Why do innovation and small business go together? Consider this: small businesses account for 95% of all radical innovations and for half of all innovations. Inventions such as the personal computer originated from a small business. Therefore, innovation and small business are often very much aligned and this trend is expected to continue into the future.
After all, innovation and small business have to be associated because, in many cases, one can only break into established markets and compete with the recognized giants by introducing innovative solutions to customers’ needs.
Interestingly, large organizations usually focus on improving existing solutions rather than on inventing new solutions. As Scott Anthony, co-author of the book “Seeing What’s Next: Using Theories of Innovation to Predict Industry Change”, and partner at Innosight, a Watertown (Massachusetts) Innovation consulting firm, mentioned, “The thing that’s so tricky is that everything an established company is trained to do – watch your markets carefully, listen to your best customers, innovate to meet their needs – oftentimes causes them to miss some of these disruptive transformation trends”. Moreover, large organizations are often very bureaucratic, which slows down or even kills innovation efforts of employees.
The factors above further contribute to the competitive power of innovation in small business. Small business should embrace its less bureaucratic environments and enhance its innovation efforts. However, innovation efforts of small business have to be designed carefully. The following factors should be considered within the context of innovation and small business:
Six factors to consider
1 – Entrepreneurs need to ensure that adequate financing is available or is accessible for the entire duration of the innovation effort.
2 – A new and innovative product or service must add real value to customer. Innovation can only be a successful effort if there is a demand for the new solution.
3 – It is best to choose an area in which an entrepreneur has personal experience.
4 – It is best to concentrate on products and services which are currently not available or underserved. This will allow entrepreneurs to achieve more rapid growth as well as to have less competition, at least initially.
5 – If innovative products and services is the focus of the business, than continuous innovation should be given a priority.
6 – It is advisable for innovation to be of a type that allows for further products and services to be developed based on the initial innovation.
Innovation and small business success
Due to widespread globalization and advancement in technologies, innovation is accessible to small businesses in a way that was never possible before. Innovation and small business should go together, it is the only way to establish a strong foothold in the market while competing with recognized giants.
There has never been a better time for small businesses to grow and prosper. Think about the opportunities that technology and globalization offers to small business. For example, the internet has made it possible to access markets anywhere in the world, at a very low cost. The only thing that small businesses need is a solution to customers’ needs that is new and in demand. Small business needs innovation. Therefore, innovation and small business success are also very much aligned.
The following article may be of interest to you if you would like to understand this better: “All Shook Up – You can’t control disruptive innovations, but you can learn to predict them–and to react to them in a positive way.”