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Innovation|The Legacy Company’s Guide to Innovation
Innovation

The Legacy Company’s Guide to Innovation

How to collaborate well and scale up fast by Ivanka Visnjic and Ronnie Leten

From the Magazine (September–October 2024)
Gjon Mili/The Life Picture Collection/Shutterstock

Summary.   

Many experts are urging established companies to radically innovate—and disrupt themselves before someone else does. The trouble is, large firms aren’t designed for moon shots. Their owners don’t like the risks and won’t kill the goose that lays the golden egg. As a result, all too often they end up defaulting to incremental innovation. But there is a solution: Incumbents can partner with entrepreneurial start-ups or with intrapreneurs that have ideas for breakthrough products. By doing that, they can leverage their significant resources while increasing the odds that those ideas will take off. This approach does require careful management, however. Drawing on the experiences of more than a dozen large multinationals, including Atlas Copco, Enel, and Epiroc, this article outlines a three-stage innovation process for incumbents to follow: First, set up numerous projects with multiple partners, nurturing them until their chances of success become clear. Next, once a venture has a breakthrough, gradually increase your commitment and help it remove roadblocks. Finally, when its business model is viable and it has a critical mass of customers, rapidly mobilize the resources it needs to scale up quickly.
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As the markets celebrate the success of gen-AI and green-tech start-ups, many experts are urging established companies to emulate those ventures by committing to radical innovation—by disrupting themselves before someone else does. But for a lot of incumbent companies, that’s just not a feasible strategy. Their owners don’t like risk and won’t kill the goose that lays the golden egg. As a result large enterprises end up defaulting to incremental innovation, perversely increasing the chances that they’ll get upended.

Read more on Innovation or related topics Scaling entrepreneurial ventures, Joint ventures, Start-ups, Talent management and Entrepreneurial business strategy
A version of this article appeared in the September–October 2024 issue of Harvard Business Review.
Read more on Innovation or related topics Scaling entrepreneurial ventures, Joint ventures, Start-ups, Talent management and Entrepreneurial business strategy

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