Why mature organizations can’t innovate
Copyright by Stephan Klaschka 2010-2025
Why mature organizations can’t innovate
Clayton Christensen is an innovation icon and the figurehead of disruptive innovation – he coined the term in the first place! (I am a big fan!)
Professor Christensen concluded that large companies can’t innovate in his famous book “The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators” and I’m out to prove him wrong - at least to some degree!
Why? – In part, driven by my passion for disruptive challenges but mostly out of compassion for my talented colleagues in large organizations I worked in and who deserve better, as we worked hard every day to create innovative products that save and improve the lives of so many patients.
There must be a way of turning around a mature organization. After all, IBM reinvented itself several times and turned from a hardware manufacturer to a services company. What a pivot was that!
Getting back to 10X innovation
So, can a mature company adapt and pivot from within? In life sciences, for example, innovation is commonly understood to find, develop, and bring to market new innovative medicinal drugs, devices, or services as the core business. In a rapidly and fundamentally changing business environment (if you are interested, see “What is Digital Medicine?), however, a “selling pills” model alone runs flat. A life sciences company must find and adapt to new business models to survive and flourish - and the same holds true for most other industries.
Time will tell if 10x vs 10% – Are you still ready for breakthrough innovation? is possible once again. - The question is, can a mature organization turn around? And if so, how?
Shift from Discovery to Delivery
It starts with understanding why innovation slows down in maturing organizations (outliers may confirm the rule) but stay with me here to get the basic principle. The answer lies in the natural business life cycle: in the start-up phase of a new company, the most important skills are around discovery, i.e. exploring a radically new business opportunity.
Delivery skills are most needed as the business gains traction and needs to grow. Management composition needs to change to develop and expand the business professionally. Disruptive input is not in demand but rather becomes a liability that inhibits an operation that needs to focus on reliably and at scale delivering output. Innovation shifts from disruption to incremental improvement, and rightly so—yet it comes at a price, as it also leads to predictable obstacles (see Overcoming the Three Big Hurdles to Innovation in Large Organizations).
Research shows that disruptive innovators are typically not good at delivering and growing the company. As the business matures, they need help and often move on to do what they do best: starting something new, while the company matures in the hands of management that can deliver.
Predictable Downturn
Over time, markets become saturated, the established business model may no longer work, and profits decline. Now we hit an inflection point: the management was hired for its delivery skills. They don’t know how to renew the business, since they never created one. They do know how to prolong the downturn clinging to the dated business model by squeezing out inefficiencies and saving costs. Research confirms with little surprise that these ‘maturity managers’ are good at delivery but mediocre at best when it comes to rejuvenating discovery.
The mature company is like a supertanker that becomes a slowly sinking ship. Groupthink with its mindset and engrained culture prevents disruptions from breaking through. After all, no passionate out-of-the-box thinker or true entrepreneur has been hired for years. Instead, streamlined Ivy League graduates with MBAs are favored to run the business more administratively, and bureaucratically, without taking significant risks – who would ever take the risk and hire the crazy guy instead, right?
Turning to Intrapreneuring
So, where could the turnaround come from? Wait for it… here comes The Rise of the Intrapreneur, who will connect things again in new ways, create and build an innovation-friendly ecosystem, and chip away at the resistance of the “organizational immune system.”
In the following posts, we will explore more intrapreneurial methods, using the example of a large, mature pharmaceutical enterprise and FORTUNE Global 500 company.
Stay tuned for my next post: School for Intrapreneurs: Lessons from a FORTUNE Global 500 company