Blogs & Comment

Don’t believe the hype: companies can be innovative at any size

We fetishize tiny startups, but lots of companies get big and keep their disruptive streak intact

Big dog looking down at a little dog.

(David Allan Brandt/Getty)

If you believe certain circles, the state of entrepreneurship is very dire indeed.

Take a recent column in New York magazine, in which writer Annie Lowrey argues that despite all the hype surrounding Silicon Valley, the United States is growing less and less entrepreneurial by the day. She bases this gloomy assessment on three factors: There are proportionally fewer startups in the U.S. today than a generation ago; those startups are failing with greater frequency; and the business landscape is increasingly made up of larger, more established companies (which she dismisses as “big, old incumbent dinosaurs”). These lumbering giants, Lowrey says, seek only to buy dynamic startups and strip them of their vigour. In her view, this all leads to a “sclerotic” business environment that is not at all favourable for the young, hot, disruptive businesses upon which the dynamism of the economy depends.

There are several flaws in this argument. For one, innovation doesn’t always vanish when a giant buys a startup. In fact, the histories of Google, Apple and their ilk are filled with examples of companies that likely would still be languishing in pre-commercial limbo had their creators not been given the marketing and infrastructure support of new corporate parents. Consider that YouTube, now a $6-billion-per-year business, had reportedly generated just $15 million when Google bought it in 2006.

But the greater problem with this end-of-entrepreneurialism view—which is distressingly widespread—is that it perpetuates the stereotype that real innovation, the type that disrupts the status quo, is the sole domain of young, iconoclastic startups.

This is a romantic narrative that plays to our collective affection for David-versus-Goliath stories. (There’s a reason, after all, that shows like Silicon Valley are so popular.) But it’s misleading and, arguably, dangerous to suggest that all large companies are quagmires of torpor and complacency.

The reality is that at intelligently run businesses, innovation rarely stops when the 100th employee is hired or sales hit $100 million. In fact, there’s a long list of groundbreaking, growing Canadian companies that prove just the opposite. Take HootSuite, the Vancouver social-media dashboard provider that runs on a sophisticated architecture of processes and policies meant to foster continual product improvements. Or Shopify, the Ottawa e-commerce firm that constantly challenges its employees to come up with more creative ideas. Or businesses like rewards software firm Achievers, web-publishing provider Wattpad, corporate child-care supplier Kids & Company and recently acquired eyewear e-commerce trailblazer Coastal Contacts, each of which has embraced the “good enough is never good enough” ethos.

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These are all growing, vibrant, sophisticated businesses that long ago graduated from the scrappy startup phase. They have proven revenue models, scalable business plans and practical ambitions. And they’re every bit as disruptive to their respective industries as any Silicon Valley kid with a nifty line of code and a sack of VC cash.

Companies like these prove that innovators—the entrepreneurial, “let’s build a better business” kind, not the “aimless tinkering” kind—come in all sizes. That doesn’t necessitate having a hundred Mark Zuckerbergs on the payroll, but it does mean hiring employees who think creatively and fearlessly and, crucially, giving them the ability and authority to make change when needed. Those qualities exist in companies big and small: There are firms with thousands of employees where innovation thrives; there are five-employee shops that couldn’t rub two new ideas together to save their lives.

Fretting that innovation is dying because startup volumes are down—and the number of registered businesses in Canada has been slowly declining in recent years—is the wrong way to look at this. Instead, we would be far better served by celebrating (and closely studying) the big companies whose disruptions actually stick and whose people show no signs of slowing down.

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Deborah Aarts is senior editor of Canadian Business and