The ability to innovate and access external innovation is vital for SMEs to stay competitive. And due to the fact that SMEs are generally more nimble and able to pivot better than larger companies, doubling down on innovation can be a real source of creating competitive advantages. In this article I share a few examples of what SMEs have been able to achieve through innovation. I also give you some tips on how you can take the first small steps towards creating a culture of innovation in your own company.
The following 3 examples of highly innovative companies with fewer than 50 employees, show just how far SMEs can push the innovation boundaries.
Example 1: App development for non-techies
Bubble has developed a platform that allows people without programming skills to create their own app-based marketplaces, web products or tools. The company has experienced explosive growth in the number of paying customers on its platform from November 2019 to November 2020. That number grew 15 times and revenue has grown 240% year-on-year.
Example 2: How to render medical waste harmless
Today there are billions of physical devices around the world that are connected to the internet and which are collecting and sharing data. This collection of connected devices is commonly referred to as the “Internet Of Things” of IOT for short. OnSite Waste Technologies has created an IOT device which turns regulated medical waste into ordinary rubbish. It not only saves customers money, but also makes the workplace safer. The device essentially uses heat to sterilise and destroy waste. The company doubled its business a couple of times in 2020.
Example 3: Customer focus always wins the day
Innovation does not have to be high tech to be boundary-breaking and disruptive. Zenernet has found a way of overcoming the barriers experienced by homeowners when it comes to adopting solar power. These barriers are mainly the hassle of installation and non-transparent pricing models. The company’s strategy to embrace virtual home visits proved to be faster and produce more accurate measurements. Zenernet was also the first company to introduce a modular pricing structure and instant firm quotes. This customer-focused approach and commitment to transparency, led to revenue growth of 88% in 2020.
First steps on the journey to creating a culture of innovation
For SMEs to perform at that level they need to embed innovation and creativity in the culture of their companies.
But with so many pressures on SME leaders, where do you start? Recognising that innovation can be simple, makes it less daunting to start building that culture of innovation. You don’t have to start out by building disruptive revolutionary solutions. Innovation simply means improvement and could be something as simple as:
- changing how you deal with suppliers to better leverage their technology and/or lower costs;
- streamline internal processes to free up staff resources to work on more value-adding activities; or
- introducing or improving a system for formally and systematically managing key risks.
Leveraging supplier innovation and lowering costs
Chances are that companies like Bubble, OnSite Waste Technologies and Zenernet did not build their amazing solutions entirely on their own steam. Most likely their suppliers played a key role in providing innovative solutions that are now a source of their competitive advantages. So, proactively managing suppliers in a way that positions you to be among the first to leverage their innovations is a potential source of competitive advantages. By leveraging external innovation, you too become more innovative in the eyes of your customers. Even innovations that are limited to lowering total costs may allow you to provide new pricing models, which your competitors may not yet offer.
Freeing up staff resources by streamlining processes
There are likely a number of areas you could look at in terms of improving processes. One often overlooked, yet vital, area is how suppliers are managed. If you have too many suppliers and staff lack clear directions on which suppliers to use, then you are unnecessarily increasing their workloads and may end up demoralising them. Most non-procurement staff are not interested in dealing with supplier issues. It’s not their core competencies and it’s not why you hired them. Streamlining your procurement processes will give them chunks of their time back and also help you control total costs.
Proactive risk management is often neglected
Yet the ability to effectively manage risks can make or break an SME. And it’s not just about managing possible negative outcomes. A good risk management process should also capture opportunities that can proactively be amplified. In addition to identifying threats and opportunities, some of the fundamental aspects of an effective risk management process are:
- assess the likelihood of the risk occurring, its impact and duration;
- determine the most appropriate way of mitigating, avoiding or transferring the risk;
- assigning ownership to the identified risks and ensuring appropriate follow up.
Get to the root of the problem
Before implementing a major change it’s advisable to conduct a root cause analysis to ensure you are working on the right problems – the root problems. The immediate problem you experience is likely a symptom of another problem (or set of problems), which may itself be a symptom of yet another problem, etc. To help you get to the bottom of what you are dealing with, I shared my The 7 root cause analysis steps in the article, 7 Surprising, but Effective, Steps to Achieving More Profitable Growth.
