Myth 1: SMEs need a lot of investment for growth and innovation to be done right
Not true.
Substantial investment is not a key driver for success. Recall Quibi, a company that went from raising a great deal of money to irrelevance in a very short period of time.
Their goal was to disrupt Netflix by optimizing micro-content on mobile devices. Even though Quibi had a seasoned leadership team from eBay and Disney, as well as a substantial budget of $1.75 billion, it ultimately did not succeed.
The mistake?
They didn't distinguish between ‘Explore and Exploit’. There are no ‘winners’ in innovation. What you do is create the conditions for winners to emerge.
Let’s contrast this with a success story: Laurastar.
Laurastar is a Swiss company specializing in high-end steam irons. By embracing Strategyzer's approach of investing in multiple ideas through exploration and iteration, Laurastar invested in three teams to explore potential value propositions and business models in parallel.
Three different potential business models were tested to result in the most viable one. By focusing on health and mass-market distribution, Laurastar created Iggy, a handheld device that not only steams clothes but also purifies fabrics.
The key to their success was not an exorbitant budget — it was a business model shift to achieve competitive advantages in the market.
Myth 2: Growth and innovation requires R&D or technology
Tendayi Viki challenged this prevailing belief in driving innovation. He presented research findings that revealed a consistent zero correlation between R&D investment and returns over nearly two decades (PWC’s Innovation 1000 reports).
This begs the question, why when two companies invest the same amount in innovation one results in 50% positive growth and the other can just as easily result in -50% growth. This is because innovation goes beyond technology or product advancements. Having a cool technology is not the same as having a value proposition
It's about creating value for customers and the company through strategic business model innovation.
By shifting their business model to focus on emerging customer needs, Laurastar sets an example of how businesses can implement innovation strategies and achieve success without relying solely on technology.
The conversation also addressed misconceptions surrounding intellectual property protection in business model innovation.
While intellectual property has its place, the emphasis should be on delivering value to customers rather than solely protecting ideas. Think about how you're creating products and services people want.
However, success extends beyond simply creating desirable products and services.
Crafting a robust, innovative business model is the backbone of sustained profitability. Many companies excel in product and service creation but falter in value creation, delivery, and monetization.
For SMEs, business model innovation isn't about new groundbreaking inventions but finding the right business model for their product and service.
At Strategyzer, we believe that business model innovation is the biggest unexplored possibility for large and small companies because very few people master it.”
Alex Osterwalder
CEO and co-founder of Strategyzer
Myth 3: Innovation is harder to execute in SMEs
Many SMEs have the misconception that it is much harder for them to innovate because they do not have the resources or manpowers available to larger enterprises. Yet, SMEs can operate with a lot more speed and agility when it comes to innovation by tapping into their superpowers.
- SMEs have a smaller organizational structure which means they deal with less hierarchy and have greater access to decision makers
- Innovators have greater ability to influence business model innovation because quite often, the decision maker, economic buyer and influencer are the same people and you don’t need to get buy-in from as many people
- The innovation process can be run more effectively because it’s easier to implement a tech stack that facilitates rapid experimentation. Larger companies quite often have a complicated new vendor process or 90 days payment terms which makes it impossible to hire designers and developers to help with building experiments.
- Innovators can learn and test a lot faster due to closeness to customers in terms of access and the relationship they have, especially for B2B businesses
The ability for SMEs to move quickly and cheaply is a significant advantage when it comes to innovation. Especially in a resource constraint environment, the ability to quickly show evidence to support or refute your idea should not be underestimated.
In this webinar, Alex shed light on Strategyzer's commitment to democratizing innovation. Recognizing the budget and resource constraints of SMEs compared to their larger counterparts, we now offer programs. These programs are designed specifically for SMEs so you can implement a ready made innovation process quickly and efficiently.
Our mission is clear: to dispel the myth that innovation is solely the domain of large companies and make it accessible to all through affordable program licenses — you really do not need a considerable investment to drive innovation.
Laurastar has done it, and so can you!
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