Innovation Requires Risk


The engine of American business is small business and entrepreneurism. And the engine of small business is innovation. To generate an atmosphere of innovation around your business, you need to have a sense of desperation and willingness to take risks.

Despite their massive resources, huge R&D budgets, armies of employees and consultants, and other advantages, mega corporations are out performed in the innovation realm by small business. And the reason for it all is complacency. The risk-taking and sense of desperation that help a small business grow and add one more customer is often taken out when that business becomes a giant.

Maxwell Wessel opened an article for the Harvard Business Review Blog Network with this line: “Big companies are really bad at innovation because they’re designed to be bad at innovation.”

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When you’re a small business, just looking to get one more customer, you’re more willing to take big risks. You need that one more customer to survive, and you’ll do whatever it takes to get him. You’ll identify problems to solve, and think of all-new ways to solve them.

Big business certainly would like more customers. They would like to solve more problems. But their primary concern is playing defense: protecting what they already have is a higher priority than getting more. There is low risk-tolerance, because there is more to lose.

Mr. Wessel offers examples of big companies that had ideas for solving problems, but were unwilling to really commit to a big solution. Instead they looked for ways they could use what they were already doing to create a halfway solution that would avoid disrupting the existing business. Meanwhile, smaller, more innovative competitors were willing to change, reinvent themselves and really solve the problem.

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As a small business owner, you have a great opportunity to innovate and be disruptive in your market. You might have bigger competitors, but you can use your natural advantages to get that one more customer that you need, through adaptation, reinvention, and flexibility.

Don’t fret that you are “just” a small business. The market is constantly changing, and the small business is best able to handle that change. And don’t forget, every big business started small—they just adapted to changing conditions better than everybody else, including their more “advantaged,” bigger competitors!

Fran Tarkenton

Fran Tarkenton

Fran Tarkenton is an entrepreneur and NFL Hall of Famer, and the founder of and Tarkenton Companies. With a passion for small business, he’s started more than 20 businesses during and after his NFL career. Fran is a small business coach for entrepreneurs and business owners, providing advice and guidance through sites such as,, and more. He has written about business issues in the Wall Street Journal, U.S. New and World Report, and USA Today, along with regular appearances on CNN, Fox News, and MSNBC. You can follow Fran on Twitter @Fran_Tarkenton.