There is a common misconception that, because SMEs have fewer resources at their disposal than large companies, this will stifle their ability to innovate. While it is true that SMEs may not have the resources of large corporates, the streamlined nature of most SMEs means that things can be done without much bureaucracy - which is actually an enormous advantage to innovation.
For instance, SMEs may have fewer employees, but generally these employees will be better aligned. They may have only one or a few products to offer, but a less complex operation allows for a straightforward decision-making process and greater focus.
In fact, large organisations often become too big and rigid to cope with the market in which they are operating, so end up fragmenting in order to survive. Have you ever noticed how people in large organisations often want their business to be like a start-up again - agile and exciting? And how people in a start-up want to be as successful as big corporates? SMEs are exactly where they need to be – in that sweet spot right in the middle.
So, if resource constraint isn’t the big challenge, what is? Well, often it is success itself that trips SMEs up. If you hit the jackpot how do you respond to a growth rate that is something you’ve never seen before?
Change is inevitable and complacency is a killer
For SMEs operating in the high-tech sector, it is all about being at the forefront of innovation. Change is inevitable, but the rate of change in today’s world is immense, and even more so in the technological sector, where new technologies are emerging and old ones are becoming obsolete in a continual cycle.
Organisations operating in the high-tech sector that get too comfortable eventually lose out. How long until a new technology comes along that makes what you’re currently doing obsolete? The danger is that by the time you have realised things have changed, it will be too late. Your customers will have moved on. Remember what happened to BlackBerry?
It is crucial to keep an eye on what is going on outside of your organisation: your industry, your marketplace, your competitors. Successful businesses combine this external sensing activity with a critical view, seeking to question, explore and challenge what they discover to understand the value different technologies can offer their customers and where the opportunities lie.
Is your innovation on its way in or on its way out?
To avoid being tripped up by success, organisations need a solid business strategy to give them a sense of what they are trying to achieve and to guide their actions. Organisations with their finger on the pulse will need to make quick but sound decisions as to where to invest their money and focus for the best long-term reward.
It is easy to believe that there is value and opportunity for all the technological innovations out there and while that may be true, they won’t all represent the right avenues for your business. And, if there is value or opportunity for your business it often has to be discovered through further work. This is where a robust but flexible business strategy comes into play.
A good business strategy sets out a clear set of priorities around where the company competes in their marketplace, what its competitive advantage is, and the capabilities it has and needs to develop in order to deliver that strategy.
Strategy as a guiding framework for success
Often, firms play around with ‘strategy fluff’, like working on mission statements and values, without really engaging seriously in the process mentioned above. They think they’ve got a long-term growth strategy because they have the mission statement associated with it, but they haven’t really thought through all the issues in terms of what is really prioritised within the business. Other businesses over-commit to a narrowly-defined path and fail to see the environment changing around them, missing the opportunities for innovation.
The key to success is to see strategy as a guiding framework that can be flexed, adapted and changed as necessary to suit new opportunities, rather than as a straitjacket that constrains or limits you to following one set path. What you need is clarity on where you are trying to get to, and some guidance on how to make decisions and choices along the path to that goal.
A good strategy allows you to test and prove the risks and the safe bets. It needs to be constantly revisited and adapted as new opportunities come along, and as others become less relevant to the business. This is where companies need that agility, responsiveness and openness to innovation that SMEs generally enjoy and that help them to succeed in a competitive market.