This is the first in a series of blog posts.

Market-Driven Innovation and Small Businesses

Small businesses are often formed because the owner has a good idea. If the idea has legs, then the business grows to a reasonable, but fixed, level of revenue, but then it begins to flatten out. Established data tells us that only half of small businesses survive more than five years, and further decays continue over time. There are a host of reasons for this, but in general, the reasons are similar to those that cause mid-level and large firms to stagnate. However, the small business has two advantages over its larger counterparts: There are fewer people (team members) to convince to get on the same page; and misalignment becomes noticeable, and actionable, early.

Drive through the Barriers

There are a few basic drivers that can help small business owners overcome the “small business conundrum” when it comes to market-driven innovation.

1. Fact-based decision making

From the very beginning of sales, the business owner must determine and define those few decisions factors that will define success. In addition to defining the basis, the basis also has to be used to measure and timely report on the direction of those factors.

2. Well thought-out growth plan

Assuming one of those factors defined is focused primarily on the growth engine, it is critical to establish an operational growth plan. Most growth plans fail because they assume growth is defined by the number of potential users not yet served and the effort required to reach, engage, and sell to those potential users. It is primarily an available volume estimate. Real growth planning identifies the factors that cause growth to happen and the factors that prevent growth, and how the potential customers and/or markets fit into those factors.

3. Early look beyond the current innovation that has become mainstream

Although similar to the above driver, this is different in that those potential customers who don’t buy into your initial value proposition may be looking for an alternative solution or opportunity. This is potentially exciting to the small business owner, because it enables innovation add.

4. Preventing silo formation/inward focus

This is probably the biggest sin of large and want-to-be-large organizations. Most business leaders believe that they must organize around functions. In doing so, they create silos that kill market innovation creativity. Small businesses, on the other hand, suffer from the load of work that must be done in these functional areas just to survive, and thus don’t have time to think about growth or innovation. This factor is easily fixed. The fix is generally dependent upon the nature of the small business.

5. Establishing those few clear and simplified work processes

Although similar to the previous barrier to growth, it is important that small business leaders determine and internally focus those few things that must be addressed for success and farm out or skim address the rest. This requires an assessment of “core competencies,” which large companies tend to ignore but can afford more so than a small business.

I will address all of these factors in greater detail in future blog posts, so stay tuned.

If you want to discuss any of these elements now, prior to a future blog in this series, please contact me at

About the Author

Ronald E. SullivanRon Sullivan is a Senior Partner at Breakthrough Marketing Technology. He has worked with many businesses on innovation, new product development processes, strategy, building new business models, channels and distribution, and pricing optimization. He has significant expertise in study design, data analysis, and market intelligence.


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