Innovation is in SMB DNA

“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service.”

Peter Drucker “Innovation and Entrepreneurship”


Yes, SMBs sure are natural innovators. Most times their inspiration is driven by three critical needs: necessity, opportunity and ingenuity. Adaptability, agility and experimentation can be used as tools to their advantage. However a few challenges remain. One, a smaller company cannot grow in billions of dollars and two; it does not have billions of dollars to invest. But the fact cannot be denied, innovation once optional for small businesses is now mandatory.

According to Justin Crotty in response to Joe Panetierri’s blog on balancing innovation with sustained growth, “It’s about being nimble, being able to productively change, and staying innovative. Innovation is a requirement of companies of any size, but smaller companies live or die by it”.

Ask any of the successful SMB owners to describe their innovation, and they might seem perplexed. More than likely, they would tell you they had an idea, saw a way to do it better, recognized an opportunity, found a way to meet their customers’ needs or creatively solved a problem. The word “innovation” invokes a picture of resource-rich lab settings, science parks, university research teams and large corporate research and development budgets. The reality of small business innovation is quite different. For small businesses, the market is the lab.

These innovations can be either market sustaining or market changing. Sustaining innovations are improvements to existing products or business processes as ongoing refinements and usually tend to add value without making significant product or business changes. Market changing innovations are disruptive, changing fundamental ecosystems and rewriting industry rules. There are many famous examples of small businesses growing into large corporations through the use of disruptive innovation. Southwest Airlines, Dell Computers, Charles Schwab, Nucor Steel, Amazon and Google are all examples of small businesses that used disruptive, market-changing innovation to become industry leaders.