How to innovate in a large company

For a large company to behave as inovators, it needs to set up small, disconnected divisions within the company which can act like a startup company. This is the theme of a speech by Mark Bregman, chief technology officer of Symantec. http://www.itconversations.com/shows/detail1032.html
My employer could do well to take note. Two of my employer's key values are:

• Develop People
• Behave as Entrepeneurs and Innovators

I've been actively trying to build a new business line within my company based on building Geospatial Open Source solutions. My goal has been to win small contracts, build credability and then become a contendor for larger work. We have had a few wins but have had more lost opportunities because:

• The opportunities are small and have not been given the priority required for small jobs.
• The processes of large contracts are being forced upon small jobs and making ADI uncompetitive.

Typically, large companies buy small innovative companies to get inovation into their product suite. However this has downsides:

• It is usually difficult to retrofit products from the small company with existing products in the large company.
  
• Innovative employees from the small company are less likely to want to work in a large company without an opportunity to innovate.