Why small businesses are key to innovation

Published in Design & Innovation on 07 Dec 2011

Innovation is about seeing something new and believing that something will succeed, then making it happen. These components more naturally occur in small and medium sized businesses rather than in multinational corporations. This is why many, big companies cannot execute game changing innovation as well as small companies and this will become more and more apparent over the next few years. In my view the innovation systems that many big companies have created are caught up in process and are now too slow. They don’t admit it publicly because they can’t; it would be an admission of incompetence. Small companies have the edge; they can innovate quickly and efficiently implement and execute ideas. Big companies now, always end up defaulting to small innovative companies for the game changing innovation. This is why I think now is such a great opportunity for small smart and innovative companies.

I could quote a number of senior R&D executives, in different sectors who don’t believe in their own processes because they have too many people, too much information and not enough belief. They depend on smaller dynamic companies and innovative insightful people outside of their own structures. We were recently approached by a large company who were desperate to quickly target and acquire new innovative companies as opposed to rely on their internal research and development processes.

Alongside acquisitions, multinationals have for a while now, proclaimed open innovation as a legitimate tool, collaboration for mutual benefit. In my opinion it was designed by big companies to relieve smaller companies of their smart ideas and technology. Granted the potential benefits to smaller companies on offer include the global reach of multinationals but the journey to realise the benefits for a small company can be long, expensive and painful, still the potential relationships are tempting.

Probably the most famous recent example of an individual who resisted the big boys is Mark Zuckerberg at Facebook, Microsoft had to pay $286 in exchange for 1.3% of Facebook valuing the company at $15billion. Facebook, now obviously one of the biggest corporations on the planet is of course the most famous and effective real time consumer data analytics firm, leading a huge revolution in the business intelligence sector as it was known. Such a massive entity from such a small initial social insight in such a short space of time.

Innovation is an imperative today for us all but being smart and agile is the key to discovering the early insights, establishing what problems need to be solved, finding the unmet needs, investigating the solutions and working out how they can they be designed and implemented. The new ecosystem of innovation puts small and medium sized businesses in the driving seat for the future.

New R&D

Had a great chat with a great innovator last week, Peter Arnold. Peter has held senior research and development management roles on both sides of the Atlantic with Johnson & Johnson and Smith and Nephew, and has worked in large and small businesses and created his own innovative start ups in diagnostics, internet and domestic products.

Here’s a condensed version of his thoughts on the new R&D model

“For companies to remain competitive within  markets, they must be dynamic in their approach to the development of new product and services and the acquisition of new technologies and be proactive in compressing the time-scales for introduction in the marketplace. This leads leads to greater revenue generation more quickly.

In general, corporations are faced with a number of challenges in introducing and implementing new technologies, products and services in today’s market place. The reality of this change is :

The cost of R&D is increasing over time.

The breadth of research (no. of areas that need to be covered) is increasing over time

Required development times are shortening

The time over which price premiums can be charged are decreasing

Product lifecycles are shortening

The new R&D model is to operate as a business development organisation, identifying consumer unmet needs, new channels for provision of these products, technologies and services, and a more social positioning to examine and connect with consumer needs leading to more successful innovation.”

Disagree with that if you dare. For  more from Peter check out the new resource he is curating Improveinnovation.com. ND

 

Ok so its all fine and dandy to create a new way of communicating an innovation opportunity but the proof is in the pudding so to speak. Judging by feedback today we are onto something. Try these quotes from today “first bit of clear thinking i’ve seen” “no doubt massive unmet needs to address” “no question the process is going to work”. That’ll do for me . ND

Summer has gone… but there is lots to do, some interesting conversations over the summer leading to some diverse and exciting projects, from establishing real clinical needs to designing and piloting the innovation opportunity canvas. Describing opportunities without defining the solution challenges the way many people think of innovation but it really does help you specifically understand the opportunity. ND