Innovation Strategies for SMEs

This assignment delves into the crucial topic of innovation strategies for Small and Medium-sized Enterprises (SMEs). It emphasizes the importance of hiring creative managers and employees, understanding market requirements, and adopting successful policies from leading companies. The document highlights the need for SMEs to conduct thorough research on market trends, investor preferences, legal policies, funding institutions, and competition. Ultimately, it aims to provide insights and strategies that enable SMEs to succeed in achieving their goals and profitability.

INNOVATION

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P.1 Innovation and its importance for the employees of SME .................................................3
P.2 Innovation and commercialisation affect by the vision, culture, leadership and team work
of SME .......................................................................................................................................4
TASK 2............................................................................................................................................5
P.3 4Ps of innovation and innovative ideas of employees can be shape by using innovation
funnel...........................................................................................................................................5
p.4 Frugal innovation is develop in SME and use of this innovation by virgin group. .........6
TASK 3............................................................................................................................................7
P.5 Assessment related to the information of commercial funnel and application of NPD (new
product development) .................................................................................................................7
P.6 Create innovation business case and way to generate fund.................................................9
TASK 4..........................................................................................................................................10
P.7 Tools of innovation for SME which is use to develop, protect knowledge, retain and
intellectual property..................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
Innovation means to translate our news ideas in creative method so that new
techniques can be used by any company to achieve the goal. This process use by all company
because employees of organisation think new ideas and tell them mangers . Team leader apply
those ideas on business and increase the efficiency of product as well company. Innovation is
known as risk taking because it create and market and new product. Apple and virgin group is
leading on the worlds market because of their creative ideas. SME(Small medium enterprises)
also want to lead in market so that this company also apply creative idea which used by virgin
and apple group . By using innovative thought SMS company achieve the goal and earn
maximize profit.
TASK 1
P.1 Innovation and its importance for the employees of SME
Ideas of innovation is useful for all type of enterprises because this techniques is always
take your business on way of success. Ideas of innovation improve the quality of organisation
and using all ideas take action on product. It is important for organisation because it is use as
systematic, strategic, and technological method to develop the culture(Lundvall, 2010.).
Environment, and management process of business at world level. Innovation is important foe
employees because it generate new ideas in mind of employees and develop their moral, attitude,
skill and ability to understanding the techniques.
Employees of SME are developing their knowledge by research on the policy of apple
and virgin groups company. Employees of both groups are so talented and have creative minds
because they try to use new ideas . Innovation is important for employees to know their ideas
and what is result after applying ideas. It build moral of employees and motivate them toward
work. If employees of SME started to research on ideas and started creative thinking than no
one can compete the business of SME. Innovation do development of employees, increase their
productivity, and motivate them to understand the roles and responsibility.
Innovation is different from invention because invention means to create new brand or
new product but innovation means to make changes in product which is already in existence.
The ideas which never use before is invention and it required scientific skill but
implementation of such ideas which comes in mind earlier but applied first time on product and

it required all factors which are skill related to marketing , strategic and technical. Scope of
invention is limited but innovation is spread in all over market of world. For example if any
company invented mobile phone but to run the mobile and develop new features required
creative ideas which satisfy the needs of consumer than to develop new ideas for the interesting
features in mobile need innovation techniques(Drucker, 2014.). SME company required both
innovation and invention because employees of this company have to invent new product and
after this it is necessary to develop new techniques in product. Consumers are satisfied only by
new product with proper facility.
P.2 Innovation and commercialisation affect by the vision, culture, leadership and team work of
SME
Innovation is affected by vision, leadership, culture, teamwork because all those factor
affect directly, indirectly environment of business and all are interrelated with each other. It is
not develop for the profit of organisation it intention to satisfy the needs of consumer.
Innovation affected by culture through behaviour and nature of employees because ideas
which are useful for company think by linking the cultural behaviour. SME want to improve
their brand and value of business it is necessary to produce those items which is in favour of
consumer. Leadership also influence the culture. By creating new ideas create good
environment at work place(Manyika, and et.el., 2011). Innovative ideas which are used on
particular product by SME after thinking that society get benefit or not and satisfied wither
product or not get earn,maximize profit. Cultural includes behaviour of their boss toward their
employees if manger of SME are arrogant and rude and giving pressure on them for work.
employees were don't like to do work in company and their mind became block and they don't
think about the benefit of company and not give creative ideas to company.
Leadership also play vital role in innovation process because if leader is good than it
motivate their employees to achieve the goal and increase their efficiency by creating new ideas.
Leader brings their employees to think positive about situation . Leadership of a leader in SME
is not effective than company can not reached on the success so it is is important fore this
company appoint that person as leader who encourage employee to achieve their goal .
leadership of that person should be effective so that mind of employees become active and start
thinking about new ideas.

