Innovation is all about creating more effective products, processes, services or technologies which can keep a business ahead of the competition. It is an important tool through which SMEs can bring about positive change in their products and functioning to explore and tap new market opportunities.

Small and Medium enterprises (SMEs) are the engines of economic development and industrial growth across the world but they often lack the access to technology and finances needed to survive and prosper in a highly competitive business environment.

They also lose out to bigger businesses when it comes to efficiencies of cost, structured processes to seize an opportunity when it presents itself and the management skills needed to survive, and win, in a competitive environment.

It is here that innovation can play a key role by transforming ideas into new or improved products in the most cost-effective and labour-efficient manner.

Innovation:

• Can be applied to products, processes, services, technologies or market positioning.
• They can lower production and promotion costs and translate into higher sales.
• Can include employees, business partners, customers as well as technology and research & development agencies.

An innovation, as opposed to an invention, doesn’t need to be big to be effective.

SMEs can also maximize their profitability by licensing or selling their innovations to large corporations for production and development.

More often than not, innovation is driven by the senior management and guided by market requirements and an organisation’s business imperatives.

Most experts would, however, also sound a note of caution here. An innovation, whether big or small, has to be in line with an organisation’s core business and its technology linkages or it will not succeed.

Put simply, innovation implies transformation and has to have the buy-in of all related functions within an organization and outside.