Stretched for time, money and resources – getting new ideas off the ground is often the last thing on an SMB’s priority list. How then should smaller companies approach innovation in the digital age?
Innovation is a term that is bandied around quite a lot. Businesses large and small know it is a necessity but few get it right. For large businesses, there’s more room for trial and error and costly mistakes can be absorbed. For smaller businesses, the margin for error is a lot finer and more often than not, the old adage, ‘If it ain’t broke, don’t fix it’ rings true.
In this context, it’s perfectly understandable that few if any small business feels they necessarily have the time, resources or tech know-how to turn an idea into reality. The latest government statistics on Australian Small Businesses are quite telling. Only 30 percent of micro businesses (employing up to four people) undertook an innovative activity. This rises to 62 percent for medium businesses and 66 percent for large businesses. When asked what the typical barriers to innovation were, smaller businesses typically cited a lack of funds, skills and/or the actual cost involved in implementing said innovation.
How then should smaller companies realistically approach innovation – particularly in the digital age?
Collaboration is the key to innovation
The news is not all bad. The same set of government statistics suggests collaboration is the golden key. Where collaborative agreements are in place, a higher proportion of smaller businesses have been shown to increase the number of products and services they provide, as well as improving their overall productivity and profitability.
In hindsight, this seems quite logical. The reality for most small businesses is that they are unlikely to ever have the combination of time, skills or resources necessary to devote to an innovation. Partnering can help fill in potential gaps and amplify business outcomes. Where that gap involves the added complexity of technology, collaboration is arguably even more potent.
Practical tips for SMBs looking to innovate
Here are a few practical tips for SMBs looking to get started:
- If you are short of new ideas, talk to your customers and suppliers. Ideas for innovation often come from within the same industry.
- Most new products fail, regardless of how great it is. As a first step, companies should spend time considering how an innovation will fit into their existing business and potentially compete in the market place.
- For SMBs looking for rapid results, be realistic about what you can and can’t do. Find a good partner that can help fill in the gaps. Ideally it’s someone also willing to learn about and understand your business.
- To be innovative is to do something that has never been done before. Not all innovations however require a ‘Big Bang’ approach. Many can be undertaken incrementally – one step at a time. This not only reduces overall risk, it helps you test some basic assumptions behind the idea as you go.
For many smaller businesses, innovation is a well known and understood priority. With limited time, skills and resources however, it is a challenge at the best of times. SMBs looking for results should seriously consider collaboration as a means to addressing the gap between theory and practice – especially in today’s fast moving digital age.