White Paper: Innovation Challenges for Large and Small Companies

Challenges in innovation are universal in many ways. The need for user requirements identification, brainstorming/ idea generation, prototype creation, and feedback collection are staples of the design process across many industries. However, a dichotomy exists for large and small companies with respect to the challenges they face when trying to create a robust product innovation process. 

Challenges of Size and Scale

Large companies sometimes have a challenging time with product innovation due to organizational structure and intracompany politics. Although resources are mobilized and focused toward a corporate objective, time to market is slowed and product leaps are diminished due to challenges with the sheer size and immensity of their organizational structures. In a large company there are many levels that must be involved. Sometimes, even a simple design change has to be approved by 3-4 levels of a single department. Additionally, matrix organizations typical of the medical device space will require approvals from other groups such as Quality Engineering, Quality Assurance, Regulatory, Product Management, Sustaining Engineering, etc. These approval processes are a necessity that naturally slow the development process. While the checks and balances of the matrix keep companies safe, they also create a bureaucracy that hampers innovation and instead of incubating new ideas those same ideas are driven out because they are radical or different than the norm. To borrow the Japanese expression, ‘the nail that sticks out gets hammered down’, meaning that anything innovative in a large company is apt to be discarded unless it is forcefully and aggressively protected.

Organizational structures may also hamper innovation in large companies by minimizing the impact of employees by emphasizing adherence to ‘your role’. This silo mentality often diminishes communication but also reduces the employee’s ability to contribute in areas of his/her competence. The system inadvertently impedes the company’s greatest asset: human capital. In other instances a large company may not foster a unique culture and will instead be susceptible to a ‘Wild West’ atmosphere. In these types of organizations, the top performers are Type-A personalities who drive corporate direction but may do so at the expense of technological leaps. The expression here is ‘The squeaky wheel gets the grease’, irrespective of the fact that the squeaky wheel may be in direct opposition to innovation.

Politics within organizations additionally contributes to a lack of innovation. Sometimes a few cross-functions in a large organization can become adversarial with each other rather than working together against a common foe: external competition. This improper targeting results in departmental rancor which creates a ‘no’ atmosphere- a major killer of innovation. Additionally, changes in the generational make-up of employees may result in decreased collaboration. Millennials sometimes lack soft skills needed to pushback and required to work with colleagues to craft unique solutions [1] . However, the incumbent generation, Baby Boomers and the like, are not blameless themselves. With the backdrop of recessions and ageism in the workplace the veterans within industry are needing and wanting to hold on to their positions for longer than ever before [2]. With perceived competition from a technologically-savvy younger generation the natural handover of information from one generation to the next and desire to mentor has delayed or altogether stopped. This lack of guidance creates a formidable challenge in a large organization to ensure seamless operations and to make certain innovation takes place with consideration for past successes and achievements.

“If Only We Had _____”

 Innovation challenges for small companies are markedly different from those of large companies with respect to funding, expertise, resources, and external influences. First, a small company is eternally on the hunt for solid funding. Whether the source is personal savings, friends and family, grants, loans, etc. no stone is left unturned. Ideas are cheap but implementing those ideas to compete with the large companies is challenging in a world where everything is expensive from patents to pre-clinical studies. Second, another hurdle for a small company is in the area of expertise. Without deep pockets, it is difficult to attract and retain top talent needed to drive unique and specialized solutions. Small companies often have to rely on the goodwill of helping hands or hiring temporary expertise to increase organizational bandwidth to tackle their pressing innovation challenges. Third, small companies are often found saying “If only we had _____”. That blank could be anything from lab equipment and instrumentation to computational hardware. A lack of resources is a direct, physical impediment to innovation.  Fourth, diminishing the inherent risk involved with being a small company is key to focusing on innovation. Small companies are always just one minor misstep from catastrophic failure. Large companies can ride out mistakes and errors due to their deep revenue streams. A small company, however, has no safety net so unanticipated events  such as changing market conditions or acts of God preventing such things as company travel can have deleterious effects to product development and goal realization.

A Path Forward

 A robust innovation process can be designed and implemented for both large and small companies. Time is well spent upfront on the project definition side for both types of companies.

For large companies, that definition should be on prioritization of projects and development of a product innovation roadmap defined over time to help push back on scope creep and changing goals within each product release. Once complete, a project team should be defined utilizing the skills inherent within the organization, personnel with a strong desire and passion for innovation, and based on a desire for synergy. Additionally, project definition and stakeholders should also be clearly notated so that the project team can streamline reporting and operations, and measure success both via project metrics and via the human element- will people buy this, and will it excite the market?

For small organizations, resources should be allocated with laser focus toward a defined, single goal and to meet a clear user need. Risk-mitigation strategies should be put in place such as working on multiple designs in parallel, vetting key partners, and developing other second options in sensitive areas. Smaller companies need to recognize change quickly, and by having a plan B or plan C in place they will be more ready to change direction while still meeting their ultimate goal.

Innovation is not something best left to luck or necessity. Instead, robust innovation processes can be created and set in place via a planned, purposeful architecture.


About the Author:

Rahul R. Rao, P.E.

CEO, Desert Platforms Medical Device Consultancy

Rahul Rao is a strategic medical device professional with extreme passion around new product development, entrepreneurship, product management, and leading teams to robust healthcare solutions. Contact the author at customerfocus@desertplatforms.com

Desert Platforms Medical Device Consultancy provides innovators with support in the areas of R&D, Quality, Physician Interactions, Operations, Clinical Affairs, or Strategic Marketing and Business Development.  Desert Platforms offers processes and systems to help both large and small companies achieve phenomenal results.

Desert Platforms offers AZBio Members special consideration as part of the AZBio Memebr2Member program. Click here to learn more.


  1. Twenge, Ph.D., Jean (2006). Generation Me. New York, NY: Free Press (Simon & Schuster). ISBN 978-0-7432-7697-9.

“Retirement? For More Baby Boomers, The Answer Is No”. ThirdAge Staff. Archived from the original on July 21, 2011. Retrieved June 6, 2011

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