Five ways SMEs can innovate successfully

Innovation in SMEs is subject to special conditions. Although effective idea management and innovation management is at least as important for the competitiveness of medium-sized companies as it is for large corporations, resources are often lacking.

While large corporations employ innovation managers and have their own departments for innovation and digital change, innovation in medium-sized companies is often managed by operational departments in addition to day-to-day business. This makes innovation management in medium-sized businesses special.

Managing complex innovation processes, which require high time and human resources, are often simply not practicable for small and medium-sized enterprises. Sometimes they are not even necessary.

Small and medium-sized enterprises are often characterized by a pragmatic corporate culture that is very result-oriented. Thus, essential basic prerequisites for the development of an innovation culture are often given.

How can innovation be successfully applied in small and medium-sized enterprises? In this article you will learn five practical tips with which you can establish lean and goal-oriented innovation management in SMEs.

Innovation in small and medium-sized enterprises means one thing above all: developing new ideas and leading them systematically to success. Don’t start by literally reinventing the wheel in your industry. Instead, start small: for example, with an ideas competition within the company. In doing so, you call on your employees to think about a topic in which ideally everyone has a say: From redesigning the website to the name of a new product or alternatives to an internal form – ask for ideas.

You will soon feel that employees get more enthusiastic about idea management and innovation management if the task is not too complex. Hold this ideas competition for two to four weeks. Ask employees to evaluate the ideas they receive – the basis for innovation. At the same time, you have a jury of managers from different areas evaluate the ideas. In the end, you will award various innovation prizes: for the best user idea and the best jury idea.

By establishing an idea jury you can control the selection process of ideas. After all, the best ideas should be implemented. The Innolytics^® idea management software and innovation management software supports you in designing and implementing idea competitions – and thus to start innovation in medium-sized businesses quickly and easily.

Start looking early for employees who are enthusiastic about innovation in medium-sized businesses.

Give these employees special roles:

• Innovation coaches: They are contact persons for employees who have ideas and would like guidance on how to develop them further.
• Idea partners: Managers who make themselves available to take on sponsorships for ideas and commit themselves to these ideas within the scope of their creative possibilities.

The Innolytics^® software supports you in defining and introducing these roles within your company. In our DOMO Chemicals case study you will learn how this can be implemented in practice.

In the user administration, employees with these roles can be filtered out. So you may need an innovation coach with a special experience in digital marketing. The Innolytics^® software makes it easy to find these employees. Employees can constantly update their user profiles. This creates an internal directory for technical expertise and roles in innovation management.

There are two different philosophies in innovation management:

• Outsourcing innovation and digitization to your own departments
• bring the topic to a company’s specialist departments

Some companies use a mixed model: Certain types of innovation are implemented in departments, for others departments or temporary teams are created.

Innovation in medium-sized companies does not necessarily require their own departments.

Innovation management is often the task of all employees – literally from gatekeeper to management. Small and medium-sized enterprises are often more successful with the strategy of distributing innovation management to different heads in the company than with the establishment of their own departments. Why? SMEs are characterized by the fact that they develop innovative problem solutions for customers quickly and agilely.

In contrast to large corporations, where work is often manged through regulated procedures, medium-sized companies are more improvised. Improvisation is not negative, but the ability to adapt existing knowledge to the situation and apply it in a modified form. Distributing innovation throughout the entire company means using and strengthening the existing innovation culture. For specific tasks – for example certain projects – working groups are often formed, which dissolve after a certain time. Own departments for innovation management in medium-sized businesses only make sense if they are to implement concrete projects that are far removed from day-to-day business. For example, the development of digital innovations or radical product innovation.

Innovation is like a big puzzle: The individual pieces of the puzzle are present in many minds in the company. When developing new products and offers or digital innovations, it is important to identify the right pieces of the puzzle in the minds of employees and to link them intelligently. With a company size of less than 100 employees, most managers and employees still know what the others know. The bigger the company, the harder it is. From a company size of 250 employees upwards, specialisation in the various specialist areas is so great that it is becoming increasingly difficult to exchange knowledge across departments.

Nevertheless, the rapid internal exchange of knowledge remains one of the greatest competitive advantages. Companies that want to drive innovation in SMEs efficiently must ensure that all employees have uncomplicated access to the knowledge of others. The Innolytics^® idea management software and innovation management software makes it possible for employees to create and make visible their knowledge. Innovation managers can develop their own categories of knowledge, for example:

• Innovation know-how (creative techniques, development of digital business models, design thinking)
• Digital expertise (web design, CMS systems, video editing)
• It is also possible for employees to enter their know-how via free text fields.

The advantage: In the innovation process, necessary technical resources can be identified quickly and easily: Like the trainee, for example, who is privately enthusiastic about video editing. This capability can be used to prototype and test innovations as video. The Human Resources employee who has a training as SCRUM-Master or in Design Thinking: She can be employed internally as an innovation coach or instruct other employees.

It is a characteristic of medium-sized companies that the workload temporarily rises or falls sharply. For example, a construction company or a large photo laboratory has practically no free capacity from mid-November to the end of December: at the end of the year, new buildings have to be handed over to customers; just before Christmas, huge quantities of photo books and photo gifts are ordered.

It can therefore make sense for small and medium-sized enterprises to promote innovation, especially in times when the workload is lower. Temporary campaigns offer themselves here: for example an idea competition in the company in which employees develop ideas for concepts for the future within four to six weeks, which are then implemented in specialist departments or working groups.

This approach has the following advantages:

1. The times of low capacity utilization are being used specifically to drive the company forward.
2. In times of high capacity utilization, the company can focus completely on day-to-day business without neglecting innovation management. Often very important for small and medium-sized enterprises.
3. Due to the temporary character, the interest and involvement of employees remain high, even if they are not motivated daily by employees of an innovation management department.

The Innolytics^® software supports these temporary campaigns with its own campaign manager: internal company competitions can be planned in advance and carried out efficiently.

Innovation management is not only reserved for large corporations, but also a very good tool for driving innovations forward in competition. Digital transformation and digital change can also be well managed by innovation management in medium-sized companies. The Innolytics^® idea management software and innovation management software supports small and medium-sized enterprises in setting up and establishing suitable innovation management. Digital support for innovation management in medium-sized businesses.