Instilling the Entrepreneurial Spirit in Your R&D Team: What Large Firms Can Learn from Successful Start-ups

Abstract

Prior research studies have found that even though new ventures face the possibility of bankruptcy without large product portfolios on which to fall back, they are more innovative than large firms. Large, established firms have become experts at implementing best practices as a way to increase the effectiveness and efficiency of costly R&D. Yet in practice, relying upon these routine paradigms can create inertia for these firms. The purpose of our study was to conduct research on the innovation strategies used within start-ups and to show how large firms can start ``thinking small.'' With an eye towards what established firms can learn from start-ups, we investigated over nine years the innovative practices of small ventures. We found that successful, new firms use certain best practices in unique ways. They innovated with `` hyper-agility'' and implemented 1) small omnifunctional teams with no functional boundaries, 2) goal-driven rapid development of technology rather than process guided methods, and 3) instinctive exploration of market potential rather than quantitative analysis. We highlight several of these successful new ventures and provide a framework for R&D managers of large firms and discuss how the entrepreneurial approaches of their smaller counterparts can coexist within their existing innovation processes.