Teamwork is also affect the innovation and commercialisation because teamwork do
research in group . If group of any company is strong than more ideas have generated. Different
peoples have different thinking about any matter inconclusively ideas of all create best result
which give success to business(Stokes, 2011). SME have to concentrate on team building
because apple and virgin group have big group who work on particular task. If team of SME is
strong and good than possible to generate new ideas which help to increase the value in market.
To decide the vision of this company is also very important. If SME want to success than
idea are related to that planning which make company to survive in business world for long time
that is at least 19 to 20 years. Innovation is affect by this due to critical and creative thinking and
pre planning or forecasting about that how can SME survive for long time. which polices are
made so that no other company cam beat it, Which polices move consumers towards their
product.
TASK 2
P.3 4Ps of innovation and innovative ideas of employees can be shape by using innovation
funnel.
Innovation are of four types which are known as 4 Ps that are product, process, position,
paradigm. This model is developed to make powerful those analysis which are made by
company in regard of innovation. This made innovation successful and make changes positiver
changes in their research. SME have to apply 4Ps so that their research on market will become
succeed.
11 Product innovation: This part of model change the things and analysis in better way to
achieve target(Tebbe, J., 2011). By applying this innovation quality of product and
service can be improved. This help to make product better, relabel and different from
other product that means innovate can be in that way which are incremental changes.11 Process innovation:- It does not include the process of product and services because
this method is use before the manufacturing of product. It includes hire those people
whose skill is good, give them training , management of proper workflow. By doing all
such things SME can earn maximize profit bas well as satisfied the consumers.

11 Position innovation: It means to change the value of product in the eyes of other, that
means which product is produced, how to distribute in market., how can image become
better. It include develop specific product which increase the value of company and
different from other product. So SME should have to concentrate on those product which
are not produced by any other company. .11 Paradigm innovation: it is final part of 4Ps, this model is made to shape the background
of organisation and depends on mental activity or creative minds. It increase the local
ownership and leadership in business and make able to fight with competitive market.
The change which is cause by paradigm is radical and make employees mind as active
top understand that all changes done in product is not always positive.
Innovative funnel is used to identify and describe the process which is necessary in development
of product. The aim of it to increase the demand of product in market and complete the demand
of market or society. To use innovative funnel it is necessary to refine ideas which are collected
and implement best option which left after refining. Innovation funnel helps employees to apply
new ideas on product so that development can become easy(Ries, 2011). It can be possible
through investigation of market. SME should have to use this funnel to make mind active of
employees by giving them task on different situation which are of three types first is mouth of
funnel is wide it can be done by expanding the knowledge based on information to increase the
productivity of product. Second is to narrow the funnel neck and third one is narrow segment of
funnel.
p.4 Frugal innovation is develop in SME and use of this innovation by virgin group.
This innovation is developed by company to complete the needs of consumer. It helps to
proper utilisation of resources such as financial, material and institution. SME should have
develop this type of innovation in its business so product can be produce at minimum cost and
profit will increase(Gassmann, Enkel and Chesbrough, 2010). Consumer are more satisfied and
business will increase their image in competitive market, if proper strategy follow by SME.

