Results from this year’s Federation of Small Business (FSB) innovation survey make for interesting reading.
The findings from a survey of nearly 1,300 firms, reveal that most small businesses have innovated in the past three years – in a variety of ways.
Thankfully FSB focus groups held in London and Cardiff considered innovation to be crucial to business survival.
We concur. Innovation oils the wheels of industry and keeps our economy one step ahead of the competition.
More than half of all small businesses (51%) reported improvements or had developed a new product for the business.
The second most widespread type of improvement (from nearly 35% of respondents) was making changes to marketing concepts or strategies.
27% of firms said they improved i) process innovation and ii) changes to their organisational structure, work responsibilities and decision-making.
These were followed by new or significantly improved business models and/or practices (22%) and new products (goods or service) to the market, at 19%.
Encouragingly, the majority of small businesses are risk-takers – with 63% willing to experiment with their product, process, organisation or marketing.
It was found that on average, those who innovated in the past three years are more likely to take risks and experiment with their business.
Worryingly, however, a considerable number of the 1279 respondents, 22%, have made no changes to their business in the past three years. Also, 17% were intending to make no changes in the next three years.
Generally accepted intelligence is that standing still is as good as going backwards so we really fear for the future of non-innovators.
There is surely a correlation between the fact that nine out of ten SMEs fail in their first three years (a record 660,000 new companies were registered in 2017) and the distinct lack of development in some businesses.
But that’s enough bad news. Let’s concentrate on the positive aspects of the FSB survey and the statistic that most innovators are businesses that have a good number of employees.
The old adage that people buy people (rather than goods or services) has never been truer, since 30% of non-innovators (who have made no changes to their business in the past three years) do not employ other people.
If you add in the finding that 63% of non-innovators employ up to 10 people, can we conclude that bigger businesses are likely to take more risks?
Up to a point this is the case, but some slow-moving large corporations are also resistant to change (possibly because of the sheer scale and/or cost of implementing transformation).
Somewhere in the middle of all this is the model business, with the optimum number of employees, with innovation in its DNA.
And that is more than likely to be one of the 63% of businesses that say they are willing to implement changes suggested by one of their employees.
This is exactly how it should be – a business growing from the inside, trusting its employees to not only make good decisions, but to care enough and have the freedom to suggest innovations, knowing their suggestions will be taken seriously.
In linked blogs, we look at the FSB survey findings on research and development (R&D) tax credits – Why SMEs are not accessing R&D tax credits and how innovation is paying off for SMEs and what barriers they face – Innovation the key for better business.