but it makes sense. The innovation a company does is related to the average capability of the company (as it must, since its people who are innovating, and last i checked, innovation isn't some standard process like flipping burgers that can be replicated with anyone).

As the size of a company grows the average capability must tend towards the average of the population. I must say that can't be very high, and so you see the results here. Some companies have strict hiring standards, but i think eventually, pressure to hire more people end up costing them the quality.

Not sure if there is a solution, other than to keep the working unit tiny and independent.