Market-Driven Innovation: The Small Business Conundrum

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.

Fact-based decision making

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

Well thought-out growth plan

Assuming one of the decision factors defined is primarily focused 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 them. It is primarily an available volume estimate. Real growth planning identifies the factors that initiate growth, the factors that prevent growth, and how potential customers and/or markets fit into those factors.

Early look beyond the current innovation that has become mainstream

Although similar to the above driver, the thought-out growth plan, this driver 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 addition.

Preventing silo formation or 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.

Establishing those few clear and simplified work processes

It is important that small business leaders determine and internally focus on 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 they can afford to ignore these more than a small business can.

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

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