A medium-sized company employs up to 250 people and has an annual turnover of up to €50 million. It has neither the resources of large multinationals or the flexibility of its smaller peers. If you are leading innovation management in a medium company, the fact that size doesn’t’ matter is the first myth to overcome for a successful programme.
On the one hand, large-scale companies find it more difficult to make more drastic changes because they have more at stake. On the other hand, if they are willing to invest, they have the resources necessary to really encourage and implement innovation, and may also be less risk-prone.
Standing on opposite sides of the spectrum
Corporate giants such as P&G, General Electric, Nike and IBM remain some of the most innovative companies in the world, because they recognise that investing in innovation is the only way to survive. These companies can explore all branches of innovation, both incremental and disruptive, by hiring specialised people such as Chief Innovation Officers, creating devoted teams, and investing in R&D labs and partnerships with universities.
When innovations fail, they are able to absorb losses. In fact, rather than substantiating the idea that big companies are resistant to change, studies suggest that large organisations with high level of complexity and differentiation possess higher motivation to adopt innovative behaviour.
On the other end of the spectrum, small companies have fewer resources but are more agile to experiment and discuss new approaches – particularly when it comes to startups.
While the more traditional businesses remain the same or grow progressively over the years, the ones that do scale (and tend to be more risk-prone) often experiment and try faster. This means they will also fail faster and often, in what Silicon Valley calls “failing forward”, leading to faster growth rate.
Where do medium enterprises fit in?
Medium enterprises fit right in the middle, between two very different realities. And so there are several barriers that these companies face on their path to good innovation management, such as:
- Lack of budget/limited monetary resources
- Lack of innovation infrastructure
- Shortage of innovation specialists
- Lack of incentives for innovation
- Resistance to change (in top-down initiatives)
- The high cost of new tools and processes
For these reasons, these firms are more at risk of falling behind because they are not investing enough to meet the challenges brought on by new technology. Adjustments must be made to adapt to technological change and disruption, but most companies are less able to invest and experience day-to-day struggles amid weak business growth.
But it’s not all bad news and some advantages are playing in your favour.
Learn how to leverage them and read more about the 4 myths keeping medium enterprises from innovating here