Virgin group is b benefited by using technique of frugal innovation because this work for
the society and culture. By using this technique virgin group become succeed and reasons behind
this it focus on some parts which are:
1. These approach set objectives: with the help of this innovation objective of company is
decided. It collect those information which attract consumer toward their product.
Intention of organisation only on the satisfaction of consumer. Information related to
which resources are necessary, about cost, new technology are important for the selection
of objectives.
2. Emphasis give on needs of customer: This process Show way to virgin group that how
to focus on the needs of consumer and try to satisfy them,. To addressing original needs
of customer is the main aim of this company. By applying this technique virgin group
collected such information that some time consumer are not aware of product . Than
inform them by using social media.
3. Identify the problems and solve them: According to the R&D report it shown that
frugal means to provide low and cheap quality of produce and services. Low cost product
is generally purchase by all but low cost product decreases the value of virgin group
brand(Sawyer, 2011). Member of board is worry about their product and start to to set
successful project with creative ideas. Focus on the future value and satisfaction of
customer that why this company became successful brand in world by providing g the
better facility of travel and tourism etc.
(source: Bhatti, Khilji and Basu, 2012)

TASK 3
P.5 Assessment related to the information of commercial funnel and application of NPD (new
product development)
Commercial funnel related to all commercial activities and services which are provided
by SME which satisfy the consumer by completing their needs. 99% of small and medium
enterprises accepted commercial funnel for the success of business. For NPD this funnel is
very useful because it collect information related to development of new product in market.
Commercial funnel helps to identify those information which are related to new product
development are:
1. generation of ideas:- ideas related to searhing of new product which includes intewrnal
sources like customers, distributiors, competitors, suppliers. To identify the lead of of
sales is also necessary for development new ideas. Sales lead help to decide the price of
product which is acceptable by market and consumer. If SME want to lead in market
than it is necessary fixed that prizes which are favourable for consumer. If sale is more
than profit will also increase.
2. Need identification:- It is important to identify the needs of consumer before producing
any product.. NPD gives positive impact on business because innovation or invention of
product can be possible by knowing the demands of consumer. Salesperson also help to
identify consumers wills asking question about their demands.
3. Development of market strategy:- The strategy includes three steps which help to
develop new plan about market and product. First is target market which include sales,
market share, product positioning and profit. And second part includes distribution,
planned price, budget etc. to complete the objectives.
4. Product development: product development is possible only after identify the needs of
consumer. It requires many employees, mangers, team leader etc. To manage in activity
of production. For completing the requirement of market, business need large investment
and product concept is developed into physical product by R&D.

5. Commercialization:- It is the final step in NPD that means introduce new product in
market. When product comes in market it bear many extra cost like advertising,
promotion, taxes. SME want to introduce new product in market that it is necessary to
fixed the timing of launch, location(Goldberg, 2013). It all can be possible if company
have ability to bear the risk. This step can increase the effectiveness of company or can
decrease because it require innovative ideas and efficiency.
P.6 Create innovation business case and way to generate fund.
Any business require lots of fund to develop new product on for their innovation. In the
development of any project financial risk is always involved. Any product process from the
production to sales need fund at every step. Without fund no company can survive in market
because for the investment in particular product is not possible without cash. Apple and virgin
group company is famous in world because they have enough fund to establish or developed new
techniques(Hall and Lerner, 2010). When this both organisation was started their business they
have no fund to made new product. They collect fund from the external sources and internal
sources to grow their business in market. Innovation of new product and business can be
possible by the sources of fund which are may be bank, equity finance, government grants,
university funding. To achieve success at financial level is main goal of virgin group and apple
and to achieve this goal both business followed that plans:
 To monitor and review the cost
 Company have realistic plans related to finance
 To take support of bank, creditors, government grant, investors.
Some important sources of funding which are used by apple and virgin group for the innovation
activities.
1. Company's fund:- For the innovation of product it is important to collect fund from own basis
or property which have companies. When this both group set up their business in starting they
collect fund from company's assets, their fixed deposits, saving accounts, Equity and vehicles.
When any company take the help of external sources their first question is how much fund you
invested in business by their own sources(Leeuwis, 2013). SME have to collect fund from

