How to look beyond product innovation in medium enterprises

One of the most common myths when leading innovation in medium enterprises is that you should strongly focus efforts on product innovation, as the ultimate goal is to have the next big thing. Though the reasoning is understandable, if you want to improve your odds of success, try not to miss the bigger picture.

Companies today must keep the pace with the fast changes in technology and consumer behaviour, but it is possible – and essential – to add value to your customers without necessarily changing what you do or sell in a radical way. All it takes is a bit of creativity, either by innovating new solutions or improving existing products in order to drive growth and profitability.

Also, product innovation isn’t just about inventing new products; it also comprises improving the design and function of existing products, and using new technologies, manufacturing processes and materials to ensure they stand out from competitors.

Product innovation can deliver increased market share (if a product meets the needs of the consumer and disrupts the target market), increased profit (by developing a unique, innovative product that is superior to that of the competition) and success in failure (when a “failed” product in one target market can be applied successfully to another target market).

Besides product innovation, however, there are other types of innovation that, when focused on specifically, can be a more effective and strategic innovator. They include:

Types of product innovation in idea management

Process Innovation
Process innovation can include reengineering and improving the internal operation of business processes, which involves technical design; R&D; changes in the equipment and technology used in manufacturing; management, accounting and customer service methods; and commercial activities.

This process is typically the lowest-risk type of innovation, and generally helps to reduce costs of production rather than drive an increase in revenue.


Market Innovation
Market innovation entails implementing a new marketing method involving significant changes in product design, product placement, product promotion or pricing. Its goal is to meet customers’ buying preferences through market mix and market selection.

As companies shift their attention to digital marketing in order to engage and involve customers, this type of innovation allows companies to open up new markets with their existing product portfolio and know-how. Of course that also means that, thanks to the online marketing tools available to businesses, competitors are also able to reach potential customers instantly.


Organisational Innovation
The concept of organisational innovation is part of the concept of innovation and development, highlighting new ideas and propensity for change within organisations. It encompasses implementing a new organisation method in the undertaking of business practices, workplace organisation or external relations.

Culture plays a big role in organisational innovation, with the advantages being improved workplace dynamic, engaged workforce, and a breeding ground for creative and innovative thinking.


In this vein, innovation doesn’t necessarily have to be radical either; incremental innovation (i.e. a series of small improvements or updates that don’t differ significantly from current practices) is more affordable and makes ideas easier to sell.

Above all, investment in innovation must be ongoing, and this is more easily developed in medium-sized companies where the people are closer and more reachable to the board level, creating an innovation culture that manages to involve all employees.

Learn more about this and three other myths keeping medium enterprises from innovating here

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

In innovation management, size doesn’t matter… or does it?

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

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

How can medium enterprises innovate successfully?

Though not always fully recognised, Small to Medium Enterprises are the root of economic growth and job and wealth creation. They play a vital role in the global economy, strongly contributing to employment rates, innovation and growth. For instance, in the European Union they represent 99.8% of all enterprises, where they generate 60% of GDP, and provide 70% of employment in the private sector.

Yet, such a fundamental role is only possible if SMEs are able to continue reinventing themselves in order to innovate actively and remain relevant.

First suggested in 1931, the theory of innovation dynamics proposed by the founding father of innovation, Joseph Schumpeter, is more fitting now than it has ever been: the generation of new ideas and ways of doing is imperative for economic growth. All organisations, no matter how small or large, are facing challenges today that were unheard of only a generation ago.

Trade liberalisation and the movement of financial capital, paralleled by the information and communication technology development, have accelerated this trend exponentially.

This means that companies must decide wisely, fast and continuously how to invest and use an array of new methods and technologies while fighting to compete on a global stage.

According to Schumpeter, the only way to respond to this growing competitive business environment is to develop an economy based on innovations, knowledge and educated people. And nowhere is this fight to succeed more marked than in medium-sized companies.

Why then do medium enterprises still fail to innovate? We’ll see that next.

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Learn more about the The 4 myths keeping medium enterprises from innovating here

Transforming cost-cutting into growth in your innovation programme

In times of uncertainty, when business models are challenged, companies are bound to cut costs to become more agile, robust and adaptable to change. Managers can support these efforts, namely within the corporate innovation programme.

Indeed, books do not set out which costs are good or bad for a specific company, or how they impact business strategy and operational reality. No measure fits all.

A successful strategic innovation programme thus implies the definition of specific priorities and mapping out what can be potentially bad and good costs, at different organisational levels:

  • On the one hand, bad costs should be seen as those that do not align with the growth strategy. They are waste and an outcome of inefficiencies that can and should be reduced;
  • On the other, good costs are those that support business capabilities to achieve growth goals, and may be worthy of more investment – so that in the mid to long term you end up saving more or increasing return.

In this process, it may seem easier to make centralised decisions at the board level, at a more macro level, with potentially higher impacts. Yet, simply externalising tasks and reducing headcount are often ways to overshadow a complex problem. Strategic cost-cutting challenges you to look at the bigger picture, to seek the root cause of the problem and to transform the system and its architecture.

In other words, the change must also happen from the bottom up, always with the right leadership and sponsorship, to define the areas of improvement clearly.

The employee community has to understand what’s happening, and to share and collaborate with the company’s challenges. They must be aligned with the business strategy, and feel they have a role to play and can have an active voice in the decision-making process. As an interested party, they must be welcomed into the discussion about the best ways to reach the proposed goals.


Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Get to know the Five Steps to Introduce Cost-cutting in your Innovation Agenda here

Launching your own innovation programme has never been this easy

Do you feel that your innovation programme is becoming too complex? That you are spending too much time picking the right software to support your initiative, instead of focusing on what your company really needs?

Exago Start, our new cloud-based idea management software edition, is here to simplify your job and change the way innovation is done.

Built to empower your teams with the tools to innovate, you can easily deploy it in one day to start solving your business challenges. Exago Start offers you:


Inspired by industry best practices, the new innovation software accelerates and facilitates the launch of your idea management programme, with:

  • Ready-to-go and field-tested configurations
  • Brand-framing options
  • Practical back-office
  • Quick Start Guide to launch your initiative


Have your people share ideas and collaboratively improve colleagues’ ideas in a healthy competition environment, with:

  • Time-bound and/or permanent challenges
  • Call to action notifications and automated email updates
  • Social feeds and actions to engage the community
  • Idea co-creation and discussion forums to refine and develop ideas
  • Multi-level rankings to recognise participants for their valuable content creation, based on the quality and quantity of contributions


Effectively assess ideas along the funnel and gauge results with no additional effort, thanks to:

  • Field-tested idea workflow with different evaluation mechanisms per challenge (likes or voting based on single or multidimensional idea rating)
  • Decision panels to monitor and support idea evaluation (with pre-allocation of ideas to specific evaluators per challenge)
  • Complete reporting engine with exportable reports in different formats
  • News panel to share relevant information and celebrate results with your community


Launching your own innovation programme has never been this easy. Learn more about Exago Start to understand why.


Ask to see Exago Start Live