Innovation & Litigation

There are two parts to this post about a new study that had a great comment about large companies ability to innovate

Another interesting finding in the study is that big companies aren’t very good at leveraging their scale to innovate. This is an issue that comes up often when we discuss patents.

People make the claim that small companies can’t out-innovate large companies because those large companies have all the money. However, the study suggests that’s not true at all. Larger companies can be woefully bureaucratic, slow, inefficient and risk averse. That leaves plenty of opportunity for smaller companies to out innovate the larger ones despite the appearance of a disadvantage in money and scale.

I can unequivocally confirm this.

I can think of two root causes that I see in business operations.

  1. Job Protection via non-action (If I don’t make a decision, I can’t be blamed for it if it doesn’t work out well, and therefore won’t lose my job).
  2. Risk Aversion – For a while, my personal/professional attitude was “what the hell, let’s do it” and try some risky projects (hm, maybe this ties into the above too) – the current ligitation stats in this country scare the crap outta me, and should scare everyone.

Being risk averse as a larger company, isn’t necessarily born out off paranoia, but out of the reality that is the massive number of lawsuits that any large company faces, simply by being an easy target. This statistical excerpt from this journal at SarbanesOxley Compliance Journal put the litigation atmosphere in the US in a very stark light:

U.S. Businesses Face an Average of 305 Lawsuits Worldwide, While Spending 70% of Legal Budgets on Litigation

Billion-dollar+ companies carry biggest litigation burden, fielding 556 cases on average, almost half facing 50 new suits annually.

I have two words for y’all on that topic.

Tort. Reform.

Which still won’t make folks worry about losing their jobs any less, I suppose.