What's Killing SME's Growth?

The most common notion is that small and medium enterprise lack adequate & quality management system to accomplish new growth -Implying that a more competent manager or the more efficient system will be more successful to do the task. A business leader will then result in hiring a new manager to effect a method such that it sustains growth for the company.


Many CEOs and their executive board members often ignore the fact that rarely does ideas for new growth in any business emerge fully formed in the head of an innovative employee. The capacity of an organisation to innovate does not depend solely on assembling a team of rock star employees while ignoring the strategic patterns of coordinating between people as well between people and other structural resources that exist within the business. Even the Steve Job’s of many companies do not become radical thinker in one day – they usually form their innovative mindset from a culture that has been built over time thus, making it easier to perform creative work on a constant basis. It is imperative for business leaders to recognise that growth and innovation only thrive in environments that are sensitive to forces that act upon the innate talent of every individual involved in the business.


Stack the odds in your favour

Forces that powerfully influence what the managers choose and cannot choose to do. There are many factors that could undermine small and medium enterprise ability to sustain growth. Notably from the previous paragraph that lack of critical and nonparallel thinking from business leaders or start-up founders is my focal point in this letter. An average SME executive’s inability to ask a question, observe, create a network of ideas and experiment on how those ideas could become a tangible value-add for their clients or users. When a business focuses on building a culture of discovery and then become defined by these habits, they incrementally grow their capacity to innovate, expand their market share, and subsequently increase in their market cap.


Why a truly defined business strategy should be the essence of your organization

More often than not the word strategy is overused, but in an organisation where the management has outlined strategic objectives and seen as an integral part of their business process, in such case strategy is not just a buzzword but what we call an “index terminology”. A truly defined business strategy characterised the correlation of an organisation’s resource capital; skills, opportunities and risks created by its external environment (Robert Grant 2001). Companies usually start off by describing their processes or plans as the strategic move they intend to execute on, but very quickly you will find that this “strategy” has been backed into a narrow corner even before implementation begin. By doing so, they reduce strategy into a left-brain exercise and, as a result, nullify the vitality of ideas that could arise from it.


How the myth of “Keeping it simple” is killing your SME growth

Also many believe that at a very early stage, only a primary business process is needed. This ideology is usually connoted by the common saying “keep it simple stupid”. While most enterprises are busy KISS-ING their strategy becomes more and more about goal formulation rather than a coherent approach to strategic thinking. A competent business leader knows that strategy is about telling stories; not a story of how the idea came to fruition or a type of formulated marketing story.


How to get people to trust your brand

 Tell a good story… specifically, a story that teaches others how you want to be perceived. You can share specific stories that highlight the specific moments that make your company what it is today. Theodore Levitt in his landmark article marketing myopia proposed a solution to the problem of external change be that companies should define their served market broadly rather than narrowly. Many small companies have short-sightedness in how they approach marketing activities. Thus, they fail to implement a funnel vision in their business strategy; that is a: railroad company should perceive themselves to be in the transportation business, not the railroad business. However, such broadening of the target markets is of little value if the company cannot quickly develop the capacity needed to deliver customer requirements in a broader sense.


How to get others to give a damn.

An analogy to illustrate this idea is the act of telling a story, not just any story, a damn good story. When we begin to hearken to a narrated story, usually we disregard the time it took the storyteller to arrive at his final point; we continue to pay attention as long as they can articulate the message and keep it relevant to why we gave them our attention in the first place. If the story consistently stimulates our cognitive reasoning, we will endeavour to follow the story until the end. Think about the last time you saw a short boring film and a very long but exciting one. Usually, after it’s over we then wonder how we have managed to sit through the movie for 3 hours. More often than not the person telling the story have done an excellent job in capturing your attention for that long. The same principle goes for companies that strategically build capacity and those that don’t. I have never wondered the Lord of the rings the movie is so long but I have found myself wondering why Donald Trump keeps getting airtime…but, of course, he’s the President of United State.

Once you’re able to locate what’s stopping your business from growing, you can take actions to address it and start revving up your innovation engine.

    Open Innovation vs Intellectual Property : Can they co-exist?

    Imagine a contest with two competitors, on one side you have Intellectual Property Rights (IPR) and on the other, you have Open Innovation (OI). In recent times the conversation has turned into which is better and who will come out on top when it’s all set and done. If this approach is to be taken, it would result in a ‘winner’; and in the business world we can all agree on ONE thing, there is no ONE way of getting the job done.


    Before we get into the discussions regarding which is better, let’s start by determining what is IP? And what is OI?


