Why Big Companies Don't Create New Products

(Serious business blog entry)
Risk
It is risky creating a new product. Always risky. No matter how convinced you are that it will work, statistics are against you. Established companies like predictability, not risk. From-scratch product ventures are anathema to how companies are forced by shareholders/owners to operate.

Baptism of fire
As Edison put it, success is 1% inspiration and 99% perspiration. Bringing a product to the level where it brings real value to customers is a long arduous journey. Who in a corporation has that kind of resolve? The owners, maybe, but not the employees.
To get a product to that level of success requires incredible dedication. Being in your own little startup allows you to focus the majority of your effort on the task. In contrast, trying to achieve such results when you are applying a lot of your emotional cycles to corporate politics makes it an impossible task.

Results
Companies reward results. To innovate, you have to take substantial risks. If you are a guy in a company that sees a product opportunity, why would you put your career on the line for the company when there is only a (let's be optimistic) 30% chance of the product or innovation working? You'd be crazy to stick your neck out and pursue it inside the company. If sheer passion is driving you, then be aware that the company probably doesn't care about passion. They care about profits, and your little idea better have some.
Is it not better to play it safe and stick to what already works in the company, or leave the company and try it yourself?

Bureaucracy
The company may support your idea initially, but they still have "their ways of doing things" - the very culture borne of the successful steps that got the company this far. Unless you are working for an extraordinary company, one with a deep respect and support for such "skunkworks" projects, the organization will likely apply institutional pressure on you to conform long before you show any progress.
It is hard enough indeed, when you do not have such pressures, to bring a product to market. The added drag effect of internal bureaucracy is usually enough to doom any significant product innovation initiative.

Beg, steal or borrow
Most established companies recognize the difficulty of creating new products. It is often much easier to wait and see what other companies do in the space and simply copy that if they can get away with it. If the product category turns out to be successful, an established company can go looking for a start-up that has solved the basic product problem, or they copy it, or license it from someone.
Indeed, some companies appear to have a policy of just copying products from small, arguably defenseless companies. Then, if they do get sued, can pull out the checkbook and buy their way out of the problem.

Catch 22
Remember the old "Catch 22" rule? "You have to be insane to want to be a pilot, but insanity disqualifies you", or something like that. It's a bit like that creating a new product. Statistically the odds are against you. I know, there are books and books out there telling you of sure-fire ways of creating winning products (I know. I wrote a couple myself). As far as I can see, those most successful at creating products are the ones who are passionate about it. Being passionate about something is payment enough, if you ask me. Corporations can't buy passion. And passion beats intellect any day.