Innovation, growth mindset and SMEs
SMEs need a shift in mindset to help them keep pace with leading technologies, nurture innovate and grow
You would have to be living under a rock to have not heard of innovation, a trending business topic. Companies worldwide, SMEs included are all too familiar with calls to innovate to be competitive, enhance productivity and stimulate growth. Presently, some readers may be thinking ‘yet another article regarding the need to innovate or stagnate.’
Innovation in its raw stripped-down form introduces new products and services or improves business processes or strategies. Research links positive relationships between productivity, innovation and high growth rates across sectors. Seven of the top ten most innovative companies of 2018 as polled by a Boston Consultancy Group report are digital innovators. Most, if not all, these companies integrate digital technologies into their innovation activities, a trend that shows no sign of dissipating any time soon.
SMEs leading the charge in exploring the disruptive potentials of digital technologies and implementing digital business models are becoming stronger while innovatively-weak ones are left lagging behind. While globalization and new technologies can introduce staggering economic achievements and accelerated technological change, persistently unaddressed traditional problems faced by SMEs as highlighted in the OECD policy brief Small and Medium-sized Enterprises: Local Strength, Global Reach, will continue to stunt their abilities to compete and effectively participate in a globalized, technology-driven environment.
SHIFTING MINDSET WHILE SHIFTING TO DIGITAL INNOVATION
Encouraging and nurturing innovation from the inside-out requires a significant change in mindset for some firms.
Do you agree that?
- Intelligence and talent are traits fixed at birth and cannot change much.
2. New things can be learnt but basic intelligence can’t really change.
3. Intelligence, talent and abilities can be developed with persistence, effort and the right strategy.
4. You can change your basic intelligence level considerably.
Agreeing with Questions 1 and 2 indicates a fixed-mindset, while those agreeing with Questions 3 and 4 display a growth mindset.
Harvard Business Review’s The 5 Requirements of a Truly Innovative Company observes that firms with new business incubators, idea wikis, disciplined processes for gathering customer insight, and other good ideas, struggle with making real progress — meeting growth goals or customer expectations. A consequence of this is that decisions to shift to digital-related technologies can be intimidating and challenging to large, small and medium-sized firms. According to a McKinsey survey 65 percent of senior executives were ‘somewhat’, ‘a little’ or ‘not at all confident’ with their innovation decisions. On top of that, one-third of the fifty most innovative firms of 2018 noted inadequacies in digital processes to bring about significant changes in their business. An explanation of the gap between the companies’ and shifts to digital innovation may be attributed to mindset.
Research on mindset and why some businesses succeed and others do not is not a new phenomenon, nor is it solely relegated to a specific geographical location or industry. It is used by several organizations, including the Danish Technological Institute (DTI) to identify mindset types of SME owners, elicit measures in SME owners to see themselves as innovators, provide a lucrative, simple and easily replicated strategy and approach to foster and/or improve an innovation culture among staff and managers.
The DTI’s Innovation Agent Program supports SMEs in the revamping of their innovation strategies for the digital era. By engaging in the Program, SMEs can explore and better understand ways in which disruptive technologies can expand their future notably through the development of new products and business models. These companies are then able to raise the bar and gradually pace themselves during the innovation game by grounding their new products and services within digitally-enabled services and with expert guidance and support from an up-to-date innovation ecosystem and actors.
Written by Marie Nicole Sorivelle and Knud Erik Hilding-Hamann
Danish Technological Institute, DTI
