Innovation | SME
  October, 2016

Innovation in SMEs: The meat is in the middle

Hari Nallan

Having spent more than a decade in consulting, advocacy and delivery of innovation, I see many patterns across industries I worked with. While I have a different story to tell to large enterprises, this article focuses on the patterns that are relevant to SMEs, in the area of Innovation.

Being innovative is much more essential to SMEs than large companies. A lot of SMEs now realize this, but struggle to act upon it. Innovation seems much more difficult for SMEs than large enterprises because SMEs need to innovate in all its manifestations: Product, Process & Service and in most of the cases, all at the same time. For a common understanding, I’m giving a generalized definition of each of the three:

  • Product: A manifestation of what is offered/ sold to the customers. Customers directly attach value to how a product works, feels and looks.
  • Process: The process of developing products and services, from concept to build and delivery… it is the most difficult to master of the three; more about that later.
  • Service: The relationship between a buyer and seller, that assumes the form of an experience when a transaction or communication occurs.

Complexities lie at the overlap of the three and one cannot be mastered without influencing the others. This is exactly where SMEs begin to struggle. How then, do we handle this?

1. Initiate innovation top-down

In my experience, most of the large companies already get this. Due to the overlap I mentioned earlier, it is important that top leadership is involved in innovation initiatives because, top leadership will be able to influence and interplay all the three manifestations. The good news is, it is far easier to do this in an SME than a large enterprise.

However, this is just a starting point; and this alone will not ensure results.

2. Process takes priority

Inter-playing all the three is easier said than done. If I were to prioritize, I would choose process over the other two. In my experience, most of the SMEs fail to understand this priority and tend to think that creating a great product is enough to earn success. While a product has its specific lifetime and hence, expiry, it the process that enables great product development; and investing in process can generate continued results over extended periods… great products included!

However, it is also one of the most difficult ones of the three to innovate because, process is intangible; and process is something that involves the entire organization and its people. This is why I say, the meat is in the middle.

3. The meat is in the middle

In order that your innovation initiatives receive company-wide adoption, you will have to include your middle management; and this is irrespective of the size of your company. It is the middle management that can execute on your strategy, implement your process, hold your people accountable and ensure product and service innovation. In my experience consulting hundreds of companies, I have noticed that the companies that have included and empowered middle management innovated at a far higher rate than the other; and in fact, companies that didn’t include their middle management, struggled to innovate.

So, to summarize innovation mantra for SMEs: Initiate your journey top-down, Prioritize your process and most importantly, Empower your middle management.

Hari Nallan

Hari Nallan

Founder and CEO of Think Design, a User Experience strategist, Designer, Speaker and Educator. Think Design is a Leading Design consultancy with offices in Denver, New Delhi, Mumbai, Hyderabad and Bengaluru; and collaborates with visionary organisations to identify, build and materialise innovative products and services.


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