In business the word ‘innovation’ is thrown around dozens of times each day in every organisation large or small, but what does it mean when it comes to the world of the start-up or SME?
Put simply; innovation is the critical driver for start-up & SME growth. It defines your current and future success, iterations, new markets, new products, services or solutions that you or your company are going to provide & achieve your end goals. But can it be that simple?
By innovation we are not just talking about the approach taken currently by many start-ups of focusing on technology and digitisation which is a popular misconception – innovation is everywhere!
According to the Oslo Manual produced by the Organisation for Economic Cooperation and Development (OECD), innovation is defined as introducing something new or making significant improvements in one or more of the following areas:
- Products and services
- Business processes
- Organisational methods
- Marketing practices
Innovations can be introduced on one of three levels:
- New to the world
- New to the market
- New to the firm
While many start-ups have the first two firmly in mind—even new approaches can significantly drive growth.
For start-ups and SMEs to drive growth through innovation they need to pursue more than product innovation and explore other forms of innovation such as organisational and process innovation – all of which will be discussed in later posts.
Why innovate?
As the title suggests, if you don’t innovate, your business won’t survive – it’s that simple. Innovation allows your company to grow. As mentioned, innovation is about changing the world or the market. Changing the way you do things, see things or tackle problems as an organisation can positively add to your business culture, efficiencies and bottom line.
When it comes to the value of the ‘innovation’ in more areas has shown to lead to improvements in earnings, the CommBank Business Insights Report 2016 outlined the massive value that could be achieved through innovating in a range of different areas, not simply one.
Findings from the report include:
- Innovating in 1 area resulted in an average improvement of $386 000
- Innovating in 2 areas resulted in an average improvement of $392 000
- Innovating in 3-4 areas resulted in an average improvement of $763, 000
So how does innovation affect you as a start-up or SME?
Innovation is what took many of us from the boardrooms of big companies to running our own start-up or SME in the first place. Innovation is what keeps us up at night, creates new opportunities, ideas or capabilities that in some cases…change the world.
Your SME or start-up needs growth to survive, and it is no surprise to many of us in the industry that driving that growth is a key challenge for many start-ups and SMEs. Only a very limited few can achieve high growth, which is defined as having average annualised growth of at least 20% over a 3-year period. These are referred to as gazelles and are something to aspire to for all of us.
In Canada, only 1.6% of Canadian SMEs with at least ten employees are experiencing strong growth of 20%, however, in Australia, only 9% of firms with five staff or more are experiencing strong growth hence meeting the definition of gazelles. Do you have what it takes to innovate and be in this space?
What do you as a start-up and SMEs need to do?
Innovation if it isn’t already imprinted in everyone’s mantra today, needs to be by tomorrow. Innovation is the cornerstone of what SME’s & start-ups do – this should never be lost.
It is staggering to believe that only 1 in 10 medium-sized firms in Australia have a written strategic plan! If you are a start-up or SME, just because you are ‘embracing start-up’ doesn’t give you an excuse not to plan. A plan provides you structure, guidance & a roadmap to success. If you fail to plan, you plan to fail – is that what you want for your business.
There are many business strategists or consultants that can provide cost-effective & strategic business plans that come from sound research & experience – not just from social media or a download. An investment in a plan should not be thought as a cost to your business, rather an investment.
As a business owner or manager, it is paramount that you revisit your current business strategies – when you have your plan in place – and ask some key questions:
- What current innovation initiatives have they undertaken and have planned for 2018?
- Are there other types of innovations initiatives that could be feasible?
- Are there any other ways in which we can incorporate innovate into our everyday work lives?
In the great words of Steve Jobs “innovation distinguishes the leaders from the followers”. You need to ask yourself is your SME or start up a leader or a follower?
In Summary
Innovation is why we have the iPhone, the electric car & countless other ‘game-changing’ inventions, but more than that innovation allows us to continue to grow.
Grow as an industry, thrive as a company or department but most importantly grow as people. Without innovation, we would be stuck doing what we always have done before and that is simply not in our nature.
