Richard F. Rashid of Microsoft says big companies can drive innovation.

WIRELESS WONDERS - Computers systems employ inexpensive sensors to improve efficiency and reduce waste.


STEVE LOHR - ESSAY

For more than a decade, the prevailing view of innovation has been that small companies had the edge. Innovation bubbled up from the bottom. Big companies didn’t innovate, and government got in the way.

There was a lot of business-school research supporting the notion that innovation comes most naturally from small-scale outsiders. That was the headline point that a generation of business people, venture investors and policy makers took away from Clayton M. Christensen’s 1997 classic, “The Innovator’s Dilemma,” which examined the process of disruptive change.

But a shift in thinking is under way, driven by altered circumstances. In the United States and abroad, the biggest economic and social challenges - and potential business opportunities - are problems in multifaceted fields like the environment, energy and health care that rely on complex systems.

Solutions won’t come from the next new gadget or clever software, though such innovations will help. Instead, they must plug into a larger network of change shaped by economics, regulation and policy. Progress, experts say, will depend on people in a wide range of disciplines, and collaboration across the public and private sectors.

“These days, more than ever, size matters in the innovation game,” said John Kao, a former professor at the Harvard Business School and an innovation consultant.

In its economic recovery package, the Obama administration is financing programs to generate innovation with technology in health care and energy. The government will spend billions to accelerate the adoption of electronic patient records to help improve care and curb costs, and billions more to spur the installation of so-called smart grids that use sensors and computerized meters to reduce electricity consumption.

In other developed nations, where energy costs are higher than in the United States, government and corporate projects to cut fuel use and reduce carbon emissions are further along. But the Obama administration is pushing environmental and energy conservation policy more in the direction of Europe and Japan. The change will bolster demand for more efficient and more environmentally friendly systems for managing commuter traffic, food distribution, electric grids and waterways.

These systems are animated by inexpensive sensors and ever-increasing computing power but also require the skills to analyze, model and optimize complex networks, factoring in things as diverse as weather patterns and human behavior.

Big companies like General Electric and I.B.M. that employ scientists in many disciplines typically have the skills and scale to tackle such projects. Their advantage is in “being able to integrate innovations across these complex systems,” said James E. Spohrer, a scientist at I.B.M.’s Almaden Research Center in San Jose, California.

Technology trends also contribute to the rising role of large companies. The lone inventor will never be extinct, but W. Brian Arthur, an economist at the Palo Alto Research Center, says that as digital technology evolves, step-by-step innovations are less important than linking all the sensors, software and data centers in systems.

Today, Mr. Arthur said, the unfolding “digitization of the economy” is in some ways a modern rerun of past technology waves, from steam power to electricity. “It’s not individual inventions that matter so much, but when large bodies of technology come together and have an impact across the economy,” he said. “That’s what we’re seeing now.”

In computing, some technological frontiers require size and money. To be competitive in Internet search and some other Web services, which cater to hundreds of millions of users, a company must build data centers of gargantuan size, and only a handful of companies can design and afford them, led by Google and Microsoft.

“There are just a few companies in a position to do computing and process data in a way never done before,” observed Richard F. Rashid, Microsoft’s senior vice president for research.

In health care, institutions that have done best in improving the health of patients with chronic conditions like heart disease and diabetes have been larger, integrated systems. They have the scale and incentives to invest in things like wellness programs and electronic health records.

In a new book on health care, “The Innovator’s Prescription,” Mr. Christensen and the co-authors, Dr. Jerome H. Grossman and Dr. Jason Hwang, say that such large integrated systems “have the scope to create within themselves a new disruptive value network.”

In an e-mail message, Mr. Christensen, a professor at the Harvard Business School, said that big companies do tend to resist disruptive innovation but that size need not spell failure. “The good news is that, once they recognize the benefits of disruptive thinking,” he wrote, “the big companies have all the resources necessary to induce change.”