Why an IPO Can Kill Your Innovation

Think going public will give you the money you need to expand and really fuel your passion and innovation? Hold that thought, and consider a new study that just came out of the Stanford Graduate School of Business--though prepare yourself for some cognitive dissonance.

A Stanford study finds that tech companies undergo a major innovation slowdown after going public. Some of the unintended consequences of initiating an IPO, according to assistant professor Shai Bernstein, include Research and Development becoming more incremental and less ambitious than it used to be; inventors leaving, because they can make a fortune on stock grants and options and pursue the next new idea that interests them as well as a sharp decline (48%) in performance of those who stay.

Hence, to ensure a constant fresh flow of breakthrough innovation and impede a process slow-down in your company as people shift to the necessary task of refining, one must get new blood, literally.

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