Is innovation something only for the big players, with deep pockets and large R&D budgets? Or is it something a smaller company can also aspire? Nobody can dispute the fact that having a large R&D budget definitely helps. IBM, AT&T, the great innovating companies of the past century, have all invested billions of dollars in R&D. The pharma companies today do the same. The US Department of Defense, owner of the world’s largest budget, is also the world’s most significant R&D center.The famed ‘military-industrial’ complex of the US is no myth.Even the Internet came out of one such R&D project.
But, do small companies need to give up?
SMEs have their advantages too!
What are the forces that constrain innovation? A rogue’s gallery would line up something like this:
• Resistance from the established product or market regime. It was not for nothing that GM created a separate unit called Saturn to design and build its next generation car – it knew quite well that its existing status-quo- loving units could never do it. IBM resorted to a similar device to create its own PC. Obviously, the smaller you are, and the less successful you are, the less resistance you will have to deal with when you want to do something new!
• Bean counters know the cost of everything, and the value of nothing. Such corporate nay-sayers are much more common in big companies than in small ones!
• Too many layers between the ‘ideas person’ at the top (usually the founder/CEO) and the front line troops who have to execute the new idea. Again, won’t SMEs be much better off here? Strangely enough, it has been my experience that the CEO/founder is usually the one brimming with ideas – which is why he is the founder, after all. His/her problem usually is,people to take his/her ideas seriously! Anyone familiar with the way companies actually work would understand what I am saying – only the naïve think a CEO just has to issue orders, and the job gets done!
It almost looks like SMEs have an unfair advantage!
What is innovation, anyway?
One of the most innovative companies I have ever studied was a small company in Ahmedabad called Amtrex. While other companies were merely running management development courses on BPR, Amtrex was actually doing it redesigning its business processes, so a customer could get an air conditioner in 24 hours (In India, mind you!), reconfiguring its new product development process to cut the time from concept to market by more than half, and so on. Why was it able to do such things? Because a small group of people at the top dared to think it could be done, had nothing to lose by doing things differently, and in fact, realized that the company could only expect to survive by doing things differently.
After all, innovation can be in business processes, business models, too.
The best recent case is of Twitter. The founder, Evan Williams, worked at Google, supposedly the most innovative large company in the world, and found the processes there, far too stultifying to come up with anything new. He realized very early that most new ideas cannot be easily understood by anyone other than their creator, and that they happen mostly by accident, not by design or management process. Though Google consciously builds management processes to encourage innovation, it wasn’t enough for Mr. Williams.
Listening to the unvoiced voice of the non-customer!
Finally, where do the most innovative ideas come from? From the market, yes, but not necessarily the one we mean. Blue Ocean ideas come from listening to non-customers, not to customers. Southwest Airlines, to quote an obvious example, could never have come up with its innovative business model by asking airline travelers what they wanted. If that had been the way to get ideas, American and Delta would have been much better at it, since they have millions of captive customers. Southwest created their business model by listening to non-airline-travelers.
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Labels: Ahmedabad, Amtrex, Ashok Korwar, business models, business processes, Evan Williams, Google, ibm, innovation, pharma companies, R and D center, SMEs, worked