    IP and OI can be very difficult to understand, here we offer a brief and not technical insight about them. If you are already familiar with the concepts, skip directly to “Common Ground” and “How to exploit your IP using OI”.


    What Is IP?

    Intellectual property is essentially ideas and innovations generated by individuals. These ideas are generally categorised into 4 i.e. design rights, copyright, patents, and trademarks. Through these four protection frameworks, you can legally protect your ideas for monetisation opportunities, either independently or via strategic partnerships in the form of licensing. You can also protect your ideas from those who wish to free ride on them for their own financial gain without any consideration for remunerating your cost of expression. More than that, you can use that very protection as the spearhead to your business strategy, by using the legal cover afforded by your rights to confidently commercialise and expand the reach of your products and services as well as attract funding. In that sense, the overarching characteristic of IP is that it is closed off and keeps everyone outside of ownership at arm’s length.


    What is OI?

    Open innovation, on the other hand, is almost the opposite when looking at the overarching characteristic. The clue is in the name, as the main principle with OI is to embrace contribution from multiple sources, while at the same time allowing your own processes and ideas to be used freely by others. OI is very much a community-based method of developing processes and products, with the mindset being that it would be for the greater good to work together as opposed to working alone. The strength in this is that, where the effort is collaborative, there would be no need to ‘protect’ the product or service that came as a result of the collaboration, as it is the creation of a community and not of a sole individual. Furthermore to attempt to exclude people from the benefit of the creation would be to go against the main principle, which is to be open.


    Common Ground

    On the face of it, it would seem that OI and IP could in no way be compatible. That the need for there to be one winner must be true. In many ways, this is altogether the wrong approach to have, especially when we make a key distinction between the two i.e. OI is a principle and a way of doing of things, IP is a legal right. It would be fair to say that IP can also be categorised as a principle in terms of some of its overarching characteristic, but in its truest form IP is clearly a right; and it would be somewhat flawed to try and compare which is better, a legal right versus a way of doing things.

    With that said when we take a closer look, we find that there is, in fact, a common ground between the two, and if anything IP and OI could both be implemented when executing your business strategy.

    Admittedly there are certain industries such as customer oriented software, where OI play a more pivotal role in the developing stages, however:

    “It is important to recognise that many ostensibly open sourced firms do not always make the critical Application Programming Interfaces (APIs) needed for value capture publicly available. Although not usually patented, the intellectual property of APIs is almost always kept as a trade secret and immune from tinkering by other developers.” (Michael Locascio, Fortune Global 500 chemical company)

    Other real-world examples include, where a business owner follows the principle of OI as their main ethos, but still uses IP to bring structure and accountability in terms who have contributed and in what way they have done so. A great example of this is songwriting, where a group of songwriters are present and contribute to creating a song (OI) and, in return, they get the recognition in the form of having part ownership of the copyrights as well as royalties.


    How to exploit your IP using OI

    Where a business owner uses IP as the spearhead for their business strategy the same assumption can be held, in that OI can still be utilised by that owner to create a product. Examples of this can be found all over the place, whether it be in the tech world where Leica collaborated with Huawei to create a mobile phone focused on taking the best possible pictures; or in the fashion world where Supreme and Louis Vuitton collaborated to create a line of clothing and accessories showing both their logos. It is obvious that they both maintain their IP rights, however, the use of OI leads to both parties creating more revenue and growth as they are exposed to each other’s customers.

    Before starting a partnership, IP agreements are needed to attribute pre-existing IP to each party to avoid ownership claims and legal disputes; Therefore, an IP strategy is essential even in OI environment.

    Licensing your technology/product to third parties or to a pool of experts in an Open Innovation way can also be a strategic and marketing move. The company can exploit their IPs using Open Innovation to create a better branding and know-how (an essential IP of a company), to create a marketing campaign and to create a larger pool of customers and adopter. To do so the product/service has to be properly protected, therefore IP strategies and agreements have to be planned.

    By choosing what to disclose and not to disclose in an Open Innovation project, companies can continue to protect their products/services avoiding ownership claims and legal disputes. A company can also decide to disclose a side product they have, further diminishing the collateral risk of disclosure.

    To keep it simple, the introduction of IP in OI communities creates a solid base to build as opposed to inhibiting progress and innovation; and the introduction of OI in business allows for expedient progress in developing something worth protecting with IP.

    At  Fractional IP we believe that there is no one way of getting the job done, IP and OI can work hand in hand to achieve commercial success; where OI is how you work, IP is how you protect the result of that work.

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