Small Firm Innovation in the Economy Small Firm Innovation in the Economy Uncategorized The idea of product innovation dominated Western business throughout the twentieth century. Now product innovation has been substantially replaced by business innovation. While there is still some traditional product innovation, many businesses, especially at the SME end of the scale, differentiate themselves by means of different strategies. And their differentiation matters since the more a company differentiates itself the fewer direct rivals it faces. One stratagem is to support production with a service that was not formerly available; car accessory store Halfords, for example, now supplies and fits roof racks. Another stratagem is to give an established service a new twist, as Charles Schab did with ‘execution only’ stock broking; this new format discards the advising element while making the buying and selling of stocks easier and cheaper – to an enlarged market, of course. Creating or exploiting a niche is another creative opportunity. One Alfred Place is both an address in London WC1, and a club with a difference. Its founders have crossed the idea of the traditional gentleman’s club with the notion of managed office space and come up with something new. One Alfred Place offers a place to work (not fulltime) and to meet business prospects, plus a full range of business facilities. It also offers good dining but unlike the traditional club it is not residential. The niche it serves is the need of newly unemployed professionals seeking to start their own business but lacking a place in which to do it. Then there is reconfiguration as a form of business innovation. It is common knowledge that the internet has allowed a reconfiguration of selling everything from books to houses. But it is not all IT based. South West Airlines flying the Texas Triangle reconfigured the traditional airline business and spawned a slew of budget airlines. There is a tendency to think of competitive advantage as something that inheres in the operation of a business, is born rather than made. Wrong. The scope for developing it may vary, but it is still an initiative of the entrepreneur. Whenever you agree to fit as well as sell a roof rack, and most of the competition don’t, you have added a competitive advantage. * wrap your product in a service to make it more marketable * tweak the service provision to differentiate * innovate in service provision (we don’t have a mature economy for services, only for manufacture!) * reconfigure the value chain if it will give your business an edge * transform products by using a new material * configure your business so as to multiply its range of competitive advantage * seek niche markets, and try to displace existing providers by enhancing your offering. And if all else fails, there is always ‘quality of execution’, doing whatever your company does better than the competition. BioLatest Posts Peter LawrenceAuthor at WileyPeter Lawrence is a writer and visiting lecturer at Northampton University. He has published 26 books and is much in demand as a consultant across the world. Latest posts by Peter Lawrence (see all) Small Firm Innovation in the Economy - October 13, 2013 The Successful Startup Experience - October 13, 2013 How Change Creates Business - September 18, 2013 Want more stuff like this? Were on a mission to provide expert news, advice and information for Entrepreneurs. Try our FREE newsletter!