selling the assets of company and issuing shares so that starting investment in product can be
possible.
2. Government grants :- Another source of funding is government grants which can be
obtained by industries, banks, fund associations etc. apple and virgin group company took help
of government sources to raise their business. So that identify the policy of both company SME
should have take facility of external fund.
3. Venture capital:- venture capital work is to provide fund to private companies so that they can
increase their business. Venture capital is known as high risk covering project because it help
organisation on the stage of commercialisation of new setup. This venture provide fund to any
company on the basis on return on investment on the fixed date.
Other sources which can provide fund to SME are family and friends. Debt, equity, business
angels, crowd funding so that needs of business can be fulfil and easy to develop innovative
ideas.
TASK 4
P.7 Tools of innovation for SME which is use to develop, protect knowledge, retain and
intellectual property
Tools of innovation help to develop the organisation by different ways it includes,
practice which encourage employees, design of place, effective collaboration and open approach
of innovation etc. This help to enhance the performance of employees and mangers and satisfied
the needs of individuals(Lee and et.al., 2010). If innovation is better output which received that
is profit will also goods. Tools of innovation is sensitive matter for SME because it have no
such resources, lack of work space, fund etc. tools which helps in developing business are the
good work place have provided to employees, to create new ideas it is important people engaged
bin activities which are discussion on new topics, diagnosing, modelling, analysing, etc. which
can be possible by effective collaboration.
Intellectual property play important role in innovation to reduce the risk of business. It
means to be unique , creative, inventiveness etc. Right of the national legal system of intellectual
property is evolved during the last 150 years. This techniques can protect the secrete of business
like achievement, design of innovations. Retention of right can be possible through this tool

because it helps companies and other organisation to protect their brands, copyright, designs,
marks , patents etc.
(source: Greenhalgh and Rogers, 2010)
CONCLUSION
From the above report conclusion is received that innovation is very important for the
SME because generation of ideas is only possible through innovative and creative thought
Innovation can be possible through in SME by applying new techniques, hiring expert mangers,
employees which have creative mind. SME want to success and grow in business market for this
it is important for this company to identify the requirement of market. In my opinion SME
should have concentrate on others companies which are leading in world and try to find those
policy which are adopted by them. SME should have start research on market, such are
requirement of market, about investor, legal polices, fund providing institution , competition etc.
so that SME can succeed and goal and profit can be achieved.

REFERENCES
Books and journals
Bhatti, Y. A., Khilji, S.E. and Basu, R., 2012. Frugal innovation.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Gassmann, O., Enkel, E. and Chesbrough, H., 2010. The future of open innovation. R&d
Management. 40(3). pp.213-221.
Goldberg, D. E., 2013. The design of innovation: Lessons from and for competent genetic
algorithms (Vol. 7). Springer Science & Business Media.
Greenhalgh, C. and Rogers, M., 2010. Innovation, intellectual property, and economic growth.
Princeton University Press.
Hall, B. H. and Lerner, J., 2010. The financing of R&D and innovation. Handbook of the
Economics of Innovation. 1. pp.609-639.
Lee, S. and et.al., 2010. Open innovation in SMEs—An intermediated network model. Research
policy. 39(2). pp.290-300.
Leeuwis, C., 2013. Communication for rural innovation: rethinking agricultural extension. John
Wiley & Sons.
Lundvall, B. Å. ed., 2010. National systems of innovation: Toward a theory of innovation and
interactive learning (Vol. 2). Anthem Press.
Manyika, and et.el., 2011. Big data: The next frontier for innovation, competition, and
productivity.
Ries, E., 2011. The lean startup: How today's entrepreneurs use continuous innovation to create
radically successful businesses. Crown Books.
Sawyer, R. K., 2011. Explaining creativity: The science of human innovation. Oxford University
Press.
Stokes, D. E., 2011. Pasteur's quadrant: Basic science and technological innovation. Brookings
Institution Press.
Tebbe, J., 2011. Where good ideas come from: The natural history of innovation.

Online
Online. Innovation Funnel. 2017. Online. Available through: <
https://www.cleverism.com/lexicon/innovation-funnel-definition/ >. [Accessed on 19
August 2017].