'My favourite observation on innovation is in Bruno Latour's 'Aramis': "a project is considered innovative when the number of actors is not known at the outset." Apply this to small and large companies.
A start-up enters the world with few people, no customers, no products and no suppliers or partners. It is bound to spend its formative months and years making and breaking relationships with other actors - selling to new customers, hiring new staff, sourcing material and collaborating with others to compensate for its lack of scale. The risks are high - not every relationship will be beneficial - but getting almost anything done requires forging new links. Innovation flourishes in these unpredictable social conditions.
In contrast, a large organisation is almost nothing but a massive knot of pre-existing relationships. Getting something done, even something new, often means following a well-trodden path to actors already known to each other. Many large enterprises boast "innovation pipelines" in which concepts are shunted from one predictable stage-gate to another. Innovation can only happen in such an environment with the intervention of new actors and the reconfiguration of old ones. Large companies can innovate, but to do so they must consciously remain open to new actors or counterintuitively disrupt existing relationships to force the formation of new ones.'
It reminded me of a thought (that I thought I'd written about before here but can't seem to find) from Victor Newman about 'sticky organisations'. Organisations become 'sticky' when the culture is entrenched and resistant to change, when the idea of infallible uniqueness perpetuates ('we're different, so that wouldn't work here'), when there is a disinclination to admit failure. If, says Victor, a culture is a by-product of turning an invention into an innovation and composed of the problem-solving experiences and processes involved with that technology stabilisation process, then relationships between people and patterns of behaviour grow up around that and can adapt to block change in an effort to maintain social stability and the existing relationship capital that has been built up over time. Essentially, if the underlying business or technology changes, it also changes the value of relationships within the company, which is often something that is resisted. This, I think, is therefore more prevalent when it comes to breakthrough, as opposed to marginal or incremental, innovation.