Why do companies become less innovative as they grow? A paradox worth examining

Organizational growth is almost always a positive thing. It’s a measure of company health, success, and financial empowerment. Regardless of how scalable your model is, or how efficient your programmatic strategies are, you eventually need more humans to accomplish more things to position your company for growth.

So you ramp. Ten employees become 50, then 100, then 1000. The idyllic flat org structure becomes harder and harder to maintain, until finally you give in and create functional teams and a few layers of management to make your number of direct reports more reasonable.

Over time, you notice that despite your very best efforts, you seem to be falling into the same traps you always read about. Siloed teams emerge and hierarchical decision making starts to become more common. Your recruiting team is creating new job reqs that are becoming so specific that they are starting to look pigeon-holed.

Execution starts to become more important than collaboration. Cross-functional communication is no longer an organically occurring process, it’s now a forced organizational charter that needs to remain at the top of your corporate reminder list in every quarterly all-hands meeting. People start to put their heads down to achieve more individually-driven objectives, only coming up for air to see the forest for the trees in their semi-annual performance review. You can only hope your management team is diligently connecting every employee’s key objectives as directly as possible to higher level corporate KPIs that support the overarching company vision. Otherwise, you’ll have dozens of employees working 40 hours a week on things that don’t impact your most important strategic or financial goals.

If this scenario is making you break out into a cold sweat, that’s good. If it isn’t…it should. As our team at Vocean meets with medium to large sized companies who are on the other side of this growth curve, we hear these same stories over and over. We meet with executives who are desperately trying to find the silver bullet solution for the innovation paradox. Of course, there isn’t one single fix. But closely examining the opportunities and methods you are giving your employees to contribute is a strong step in the right direction.

Conceptually, companies grow in order to accomplish more, create more redundancy, manage organizational risk, and generate more impactful ideas. In theory, the larger a company gets, the larger its collective intelligence should become. A company of 1000 employees should have at least ten times as many innovate ideas floating around the virtual halls as a company of 100 people. But we all know that’s not really how it happens. Somehow, the larger we get, the harder it is to stimulate innovation. We become slower, less creative, and more dependent on consensus building and decision making than on innovative thinking.

Of course there are notable exceptions to this, but they are just that – exceptions worth noting because they have succeeded at cracking the code where so many other companies have failed. Ironically, the vast majority of companies struggle to accelerate innovation at the very same time that they are acquiring more and more collective brain power. Not only is this a missed opportunity – it’s extremely bad business! The largest investment at any large company is in its workforce. If you aren’t leveraging the opportunity to tap into the brilliant ideas that exist in every one of those brains on your payroll, you are leaving a massive investment on the table with no hope for ROI.

Our team at Vocean believes there should be better enterprise tools that give your employees an opportunity to contribute their ideas with impact and scale, just like they already do in social media. It’s time for companies, especially those transitioning in size, to pre-emptively encourage their employees to express and discuss new ideas, regardless of where these employees sit on the org chart. Fight the innovation paradox by giving every new employee the opportunity to add to your company’s collective ability to innovate.

Chat with us!