, or invested in an upstart to move the tech forward on a fast track while leveraging their position with their embedded customers. It has worked well for Microsoft at times, which can give you time to catch up if you are actually showing you can make progress. 

4. Not Enough Wiggle Room

Remember Google Glass? While a tech marvel, it was squeezed into Google’s larger ecosystem without a clear target market, causing its eventual demise. New projects need space to flex, grow, and occasionally blunder. META’s Oculus group seems to be taking an approach more in this direction. Sometimes you can be best served by setting up an alternative corporate structure for these initiatives, with more venture-like KPIs.

5. Resource Hoarding

According to a 2019 Harvard Business Review study, 60% of internal corporate startups complained of battling for resources with the main business. I’ve certainly seen this in action, especially under margin pressure in the core business. No wonder so many struggle to lift off. The solve: Again, setting up structures that look like a new “venture” can be better, or investing in startups that can start the process. Ford had done this well with their Ford X program that had dedicated funding for each level of achievement in the new venture.

6. Entrepreneurial Talent Gaps

Yahoo bought Tumblr for a whopping $1.1 billion in 2013. I remember that especially well because they bought the building where I had my company’s office at the time. That was a happy founder! But instead of letting Tumblr’s original talent shine, Yahoo tried to integrate them into its broader culture. By 2019, Tumblr was sold for just $3 million, showcasing the importance of the right talent (and founder) in the right place.

7. Not Doing The Right Homework

In 1996, McDonald’s launched the Arch Deluxe, aimed at adults and costing $150 million in advertising. But their core audience wasn’t biting. Remember New Coke? Same thing. Perhaps there was bias in the research, but clearly they didn’t really test in a large enough real-world setting. Sometimes, even giants can miss the mark on scalable testing if there’s a market for their big idea.

While many large corporations have the resources and potential to innovate, their size, culture, and ingrained habits can become stumbling blocks. To truly innovate, they might need to adopt a startup’s agility, openness to appropriate levels of risk, and partnering, and real-world market testing. There are many ways to set things up the right way to move initiatives forward, leveraging the right mix of internal and external talent to get things done. 

At Teem Ventures, we love the challenge of building new ventures, while taking advantage of the strengths of corporate partners. Let us know if we can help you meet your goals.