With business competitivity increasing across the board, SMEs and particularly those operating in traditional sectors must start taking steps to become more innovative well before changing their business model beyond recognition or executing haphazard projects that could end up seeing the whole business suffer a loss of momentum.
Knowing whether innovation is necessary or not is the first question a firm should be asking itself. The main considerations before taking action are:
a) is the sector in which the company operates exposed to significant digital disruption, gradual deterioration or even at risk of becoming obsolete?
b) do a company's work processes allow it to easily make the necessary changes to become more competitive?
If the answer to one of both of these questions is yes, it is high time for your company to be more innovative. That being said, how can a small business instigate a type of process within its operations that management literature normally reserves for multinationals?
Keep reading to find out 10 top tips to help SMEs from traditional sectors become more innovative.
This post is also available in Spanish.
10 top tips to help SMEs become more innovative
1. Innovation doesn’t just mean investing in tech
Before setting goals and developing a plan of action, it must be understood that innovation goes above and beyond simply investing in technology. In other words, it is not to be believed that increasing innovation will only require a quick investment in the latest technologies on the market.
2. Being up-to-date with the latest innovations in technology
Even the smallest company has to pay attention to innovation trends. A passing reference to the Internet of Things may seem like science fiction to an SME manager, but the sooner businesses understand what such phenomena are and how they are being exploited by leading companies, the less time it will take for them to start considering new opportunities and capitalize on the advantages that come with them.
3. Questioning your industry's status quo
This is an important exercise that many companies often do not do: identifying industry norms that seem unshakeable and then considering if they really are set in stone. To give an example, back in the 1990s clothing chain Zara challenged a near-dogmatic assumption in the fashion industry by simply asking the following question: why only release two new collections at two pre-established dates during an entire year?
4. Starting off with achievable goals
It is equally important to advance towards innovation by setting achievable goals: what is commonly called a “quick win” must become a positive lesson that leads to the next innovation. With each small step, innovation can increasingly engineer progress and the fruits of any labor clearly reflected in the company’s bank balance.
5. Allocating resources in an effective way
Limitations of time and resources are common to any company, but for SMEs these two commodities are particularly scarce. Given that innovation requires both in large measures, it is important to realistically analyze how much a company is in a position to combine its existing operations with a new, innovative one.
6. Assigning an adequate budget to existing resources
Once the above question has been honestly addressed, the next step is to allocate a budget and appropriate materials to be able to achieve the company’s goals. While it may seem obvious, being stingy with a budget is perhaps the main reason that innovative processes do not thrive in millions of companies. In the case of individuals, establishing the right number and type of professionals in a team is a vital move to ensure that each team member feels valued, is enthusiastic about their work and conscious that innovation is a group endeavor.
7. Incorporating smart working processes
While more conventional companies often look unfavorably on startups, the latter are an excellent example of how to use innovative work processes. SMEs can learn a lot from startups including their methodologies (such as the lean startup model), the rapid development cycles of new projects tested in the shortest possible time and, in case of a project failing, the lessons learned that enable a second attempt to create the business to be made.
8. Analyzing and understanding your clients
The concept of big data is often used carelessly. Big data is simply a large amount of data that companies have of their customers. But for businesses that don’t typically pay much attention to the figures, how are customer preferences spread out across ranges of products throughout the year? Which channels were used to check the news and which ones did they actually use to buy products? In any process of innovation it is vital to analyze data and draw conclusions to help make more effective decisions and test if a plan is being executed in an innovative way.
9. Understanding that innovation is never-ending
It is important to see innovation as a path that always leads the way to the next innovation process. To achieve this, it is important to raise the achievement of a first success as an opportunity to promote a spirit of innovation in the company culture. To do this, we must recognize the merit of the promoters and executors of innovation, and share any encouraging results with employees.
10. Redefine the outsourcing aspect of your business model
Although these days conventional companies have more opportunities to exploit the innovation capabilities of its employees - referring specifically to early adopters of new technologies or businesses who are willing to embark on projects that challenge their company norms - it is unrealistic to think an SME can become more innovative using only its own resources. Collaboration with other companies is essential, and it is therefore necessary to redefine outsourcing models to ensure closer collaborations with other entities and achieve a "technology partners" status rather than one of mere "service providers."
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This post is also available in Spanish.
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