Sunday, July 19, 2009

Innovation – How can Small and Medium organisations pursue it?



“Innovation – Is it not something for the large organisations to pursue? How can I, running a small organisation and still finding my foothold, invest in innovation?” -These were the questions that were raised to me by my friend who had just started his small organisation and who had a pretty good first year. “Well – big or small you need to pay attention in today’s world to retain your advantage”. I told him and gave him some examples of how innovation can open up some new opportunities for the small and medium organisations. Even though my friend agreed with me on the importance of innovation for all – there was still one pressing question - How can small organisations do innovation effectively with minimal investments? I did not have any direct answers for him and so decided to spend some time finding options and then giving him a detailed answer.

When I started researching, I understood the problems faced by my friend or other SMEs in their pursuit of innovation. How do they do it without spending huge amounts of money and by normal traditional means? For example - these options which are open to large organisations are not really open to them:

  1. Set up a task team to investigate new options - Large organisations can afford to have some resources engaging in research and other activities which don't yield direct benefits but small firms will struggle to do that since cash flow is a pressing and immediate concern for them.

  2. Work with partners to come up with solutions - Again large and established organisations will find it easier to partner with specialised firms who may hesitate to do so with small organisations since they are yet to prove themselves.

  3. Pay for consultants to come and help them with roadmap/strategies/studies etc - Since large companies have a larger portfolio they can afford to allocate some of their income towards consultants. Small firms will struggle to do this again because of cash flow concerns.



So the question is - what can small firms do in this scenario?

After doing some research, here are my thoughts and findings:


  1. Try to partner with other small firms in niche and specialist areas of innovation - The key here is to work out win-win relationships in complementary areas and such that they can leverage each other's area of specialisation. The challenge could be to find such symbiotic relationships but the benefit is compelling and can open more opportunities than through traditional channels

  2. Tap networks which are new but working on the areas the company wants to innovate thus exposing them to multiple channels but on a "pay for results" basis - Since small firms cannot afford to have task teams the next best option is try and partner with networks that tap solver communities that engage in research in certain areas on the basis of paying only for successful results. Thankfully due to the gaining popularity of Open Innovation, such networks are blossoming and it is definitely affordable. There is some effort involved in finding these networks and the initial engagement with them but over a period of time, the results will surely justify this investment.

  3. Use agility to engage with their customers and get them to dictate the areas of focus for innovation - One of the biggest advantages for small firms is that they are extremely agile and so they can use this opportunity to engage with their customers, listen to their ideas and work on implementing the ones which are most popular and which is doable without significant investments. This could be small steps initially but this can be used as a launching pad for all their future innovations



In summary, in this blog, we looked at some of the challenges faced by small and medium organisations in pursuing product innovation and also looked at some of the options available to them. I am sure all of you should have heard of the David and Goliath story - if you equate this to the fight between large firms and small firms, innovation is one of the big weapons in the small firms quiver using which it can spring quite a few surprises.

So small firms - learn to innovate and focus on product innovation on a continuous basis. Only innovation has the potential to level the playing field and also give an advantage to any small organisation as well, if done correctly.

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