Steve, I feel you are correctly identifying the problem, but I am less convinced regarding its solution.

Well run execution orgs already reward incremental improvements that directly boost performance in a short timeframe. Many times marginal improvements are ignored by these orgs... but is that such a big loss. It the improvement is marginal, should we bother?

But I agree such orgs often cannot innovate large strategic jumps either. And this IS a large loss, indeed this is how new mega corps are formed in the gaps missed by the big guys.

The challenge I see is two fold: First the innovations need to be very large... since the parent company is large, it is the only thing that will make a difference. But many new ideas dont have large fincial consequence initially. so they can be killed before they can bloom.

Second is evident in the way that you frame the problem. You notice the innovation arm must be different, you are right. But this sets up a problem:

The innovators are removed from the day to day execution problem. We end up working on the wrong problmes, and even if one gets lucky and works on the rght problem, it is often framed wrong, or does not have the political capital to gain adoption of the solution.

These to me are the key challenges

--dan