”We post on Facebook every day, isn’t that innovative?”
Sorry, no, that’s marketing, and it’s probably not being very effective.
Our approach to digital projects begins with a 1-2 hour workshop, which is crucial to defining a strategy that genuinely matches our customer’s business objectives. It also gives us unique insights into how SME owners across Australia perceive innovation. More to the point we get to hear the common misconceptions that exist across industries.
I’ve noticed that in the last three months of workshops we’ve conducted across recruitment, real estate, food & building: owners of small to medium enterprises don’t have a precise definition of what innovation is, and the lack of clarity is leading them to ineffective strategies.
How do we define innovation for SMEs?
Innovation can be defined as new markets, new processes or new products (or services depending on the sector). This means that to be innovative you need to establish a unique edge, something ‘new’ that no one else does. It’s with this simple definition that the whole conversation about innovation becomes very simple; it’s not a sophisticated problem when you know that all you need to do is create something new (note that I didn’t say it would be valuable… that’s an entirely different discussion).
How do SMEs usually define innovation?
What we see is a lot of is SMEs saying that they’re innovative, but when we follow up with: “what makes you special?” there’s usually a tentative and not well thought-out answer. Here are some of the things people say:
- We stay current with new marketing channels and trends: we post videos on Facebook & Instagram.
- We created an eBook that we use on our website.
- We just updated our website.
- We have an app on the AppStore.
- We have a local business innovation award.
The common elements from the items in this list above do not imply innovation; merely keeping up with new trends. Keeping up in our digital world is commendable, it’s tough considering how fast everything is moving. However, none of these satisfies the definition of innovation.
How should an SME start a journey of innovation?
Seeing that I am a student of innovation and business strategy from my Master’s degree, I am fighting a powerful urge right now not to start telling you about the frameworks that you can use to start working on innovation in your firm. Instead, I’ll give you practical advice on how to get started. Follow these steps:
- Make a list of all the things your business does. Group these things into “Great”, “Good” and “Needs Improvement.”
— Bonus: assess the process and marketing of the things you do that fell into “Needs Improvement.” Consider the effort required to improve or remove them from your business so you can focus on the “Great” and “Good” groups.
- Take everything in the “Great” group and assess whether there’s anything common so you can define a “core competency”. Your core competency should be a statement about your business you can reflect on with the sentiment: “this is what we do best!”
- Create a list of your direct competitors. List the things they do and do the same grouping you did with your business.
- Create a list of your most regular or high-value customers. List the products and services they buy from you, if they match your core competencies then you’re probably on the right track. Consider the demographics and psychographics of these customers: what jobs do they need to achieve, what pains do they go through, how do they gain out of using your products and services?
- At this stage, you have completed the background research required for innovation:
— Internal Analysis: what are our best capabilities?
— Macro Analysis: what are our competitor’s best capabilities?
— Customer Analysis: what do my customers need?
Now, use this analysis to define a complete product and service system that is genuinely unique.
How can Hustle help?
Our core competency is “we help startups & established companies design, develop and promote their brand, product or venture.”
It’s at our core to help you innovate with digital products. Let’s start the journey with a workshop. Learn more about our approach here.