Small companies are the innovators. The need for large companies to acquire small companies is necessary in order for the former to capture new products and services.  According to Fortune magazine, “Big companies almost never innovate. This is unfortunate because innovation is one of the few ways to gain proprietary advantage and stay profitable.  It’s not that innovation itself is rare – it’s occurring everywhere.  Which means, mostly, elsewhere.  And as engineers and inventiveness continue to flourish in China and India, elsewhere moves farther and farther from here.  A healthy business must therefore not only innovate more within its walls but leverage innovation elsewhere too.

“So why is innovation so hard for big companies?  The main reason is that innovative people tend to prefer working in smaller organizations that have more focus and less bureaucracy.  Even in small companies, adopting a large-company style can frustrate the innovators.
“The problem with large companies isn’t that they fail to do large and seemingly ambitious projects; it’s that they fail to do small, quirky, controversial projects  – that  have the potential to grow.  (If everyone thinks an idea is okay, how can it be innovative?)  A large organization – its missions threatened by new ideas – is often incredibly hostile to its own innovators; the antibodies to change are strong.”