SMEs need to innovate to compete in the regional, national and global markets. But how do business owners innovate when they are pressured by so many issues? SME growth in the U.K. remains strong although Start-ups fare poorly in terms of access to credit, technology, and skills.
A practical innovation framework I use is that of Keeley et al. called the 10 Types of Innovation, which can help SMEs take a methodical, disciplined approach. The framework is divided into three areas where innovation can happen: configuration, offering, and experience.
Configuration involves all the internal workings in the organisation that enable the production of products and services. Under this are four components:
• Profit model — this is how the company makes money
• Network — this is how companies build connections to create value
• Structure — this is the alignment of the company’s talents and resources to deliver greater value
• Process — this involves superior methods that the company uses
One great example of a company that innovated its configuration is Uber.
David Plouffe, a senior executive of Uber, often speaks about how the five-year-old company scaled to service more than 300 cities in the world. It was able to do this by connecting an expansive network of private vehicles. Its lean structure focuses on getting feedback from social media to further improve its operations. Its innovative profit model enables it to earn from private vehicles booking without even owning its own fleet.
The next two types of innovation are under the “offering” group, namely:
• Product performance — this defines the distinguishing features and functionality of a product
• Product system — this involves complimentary products and services that enhance the value of a product
An example of innovation in offering is the young, inspiring Alok Shetty, the founder of Bhumiputra Architecture, the firm behind several innovative architectural designs of houses that shelter poor people. One of his projects is a slum housing that has bamboo walls, plastic tarpaulin sheets resting on bamboo for roofing, and wooden shuttering sheets for the floor that would cost only Rs. 35,000 for a 100-square-foot house without compromising product performance. His other projects involve reused 40-foot shipping containers transformed into a 250-seat auditorium with aisles, staircase, and screen. All these create a wonderful product system that can be configured, attached, and transformed to enhance the value of each design.
The last four types of innovation are under the “experience” group, such as:
• Service — this includes support enhancements that surround a firm’s offerings
• Channel — this includes how offerings are delivered to customers and users
• Brand — this includes representation of offerings and business
• Customer engagement — this involves the distinctive interactions the firm fosters
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