For small businesses innovation can be more tangible, rewarding, and consequential for bottom-line business. There are much less silos, and layers of management in small businesses to engage or worry about approval. However, since most innovation programs are geared towards medium to large companies, there is less talk and focus on small businesses innovation, although innovation could be the competitive edge and the core value proposition for a small business to compete effectively and survive todays vicious market. We are not talking here about disruptive or radical innovation, this is reserved for large players or a unicorn disruptor, but we are talking about incremental effective innovation to compete.
According to a report by Boston Consulting Group, the most innovative companies in 2019 “use AI, platforms and ecosystems to enable themselves and others to pursue new products, services, and ways of working,” but for the small business owner, innovation should not take large budgets or use latest technology. Successful innovation for the small business should involve the ability to forecast, assess competition and market challenges to create solution in a nontraditional but innovative way.
The innovation platform of small businesses should mainly focus on the Business Model, Management, and Processes (BuMMP). In this brief, we provide more insight on how to drive and translate BuMMP innovation for small businesses.
Business Model Innovation
Business Model (BM) provides businesses a roadmap to create, deliver, and capture values, in short we assign BM as the value driver. The objective of innovation in BM is to focus on optimising creation, delivery, and capturing business value.
You create value for your customers by deploying your unique value proposition (UVP). In order to create an effective UVP, you have to first clearly understand your customers and their needs/wants. You are then in the best position to innovate a solution from which you derive your UVP. Your UVP should communicate why you are different and worth getting market attention. You do this with three delivery points:
– Be different, but make sure your difference matters
– Target early adopters
– Focus on customers worldview of benefits
How do you deliver value? It is prudent to start with a minimum viable product (MVP). MVP could be a product, a service, or both developed in a pilot form. You use your offer both to test for customer pull and to refine your initial product specification MVP. The delivery channels are critical to your innovation and ability to compete.
You then capture value back from your customers through your revenue streams. For business modeling purposes, it is important to list both your sources of revenue and specific pricing. The mistake a lot of entrepreneurs make is pricing their products against their solutions by slapping a small margin over what it costs them to deliver value. This is a mistake because your customers don’t care about your costs, they care about the value they capture from your product.
Management strategies can be innovative in the way companies manage people, marketing, and technology, with all the opportunities and risks involved. The obvious objective of innovation in management is to be lean, effective, more competitive, and having sustainable growth.
You need people who are good at producing daring innovative ideas and the ability of turning them into reality (MVP). With that in mind, go ahead and refine your hiring process to discover people who think differently from the rest of the group, have unique hobbies, or nurture inherently creative habits such as reading, writing, and have experimenting drive.
In the modern business world, there can’t be a successful innovation without modern technology. From business automation to AI-driven software that can be incorporated into all crucial and menial processes in every department, there are many ways you can spark innovation by bringing technology into the mix. If nothing else, it will give your employees the tools needed to achieve innovative projects. You need to know exactly how your ideas are faring in the competitive arena, and monitor innovation metrics so that you can derive actionable insights.
Smaller businesses, though, have fewer consumers to deal with. And that means you can learn more about how your innovative product or service will affect them. A small business can invest in its audience more and understand their explicit pain points.
Processes here relate to the production and delivery mechanism of products and services. Innovation in this field is critical for competitive edge and sustained growth. The objective of innovating in process development, is to enforce lean, efficient, and high quality operation. Take the example from Amazon’s prime delivery and Amazon Web Services (AWS).