Strategies, Pricing, and Challenges in Mid-Market Innovation

This report provides an in-depth analysis of the strategies and pricing techniques employed by mid-market innovators, highlighting their competitive advantages and the challenges they face. It explores how these companies are leveraging technology, such as virtual and augmented reality, IoT, and predictive analytics, to optimize business processes, forecast consumer behavior, and enhance customer interactions. The report also examines the different approaches to innovation, including conventional methods and more adventurous ventures into new markets and knowledge domains. Furthermore, it discusses the importance of internal and external collaboration in driving innovation and the various forms of innovation, such as product, service, and process innovation. Finally, the report addresses the challenges faced by incumbent mid-market companies, including dealing with rapid technological advancements, cybersecurity threats, and the need for strategic re-evaluation.

Running head: MID-MARKET INNOVATORS 1
Mid-Market Innovators
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Mid-Market Innovators
Introduction
Some mid-market innovators are state-owned companies; others are privately held. All of them
are in stiff competition, normally with each other, which compels them to be thrifty, responsive
and agile. Mid-market innovators sell to consumers who have diverse tastes and preferences but
who also have their own hypercompetitive pressures, and they are swiftly shifting from their
Business-To-Business (B2B) landscape out into the worldwide economic context (Innovation, O.
E. C. D. 2007).. Mid-market innovators are speedily reforming the dynamics of numerous
industries - including transportation, agriculture, and healthcare - but many competing
organizations especially the incumbents are still largely uninformed of their existence (Sten,
2014). In this report, overall strategies and accounting theme of pricing techniques used in
middle-market innovators are going to be explored in depth. The report will also explain why
these companies are becoming more and more successful but generally it will revolve around
their innovative capabilities and competencies as their main reason behind their feasibility. Also
looked into in this report are the various challenges faced by incumbent mid-market companies.
In order to achieve these purposes, an extensive research of underlying literature on mid-market
innovators will be conducted and then afterwards analyze the information which will have been
gathered.
Literature review
According to Guillot, (2016) all mid-market innovator companies are at the frontier of
innovation. About nine out of every ten mid-market innovators are utilizing some form of virtual
or augmented reality and Internet of Things (IoT) to keep track of their business processes,

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forecast consumer behavior, and optimize development. Besides, almost half also are utilizing
demonstration or interactive mechanisms to aid enhance employee and customer interactions.
Guillot based these arguments on a research which surveyed 500 mid-market top officials about
how they were embracing contemporary technology as the main element of their business
development strategy. The research also proved that majority of these mid-market innovators are
using cognitive and predictive analytics to acquire insights into their client base and inform
pricing and consumer relations. This innovation is assisting many mid-market companies not just
survive in their respective industries, but also thrive and emerge rising leaders in their sectors.
However, Guillot notes that the increased usage of technology in mid-market innovators comes
along with some risks and concerns which might affect a firm’s security. According to the
research respondents, mitigating information risks and cybersecurity were their top priority, with
almost a half of them ranking it as among their main reasons for investing in cloud technology.
According to Dow Jones & Company, Inc. (2018) there is noteworthy shift towards technology-
facilitated transformation since numerous mid-market companies are pursuing investments to
enhance customer engagement, protect digital data, and improve productivity. Currently, there is
a significant progress in the adoption of new technologies by mid-innovators as a strategy
tailored to curtail various business development barriers that have for long hampered by their
growth. The majority of mid-market innovators are increasing their IT budgets in order to take
advantage of the productivity benefits and other business outcomes associated with broad array
of technology-related trends. They believe that technology investments will help them lessen
their organization’s operational expenditures, create new lines of service or businesses, augment
productivity, speed up the pace of business interactions and transaction, and also improve
business process alignment. Mid-market innovators point to cloud integration, information

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security, and big data as the high-tech trends which have the highest chances of increasing
business productivity. Digitization has the prospective not simply to plane the playing field for
mid-market innovators and private companies but to slant it in their favor (Morabito, 2014).
Precedent obstacles to investment like concerns about lack of business-IT alignment and cyber
threats are being addressed and converted into growth facilitators.
According to a research conducted by UNSW Australian Business School, (2015) mid-market
firms, especially those in Australia, are adroit to employing multiple forms of innovation. As
they progress beyond the central core part of their investments, which normally is an inventive
service or product, they spread out into other areas such as process innovation. However, the
researchers note that comparatively few middle market companies use organizational innovations
or marketing innovations. They recommend for some exceptional low-cost innovations which
mid-market corporations are employing and suggest these could be an aspect of opportunity
since competitive edge can be acquired by attempting a broad array of innovations. The
researchers also realize that mid-market firms in Australia encounter various innovation
challenges mainly related to time, technology, money, and people. Mid-market companies are
not able to pay employees as much as big companies and there are less promotion chances,
making it hard to secure creative labor pool. Corporations require monies to venture in people,
machinery, further technology and acquisitions to produce creative ideas and execute innovation.
Analysis
The introduction of new practices, pricing processes, services, and ideas is a crucial driver of
revenue of development and success amongst mid-market innovators. All of these middle-market
corporations tend to be splendid and frequent innovators, often producing and executing ideas

