In How Innovation Works, Matt Ridley observes:

‘”Big companies are bad at innovation, because they are too bureaucratic, have too big a vested interest in the status quo, and stop paying attention to the interests, actual and potential, of their customers. Thus for innovation to flourish it is vital to have an economy that encourages or at least allows outsiders, challenges and disruptors to get a foothold. This means openness to competition, which historically is a surprisingly rare feature of most societies.”

From a discussion in Chapter 9, The economics of innovation, on Pages 294-297.

In this instance, I am again reminded of the response by Jack Welch in 1964, when GE’s then chairman and CEO was asked why he admired small companies and wanted GE to become more like one.

“For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy.”

Innovation Matters: And Why It Flourishes in Freedom was published by Harper (May 2020).