Where does innovation come from? It’s a simple enough question but one that requires some deep thinking to come up with any meaningful answers. To make matters worse, the answer is embedded in complicated business processes.
Sure, it’s easy enough to say “let’s innovate!” But how do you actually get there? It’s important not to confuse innovation with ideation. The latter is the process whereby you (or other small-and-medium-sized enterprises) brainstorm new ideas to help your business. Innovation, on the other hand, is the successful implementation of a new idea or concept. Following through with proper execution is the biggest difference-maker when you compare a mere idea to a real-life prototype.
In this post, we’ll look at some common ways that SMEs can transform an idea into a practical reality. We call them pathways to innovation.
One pathway to innovation is through startup venturing. This happens when a larger corporation buys, in whole or in part, a smaller startup. That way, a transfer of knowledge, technology, and personnel can occur.
The neat thing about innovation, on a worldwide scale, is that it depends on startup venturing. It’s a trend that has shaped the innovation world over the past decade or more. The large businesses that eat up the small venture firms are both encouraging and consuming innovations. It’s an innovation-consuming cycle that continually brings new innovations to the marketplace.
Startup venturing has traditionally been left to the large multinational corporations. They have big budgets and the willingness to take on risks. The question is this: is startup venturing an option for small-and-medium-sized enterprises? SMEs, for what it’s worth, make up 99% of the businesses in the European Union (EU). While large companies have the clout and the financial ability to buy innovation through startup venturing, what options do SMEs have?
There are some miniaturised ways that SMEs can get involved with startup venturing. For one, they can focus on buying only part of what startups can provide, like by buying licenses to technologies. But it can also happen through partnerships and skill-sharing programs. These can help connect SMEs with growing startups so that they can share resources and get mutually-beneficial rewards from each other. All this without actually buying a startup outright.
An SME can also take matters into their own hands by running their very own startup program. This happens when an SME invests in a startup incubator that operates at arms-length to the governance of the SME. It can be a great way to get the benefits from startup venturing without assuming as much risk or digging so deeply into the chequebook.
While startup venturing is one trend in the innovation world, there are other pathways that SMEs can use to access innovation, and we’ll look at them next.
A company can do a hackathon. What’s that? Well, it’s a trendy and unique exercise that can help condense multi-year cycles of new product development (NPD) into one or two months. It’s an engaging way to cover roughly 70% of the NPD process with in-house resources and leadership. It takes a company through a series of steps including discovery, ideation, and most importantly, execution.
Hackathons are often one-off events intended to rapidly generate ideas and develop them. They’re a great option for an SME because they’re cost-effective and can be game-changers for a smaller organization’s innovation capabilities.
A company can also develop an innovation lab with in-house expertise. These differ from a fully-fledged research and development department that you might find in a large company. However, some of the intent is similar. An in-house research lab is more like a network of employees and resources that will take an idea from a starting point to a finished product (or a working prototype).
The nice thing about an in-house innovation lab is that it can place an important emphasis on innovation for the SME, rather than letting innovation fall by the wayside and remain ignored for long periods of time.
An easier way: Innovation-as-a-Service
Another pathway to successful innovation is when you get involved with a contracted innovation expert. An innovation-as-a-service plan gives SMEs lots of up-front know-how. Without the help of experts, it’s difficult to self-assess your current innovation potential. With packaged innovation, however, advanced consultations allow your enterprise to be assessed for strengths, issues, threats, and areas of improvement. That way, a baseline of your potential can be determined so that improvements can be made down the road.
Innovation-as-a-Service options can help you avoid the common pitfalls of relying on other pathways for innovation:
- Startup venturing is a costly method for acquiring innovation. An SME has to continually monitor the startup landscape for hopeful collaborations. They also have to do thorough research and develop complicated agreements. Last but not least, they have to either buy-out or otherwise put down significant financial equity to acquire the innovation capabilities of those startups. For some, the risk can be too great.
- Hackathons can be fun and productive, but they can also be the opposite when executed wrong. It’s easy enough to set some dates, invite team members and develop some ideas. But many SMEs fail on the next critical step: converting that idea to a working prototype. Hackathons are also resource-intensive, meaning you have to divert valuable in-house personnel and expertise for the length of a project. Lastly, trying to take on a hackathon yourself can be tricky because it’s an exercise that requires lots of organisation, scheduling, and leadership in order to execute from start to finish. Sometimes it’s best to rely on an experienced facilitator.
- In-house innovation labs can also be difficult to execute. They require up-front investment and also impact your resourcing. After all, somebody is going to have to organise and lead the way of the innovation lab efforts. Time spent working on innovation lab projects can take employees away from their main duties. If managed incorrectly, the lab can end in disaster.
Why not get the best of all the options? It’s possible by working with an Innovation-as-a-Service package. Doing so can help you successfully acquire innovation, with fewer headaches and while avoiding the common pitfalls of trying to do it in-house.
You might think that “only large companies can afford innovation services”, but you’re wrong. Our Innovolo service options are flexible and affordable for all kinds of business scenarios.
Sometimes the best pathway to innovation is the simplest – all it takes is a nudge to unlock your business potential through a service option that suits you.