What is innovation? It’s a word bandied about in business circles, yet few people spell out what it really means. In truth, it’s part inspiration, plus self-belief, combined with the determination to turn great new ideas into useful realities. And innovation is the Holy Grail for ambitious SMEs, the thing that sets them apart from their peers, and puts them on the path to outstanding commercial success and ongoing business growth.
Why Innovation Matters
Coming up with alternative ideas, ways of working, products or services sounds good, but many small business owners say they have little time in their day-to-day job to develop in new directions. Even those who want to encourage company evolution aren’t great in practice. Two out of three business leaders say innovation is one of their organisation’s top three priorities, according to research by management consultancy Bain, but less than a quarter classify their companies as effective innovators. And these are large businesses – what chance do their smaller brethren stand at being pioneering, or trying new things?
Yet, innovation could be as modest as an SME adopting cloud computing, automating payment systems or outsourcing some processes to improve efficiency. It needn’t be reinventing the wheel, sometimes it’s adopting someone else’s idea, or bettering it. But the difference to operations can be enormous – evidence suggests innovators steal market share from their less enterprising peers, plus they grow faster, are more efficient, and have better profits.
The Innovation Formula
So, how can small businesses become more innovative? Nesta, a charity dedicated to encouraging innovation, breaks the process into seven steps:
- Opportunities and challenges: Identify where you might develop your business further, and also any obvious barriers to making changes. Ask questions about how you operate, and be critical of your current practices, processes, and values.
- Generating ideas: Be genuinely open-minded about how you might do things better, faster or altogether differently. Let your imagination run wild, then think about how such visionary thinking may be made real.
- Developing and testing: Once you’ve chosen a few possibilities, undertake a SWOT analysis to single out potential weaknesses, risks – and advantages. Draft a business plan incorporating your new thinking and aspirations. Undertake market research into how customers may react, and to clarify who new clients could be.
- Making the case: Collaboration within an organisation is vital to make new ideas a reality, so get your team on board. Include them in discussions, and invite observations and suggested changes. Then, devise a working plan that will be acceptable and attractive to all.
- Delivering and implementing: To get your ideas off the page, prioritise the tasks ahead, set goals, as well as how and when they should be achieved. Innovation involves a series of small steps, so identify what key stages will be, then set them in motion.
- Growing and scaling: If your new concept is taking hold, you might make plans to develop further. Revisit your business plan, and update it based on what you’ve learned. Consider what level of growth the business is ready to tackle, and, if it’s in a strong position, think about new markets, and where you may get capital to implement more ambitious plans.
- Changing systems: All of this upheaval can be upsetting, so continue to communicate with staff about what you’re doing, what you’ve achieved, and where you’re headed next. With new developments often come new processes, so help employees to work within the new infrastructure and systems so they carry your ideas forward with as much enthusiasm as management.
Where to Get Help With Innovating
If you’re still at a loss about how to nurture an innovative environment in your business, there are several sources of help for SMEs. The nature of innovation varies hugely in different industries, so seek out advice that’s appropriate to your sector. Technology, aerospace, and manufacturing businesses, for example, may need guidance on research and development. Meanwhile, a service sector company could be improved by better people management processes. A bricks and mortar retailer may be overdue to explore a degree of digital innovation online.
We’ve already mentioned Nesta, which has a range of tools and advice for SMEs on its website. The Government also has its own innovation agency called Innovate UK, a great hub for information, contacts, and potential funding. It also has an online networking platform called _connect for exchanging ideas and tips on achieving innovation goals. SMEs can also apply for Government-funded Innovation Vouchers worth up to £5,000 to pay for an expert to come into the enterprise with specialist help and guidance.
Knowledge Transfer Partnerships are relationships set up between universities and businesses to share specialist knowledge. Typically, a graduate is placed in a company for between six months and three years to work on a specific innovative project. The SME Innovation Alliance is another option, a not-for-profit body that offers smaller companies in the high tech sector support with their plan for fast growth. Finally, those with hopes of expanding within Europe can use the Horizon 2020 SME Instrument to gauge whether they can get innovation support and funding through the EU.
Whatever your industry sector, and regardless of your enterprise’s size, think about the future, and what your company may look like in five, ten, or even 20 years’ time. Without a degree of innovation, you risk being left behind your competitors. Start with an idea, and consider seriously how it could change your business. Then, be a true innovator, and put your dreams into action. Better productivity, performance, and a great deal of profit could be yours for the taking.