The innovation paradox: how small startups beat big corporates
Why is it so hard for big companies to innovate?
Despite their deep pockets, large networks, and experienced teams, they often struggle to create something truly new. Meanwhile, startups, with far fewer resources, constantly launch groundbreaking ideas.
What do startups do better? And why can't big companies achieve the same agility? Having worked with both worlds – through our startup accelerator Start it Accelerateand our corporate innovation program Start it Ventures – we've gained unique insights into this paradox.
The answer lies in the fundamental differences between the two. Startups are built for speed, risk-taking, and experimentation. They don't have rigid structures or layers of bureaucracy slowing them down. In contrast, giants focus on stability, risk avoidance, and efficiency. This makes them great at improving what already exists, but weak when it comes to creating something new.
However, big companies have one huge advantage: scale. They have the resources, systems, and market access to make a great idea big in no time. What takes startups years, a corporate can often achieve in months. But without agility and a culture that supports experimentation, this potential is often wasted.
The Problem: why big companies struggle with innovation
After years of working with both startups and corporates, we've identified several key barriers to corporate innovation:
- Bureaucratic structures and slow processes
Big companies are designed for stability, not speed. Complex approval processes, rigid hierarchies, and internal conflicts make it hard to launch new ideas quickly. Promising innovations often get stuck in bureaucracy or killed before they’re tested. - A culture that avoids risk
Corporates focus on protecting what they have: customers, revenue, and market share. Innovation is risky, and this goes against the instincts of most managers. As a result, new ideas are rejected or abandoned too early. - Focus on efficiency over experimentation
Big companies excel at scaling efficient processes, but innovation requires the opposite: messy, small experiments. These experiments often seem wasteful in a corporate environment, even though they’re necessary for innovation. - Dependence on existing business models
Many corporates cling to what works - their cash cows. Developing a new business model that might compete with their current one feels like a threat, not an opportunity.
What startups do better
Start-ups succeed because they are built to try new things and learn fast. Here’s what sets them apart:
- They start small and test with real customers.
Start-ups focus on their first 100 users, perfecting their product before scaling. They listen to feedback, fix problems, and improve quickly. Take Airbnb as an example: in its early days, the founders personally visited hosts, taking professional photos of their properties. This effort wasn’t scalable, but it built trust and helped improve the platform, paving the way for its explosive growth. - They take risks.
Start-ups don’t have existing revenue to protect, so they’re willing to bet on bold ideas that challenge the status quo. - They move fast and stay flexible.
Start-ups don’t have layers of bureaucracy. Decisions are made quickly, sometimes in hours rather than months. - They are built to scale.
Everything about a start-up - from its technology to its team - is designed for growth. Once they find a product-market fit, they can grow explosively. Look at Instagram: launched in 2010, it grew to 2 million users in just two months. By 2012, Facebook acquired it for $1 billion, with only 13 employees on staff. This rapid scaling is nearly impossible for traditional corporates.
The solution? The ‘corp-up.’
A corp-up is an entrepreneurial unit within a big company. Like a startup, but supported by corporate resources. The idea is simple: combine the speed and flexibility of a startup with the power and resources of a corporate. A corp-up can experiment and grow quickly, while the parent company provides support when needed.
At Start it Ventures, we've seen this model succeed time and time again. Drawing from our years of experience in accelerating hundreds of startups through Start it Accelerate, we help companies drive innovation using the same methodologies that make startups successful.
Four essentials for a successful Corp-Up
- Strong internal and external support.
You need both a sponsor inside the company and external advisors who can guide you through the challenges of innovation. - Fair rewards and recognition for intrapreneurs.
Big companies must reward intrapreneurs for taking risks and building new ventures, whether through bonuses, visibility, or shared ownership. - Access to long-term funding and resources.
Without consistent support, even the best ideas can die. A corp-up needs stable resources to grow and scale. - Freedom to operate independently.
A corp-up needs autonomy to test, fail, and succeed without being slowed down by corporate processes.
Think like a startup, act like a corporate
If big companies want to innovate, they need to adopt startup thinking. Not by copying or buying startups, but by empowering their talent through corp-ups that operate independently. This is where our dual experience with both startups and corporates proves invaluable – we understand both worlds and can help bridge the gap between them.
The result? Faster innovation, smarter scaling, and a culture that embraces new ideas.
Use your corporate power as a lever. Be the game-changer. Become an intrapreneur. And use the power for good.
This blog is inspired by the book "F*cking start-ups" by our CEO Lode Uytterschaut, drawing on years of experience in both the startup and corporate innovation worlds.
