Imagine, just for a moment, that you are at the helm of an SME in the manufacturing sector which is currently going through hard times. Anyone who has managed to survive six years of debilitating economic crisis certainly has great merit.
If that is your case, the key to survival has most likely been a Spartan diet, which has left your company weak, depleted and bordering on ‘anorexia’. Moreover, your company is seriously in need of resources and financing, with no manoeuvring room left for any innovation ventures. In fact, according to 93% of Basque executives, long-term success will be dictated by the capability to innovate. However, this critical innovation within SMEs is usually understood by BMASI, and our clients, as large projects focused on obtaining new products or processes which are resource intensive, and developed in collaboration with technology centres and other companies, albeit with uncertain results for at least two to four years.
But of course, by now your company is not in the best position to plant the seed, water it, and then patiently wait to harvest the fruits of your labour in, say three, or four years. You might not even possess sufficient funds to purchase the seed to be planted for future growth.
Nevertheless, we have at our disposal a wide range of alternatives to what’s known as ‘traditional innovation’. Comparatively speaking, these alternatives can turn out to be less expensive and less time consuming: innovation in the business model, or rather, the combination of elements and decisions which make for a successful company.
Now, think back on your company during the boom years and take a look at the big picture, beyond your product and process. What was the recipe that brought success? What quantities of the following ingredients were added to the mix: service/product combination + client portfolio + operational efficiency + cost structure + income model?
Every profitable company has their own unique combination. Instead of merely focusing on the product and/or the process, we can innovate with the recipe by altering both the elements in the mix and how they are combined; we may well discover new business opportunities at a reasonable cost. Let’s take a look at a number of ‘ingredients’ to begin exploring this path.
- More value (at lower cost): Which components of our product or process don’t bring differential value to the client? I’m sure we would be able to name a few. What would happen if we were to reduce, or even eliminate those components? Has this ever been proposed to your clients?
- Products + services = combined solution. Have you considered adding new services to your product offering, such as personalised design, project management; concurrent engineering; delivery and set-up; preventive maintenance; remote monitoring; control of energy efficiency; collection and recycling of the obsolete product, etc. Dozens of opportunities exist for generating new income and of spending more time with the client.
- Empathy with the client. How well do you truly know your clients? Do you know those who will take the final decision to purchase your product? Are you able to ask in an honest and disinterested way, and listen to them carefully with an open mind? What do they say, see, think and feel about the company? Finally, what needs are not being met? In what way can they be assisted?
- The ‘other’ clients. We could also think about what we would do if our top client were to suddenly disappear. Perhaps we would find ‘secondary’ clients, or even former clients, who we have never bothered to enquire about subsequently. These are clients who we have not paid too much attention to, but who could turn into opportunities in the future.
- Learning from the best. Think of leaders in your own sector, or those in other sectors, for that matter. What is the key to the success of those companies who manage to be permanently in the media spotlight? Can we learn from how they purchase, design, produce, distribute, promote, sell, or deal with the client?
- Multiple ways of generating income. Have you considered alternate income streams other than the traditional ‘sales and payment’ system? Amongst others, potential examples include: product rental; charging per use; licences; auction; commissions; subscription (by means of issuing a periodic publication); and participation in platforms or joint sales groups. By setting aside your initial reticence for a moment, you may discover new and complementary income streams.
As we can see, innovating in a company’s business model only requires honestly answering a number of questions which we don’t normally pose. By experimenting, even the tiniest of changes in our business could turn into future opportunities.
Today, it is more important than ever to innovate in our day-to-day business activities; especially given our current business environment where the absolute truths which seemed to underpin each sector, seem to be vanishing. And not only do we need to think about new products and processes, but also about the rest of the elements of our business model where we can innovate at both a reasonable cost, and faster than ever.