Innovation for SMEs
Brendan McKenna, B.Sc. (Hons), C. Eng. MIEI, WCP
What is innovation?
• Innovation is not the
creation of ideas
– Every new idea is simply a
combination of other ideas
that Someone else has
thought of first
• Innovation is the
commercialisation of ideas
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Two Types of Innovation
• Incremental
– Continuous improvement
– Must be part of the culture
– Idea box, etc.
– I’m not going to deal with it
• Commercialising the big
idea
– The subject of this
presentation
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Commercial Innovation Facts
• 10,000 business ideas -> 1,000 start ups >100 VC funded -> 20 IPO -> 2 category
leaders
• 55% of all invested money in the US is
written off (62% in Europe)
• But the capital that survives has backed
businesses that now account for 21% of US
GDP (Apple, MS, Cisco, ….)
•
Source: Saul Klein, Index Ventures, Web Summit 2013 Keynote Speech
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Radical Innovation
• Typically will take 15% of a medium
company’s resources
• Will fail 80-90% of the time
• But if it succeeds it will produce 40% of
your future wealth
•
Source: Research done by BCG and presented at the Product Development & Management Association
(pdma.org) innovation conference.
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Pivoting
– Innovation for Start-Ups
• Follow the money
– Sales & Cashflow are king.
• Learn the market
– Try and find that lucrative niche
• Use social media
– Use LinkedIn InMails when entering new
markets
– Make sure you have something attractive
for your potential clients first!
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Pivoting:
Case Study 1 – The Agreed Denarius
• Started Dec 2012 based on an
opportunity presented by patent
lawyers
• Pivoted four times since then!
– Criminal prosecution
– Personal Injury
– Insurance Fraud
– Criminal Defence
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Concept to Commercial Reality –
Step 1. Innovation Drivers
• You are an established business making money
and profitable
• You want to innovate because things are
moving too fast in your space not to
– Your business is under constant threat
– You must innovate to survive
• You have ideas from in house surveys
– These should be related to the existing business
but to one side of it, not completely unrelated
– You need to check them out with
your existing customers
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Concept to Commercial Reality –
Step 2: Verifying Ideas
• Interview existing customers – what do
they want?
– One asks questions and
listens, a second person
writes all the notes
– Summarise notes into a series of ideas
– Brain storm, affinity diagram the ideas to
come up with the product/ solution/ service
to create keeping in mind your in house ideas
– Define the ideas into solution statements
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Concept to Commercial Reality –
Step 3: Funding
• Get Funding!!!
• The EI series of R&D grants
– Innovation vouchers
– Feasibility Study Grant
– R&D grant
• Treat getting funding like you would
going for any business, put the effort in.
Set time and staff aside for it.
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Concept to Commercial Reality Step 4: Customer Partners
• Part of the fund raising will involve doing
a detailed business plan and
presentations for each new product.
• Involve your customers all the way. See if
they will partner with you, become your
first trial customer, add some resources.
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Concept to Commercial Reality Step 5: The Dedicated Team
• Form a dedicated team to do the innovation
projects
– They have to be separate from the main business
• The main business is not and cannot be about
innovation, it is only designed to do what it
does efficiently not to innovate
– Efficiency and innovation are mutually exclusive
– The main business could be impaired by
innovation
• Measure innovation progress with different
metrics to those of the main business
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Concept to Commercial Reality Step 5 (cont.)
• The innovation team can act more like a start up –
it is able to pivot if necessary
– An established business cannot pivot
– Don’t turn the innovation team into a mini main
business
• The innovation team must be able to avail of the
experience and learning of the main business if it
is to do something useful for it.
• The innovation team are there to make long term
profits for the main business
– Don’t expect anything commercial for at least 12
months
– Budget accordingly
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Concept to Commercial Reality Step 6: Execution
• Run the projects like a disciplined
experiment
• Always have a crystal clear
understanding of what you are trying to
achieve
• Seek the truth
– Expect your predictions to be wrong
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Concept to Commercial Reality Step 7: Keeping to Budget
• Don’t do the innovation unless you can
afford to lose all the money you put
into it.
– Same as investing in the stock market or
any other high risk venture
• When your budget runs out put the
results of the innovation, including the
staff, back into the main business
– Don’t keep going
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Case Study 2– An Innovating SME
• Over 10 years in business in the mobile
telecoms space
• 50+ employees and growing
• Decent profits
• Recognised the need to innovate
• Hired an “innovation specialist”
• Did it all right and had a usable product in less
than 12 months 
• Made a commercial sale 12 months later after
considerable modifications and improvements
in conjunction with the eventual customer
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Recommended Reading
• The Other Side of Innovation, Solving
the Execution Challenge
– Vijay Govindarajan, Chris Trimble
– Harvard Business Review Press
– http://www.youtube.com/watch?v=6pl1KT
NA1G0
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