Creativity and Innovation in Small and Medium Firms

Creativity and Innovation in Small and Medium FirmsI am in Egypt this week and trying to finish three big PowerPoint decks, write six documents and finish reading 63 documents with a slow Internet connection. And trying to finalize the editorial content for March 2012 issue of my magazine. It is not easy.

People often ask – What is creativity? How does it happen? How do we prepare ourselves for it? Or can you be prepared for it? Do you have to be a whole-brain thinker, or do you only need the right side of your brain? Does it require for other profession that are usually not associated with creativity too? There is no simple answer.

Creative individuals have a few features that distinguish them from their peers. First, they possess both a rich body of domain-relevant knowledge and with well-developed skills to express them through different medium. And second, they find their work intrinsically motivating and enjoy the creative process not only interested in the outcome.

Creative people also tend to have a “discovery” orientation, which leads them to view situations from different perspectives, to find problems, and to ask novel questions and to avoid group-think. Almost every entrepreneur/start-up person is a creative person at heart, because it requires a lot of creativity to start and manage a new business (with the exception of franchise business). It is harder to find creativity in large firms not because there are not enough creative people, but the organization design and business processes make it almost impossible to be creative. And for them, creativity means finding ways to work around the system but not creating new ways to meet customer needs.


For that reason, many believe that small firms are more creative and innovative than larger firms. Not only they are more creative, they are more agile and nimble. But what about mid-size firm? There are companies that are too small to be big and too big to be small?

Medium size companies tend to lack resources and expertise whereas larger firms tend to have more resources and knowledge (including hiring consultants) but more vulnerable to external shock and any radical change. People think the sheer availability of resources means larger firms should be able to innovate along product, channel, process, and paradigm more effectively. That’s not true at all. Any large established businesses carry their own old mental models and operational legacies make them hard to adjust to any changes – in particularly new ideas that cannibalize their core businesses.

I am not saying it is easier for small firms to innovate, it is not for the lack of creativity. Small medium companies tend to suffer a lack of knowledge cross-pollination and carry a higher degrees of path dependency.

There are basically three strategies for innovation for small and medium size firms:

  1. Advancing creativity and technological competitiveness based on new processes to deliver better products
  2. Advancing technological and design creativity to design innovative new products
  3. Advancing creativity and design thinking to turn products into experiences

Generally these three distinct models identify three trajectories for innovation that are largely separate from one another, although some complementarities exists. Medium size firms often suffer due to a lack of strategy or expertise to develop a robust strategy. Their innovation in processes are often the results of the need to search for greater flexibility and minimize resource requirement. The high performance small and medium enterprises are usually the results of access to strategic advice combined their speed and agility in execution.

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Idris MooteeIdris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

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