CE#663: Why Big Companies Can’t Innovate (HBR Blog Network)

by Maxwell Wessel  |   8:00 AM September 27, 2012

Big companies are really bad at innovation because they’re designed to be bad at innovation.

Take a story plucked from the pages of Gerber’s history. In 1974, the company’s growth potential was waning. In order to grow profitability and fight margin pressure, Gerber executives turned towards a market they hadn’t successfully penetrated for decades: adult food.

Luckily for a company adept in sourcing and processing vegetables and fruits, tens of millions of busy Americans were spending more time at work and fewer hours in front of the stove. Gerber’s team knew if they could develop a quick, healthy meal for adults, they had an avenue into meaningful growth.

When Gerber launched its product targeted towards this opportunity, it flopped disastrously. It’s no surprise: Instead of developing a novel line of food suited to the needs of busy Americans with distinct branding and its own distribution strategy, Gerber slapped a new label — excitingly named“Gerber Singles” — on existing pureed products and shipped them out for placement in a different aisle.

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