The hidden costs of inadequate innovation support in SMEs
When SMEs lack proper innovation support systems, the impact extends beyond missed opportunities. Here are the critical challenges we're observing across small and medium enterprises:
Time management crisis
Product innovation leaders in SMEs frequently report their strategic innovation time being consumed by day-to-day operations. This common pattern shows how immediate concerns can overshadow long-term SME growth through innovation.
Lost opportunities
Without systematic innovation processes, brilliant ideas from workshops often remain unexplored. While your SME struggles to capture and evaluate opportunities, competitors are transforming similar concepts into market success through structured business model innovation.
Innovation team burnout
In most SMEs, innovation functions typically consist of small teams or solo innovators. This isolation, combined with stagnating ideas, often leads to decreased motivation—precisely when your organization needs structured SME innovation strategies the most.
Building a thriving innovation culture: practical innovation strategies for SMEs
Successful SME innovation examples consistently show three critical drivers in our Culture Map that drive effective innovation. These findings come from analyzing successful business model innovation examples for SMEs.
Leadership support for innovation
Leadership support in SME innovation transcends traditional notions of merely approving budgets or signing off on projects. It requires a fundamental shift in how leaders engage with and champion innovation within their organizations.
True innovation leadership means creating an environment where new ideas aren't just tolerated but actively nurtured and developed to drive innovation.
In our work with successful SMEs, we've observed that leaders who drive successful innovation initiatives consistently demonstrate three key behaviors:
- First, they actively shield their innovation teams from unnecessary bureaucracy, allowing them to move quickly and experiment freely.
- Second, they regularly participate in innovation activities, sending a clear message about its importance to the organization.
- Third, they create clear accountability structures that help teams understand exactly what success looks like at each stage of the innovation journey.
To transform leadership support from concept to reality, here are specific actions that have proven effective:
- Establishing clear leadership commitment by making sure you’re dedicating 20-40% of your time to working on innovation each week
- Get involved. Leaders should make themselves available to teams to give strategic input, guidance and remove blockers so they can move quickly. Make yourself available during ‘drop in’ sessions for innovation teams, rather than having to set up time to meet. Teams may need immediate help to unblock something rather than spend 1-2 weeks waiting for a meeting.
- Implement a clear stage gate process based on evidence, so teams know exactly what is expected of them in order to progress with an idea. This also makes it easier to retire ideas that do not show traction early on and can save a lot of wasted resources
Implement a clear stage gate process based on evidence, so teams know exactly what is expected of them in order to progress with an idea. This also makes it easier to retire ideas that do not show traction early on and can save a lot of wasted resources.”
Organization design for innovation success
Organization design for innovation isn't about creating a separate innovation department – it's about weaving innovation culture and capabilities throughout your entire organizational fabric.
This requires carefully considering how different parts of your organization interact and how resources flow to support innovation initiatives.
The most successful SMEs we've worked with have mastered the art of balancing their core business operations with innovation activities.
They achieve this by creating clear interfaces between innovation teams and existing business units, establishing dedicated support roles, and implementing flexible resource allocation models that can quickly adapt to emerging opportunities.
The key to effective organization design lies in creating structures that enable rather than inhibit innovation:
- Have clear policies that make it easier for innovation teams and the core business to collaborate as equal partners. For example, have a dedicated person in key functions such as marketing, sales, vendor management that the team can reach out to for support. Innovators should also host regular ‘lunch and learn’ sessions to share the insights across the organization.
- Have leaner, more agile processes to support rapid experimentation. For example, give teams a credit card to find ad hoc suppliers to build experiments rather than going through a typical procurement process.
Systematic innovation practice
Innovation practice represents the daily habits and methodologies that transform abstract innovation concepts into tangible results with competitive advantages. It's about creating a consistent, repeatable approach to innovation that can be taught, measured, and improved over time. This systematic approach helps organizations move beyond the "innovation theater" of occasional workshops and brainstorming sessions to create real, sustainable value.
Effective innovation practice combines proven methodologies with practical tools and metrics. It provides teams with a common language and framework for discussing and evaluating innovation opportunities. More importantly, it helps innovative businesses build a repository of knowledge about what works and what doesn't in their specific context.
To establish robust innovation practices in your organization:
- Provide training for concepts such as the business model, lean startup or designing thinking so these innovation tools are widely adopted and the value understood across the organization.
- There is no need to implement an innovation toolbox from scratch. Use off the shelf solutions like Strategyzer’s Innovation Platform to make it easy to design, capture and learn from business experiments and systemically reduce the risk of new ideas.
