In my mentoring work at SCORE, which I’ve done since 2002, I have often met small-business owners who complain that large businesses, with huge inventories, low prices, large advertising budgets and an online and storefront presence, are taking business away from them by underpricing and over-servicing their customers. And what is even more difficult for the smaller firm is that they do not have the resources to play with the “big boys.” As a result, they fall farther and farther behind and ultimately fail.
I believe that smaller firms have much stronger potential that is yet untried, and when implemented, it can turn the tables on larger firms. It enables smaller businesses to innovate in the market and outplay the large firms at their own game. There is a procedure — Open Innovation — that can provide new opportunities for smaller firms. I base this on an article by Dwayne Spradlin in “Innovation Management.”
Step 1: Use crowdsourcing. This is a tool by which the small firm seeks worldwide problem-solving and opportunity recognition by publishing its situational details on the internet and offering payment for successful answers. In this way, it only pays for successful ideas and implementation strategies. In most cases, the startup of this process does not require a lot of money, and thus is within reach of the smaller firm.
Step 2: Ask the right questions. Business owners should move away from the position of feeling that leadership should provide answers to questions that arise in planning for innovation.
The opposite is true. Leadership should be considered as the source of the right questions, to which available resources should direct their efforts at problem-solving.
Step 3: Recognize and embrace diversity. The statement that most keeps small firms from embracing innovation is “We’ve always done it this way.” That kind of thinking puts up roadblocks to innovation. In fact, the things that have always been done a certain way are those that are probably in great need of innovative thinking to improve processes and/or outcomes.
Step 4: Look everywhere for problems and opportunities. Everyone in the organization needs to be alert for ways of recognizing problems and opportunities and working toward their solution. Improvement should be continuous and is the responsibility of everyone. We can make use of Deliberate Practice (see my Ask SCORE column from Feb. 19) to guide improvement efforts.
Step 5: Change the culture of the company. The culture of any organization can be found in operating procedures and the spirit that activates a continuing desire to improve and grow. It’s not just in sales and profits, but in the search for new and better ways of doing things. The winners of the competitive marketplace struggle are not those who are the richest. It’s those who never look at what is or was, but rather what can be, and then make it happen.
Use of Open Innovation can lead to growth and profitability for small businesses, but it must be done continuously. It must be a new way of life for the firm. Only in that way can the process work over the long run.
SCORE mentors are available to discuss Open Innovation, as well as other management strategies and tools for success. Call for an appointment with a SCORE mentor at 302-766-2043.
Richard Walton is a certified SCORE mentor and a member of the Lean Enterprise Institute, Academy of Management and the Online Learning Consortium. Questions may be emailed to him at rwalton firstname.lastname@example.org or sent by mail in care of The Herald-Mail, P.O. Box 439, Hagerstown, MD 21741, ATTN: Ask SCORE column.