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and enjoying a healthy return on investment and a respectable success rate (Dong, Hirshleifer, &
Teoh, 2018). Fascinatingly, when it comes to the way the mid-market organizes for innovation
and which approaches are most effectual; two different paths to innovation success are noted. On
one hand, numerous mid-market companies opt for a conventional approach to innovation (Ortt,
& Smits, 2006). They implement ideas that are closer to home, leveraging obtainable knowledge
and targeting already existing markets. They normally keep innovation internal, focusing efforts
amongst internal senior leaders and teams. For these companies, practicing vigilance and living
within their comfort zones does not cost them anything. In contrast, they relish high project
business success rates and acquire bigger worth by implementing vigilantly selected and more
well-known territory.
Yet, whilst conventional innovation is both profitable and successful for most of the mid-market
firms, the most proficient innovators in the subdivision are securing success by investing a little
further from their motherland (Gülsoy, Özkanlı, & Lynch, 2012). Middle market businesses
which do venture more greatly in new markets and new knowledge are the most probably to rate
themselves as vastly efficient innovators, and they are as well most probable to benefit from
hasty income intensification. Just like their peers, mid-market innovators depend profoundly on
in-house senior management and teams’ assistance, but they are more appropriate to go beyond
their four walls and find external support in every step of innovation. They also more apt to have
more official procedures in place to mitigate the risks they take in a better way. These companies
which rank themselves superior in regards to innovative management capacities and/or have the
capability to dedicate considerable senior management time to the innovation process leverage
their comparative advantages. They try to direct their supposed superior innovation management

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aptitudes into venturing in more lucrative and riskier investments (Guimón de Ros, & Agapitova,
2013). They benefit a lot from innovation—mainly because of better-quality competences.
The commonest method of carrying out innovation within mid-market companies is internal
innovation (Damanpour, Sanchez‐Henriquez, & Chiu, 2018). Almost three-quarters (72%) of
mid-market leaders depend on their own teams—either committed Research and Development
(R&D) teams or teams within a certain departmental unit or function—for innovation
undertakings. Whenever leaders try to find new perspectives, 34% try to find input from other
functional teams or business units somewhere else in their firms. Approximately a quarter of
mid-market firms contract with external providers such as consultants and agencies and only 7%
depend on “open innovation” techniques such as crowdsourcing (Roorda, & Waldmann, 2016).
Whilst in-house teams are chosen across every mid-market income segments and industries, the
biggest mid-market firms (with incomes ranging between $100 million to $1 billion) and
companies that regard themselves exceedingly proficient at innovation are considerably more
probable to leverage external sources of ideas, including crowdsourcing. What is more, the 26%
of mid-market companies which work with consultants or advisors on innovation undertakings
argue that they gain from tapping into knowledge they lack in-house (Jesse McWaters, 2015).
These particular companies are to some extent more probable than their counterparts to rank
themselves as being superior innovators. Several academic studies spell out the particular
instances where the significance of working with external providers is probably to be the best.
Studies in general propose it is valuable to work with external providers when knowledge is
widely detached and/or innovation tribulations are extremely intricate.
Middle market companies are normally built upon service or product innovation to enter a core
niche. They then keep on building their benefit in the niche or expand beyond their niche through

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other forms of innovations. Organizational and marketing innovations seem to be vital for some
middle market organizations, but most of them seem to prioritize innovations related to their
most important focus (service innovation (17%) or product innovation (6%)) and then process
innovations (53%). In the book Larry Keeley and colleagues in their book Ten Types of
Innovation recommends that the larger the number of dissimilar forms of innovation, the bigger
the company’s gain since this makes it hard for competing firms to duplicate their business
practices, and as a result secures market niche. Reassuringly, most of the middle market
corporations see, to be executing numerous forms of innovation. Moreover, majority of them
seem to be executing innovations which need less financial commitments, what is called fugal or
low-cost innovation (Agnihotri, 2015). A case in point of a fugal product innovation is reducing
the features of existing products and selling them at a lower price point. This calls for some
assessment of what are the necessary and unnecessary characteristics of the commodity and then
releasing a “minimum viable product” to market to determine if this commodity would be valued
by its potential consumers. An instance of a fugal service innovation is, rather than pulling down
comments by complaining clients from the corporation’s Facebook page, utilizing it as a chance
to publically connect with the clients, hence showing them and other clients the quality of
customer services. An example of fugal process innovation is disseminating financial
information to all employees instead of just the senior employees to enhance the sense that all
staffs are vital members of the company, which might augment commitment and innovative
thinking.
Despite the immense success rates of mid-market innovators, incumbents companies operating
this category encounter various challenges. With emerging technological advancements causing
significant changes to the way incumbent companies function, dealing with the sheer rate of this

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change is becoming a momentous issue. Figuring out which technologies are applicable in the
innovation process, how company budgets ought to be allocated, and what earnings on business
ventures to anticipate are creating headaches for senior management in incumbent middle level
companies. Some of them actually fear making wrong choices might cause big problems in the
future. Technology-related changes are impelling incumbent firms to strategize and re-strategize
about what is coming. There is also the worry of not being aware what the expected change is
going to come along with or result in. There is also the issue of increased cybercrime since the
threats of cyber-attacks have become more widespread. Incumbent companies are required to
network using technological systems which are now very prone to cybercrimes like hacking,
fraud, identity theft, information malware, and phishing. It is quite unfortunate that most of the
senior leaders in incumbent mid-market innovators have limited knowledge pertinent in solving
these challenges (Gebremeskel Tesfaye, & Nguyen, 2012).
Summary of the key findings
For mid-market innovators to enjoy healthy returns on investments and a respectable success
rates, there are certain prerequisites which need to be met first. They are for instance, required to
introduce new practices, pricing strategies, and ideas necessary in stirring their business ventures
towards success. Also noted from the above analysis is that most of these middle market firms
prefer conventional methods of innovation which they have enough knowledge concerning them
and are close to home. In addition, they keep their innovations internal among the responsible
teams and senior managers. Despite their great yearning to apply conventional innovation
methodologies, mid-market innovators aim at finding more success by investing in other
countries outside their home country. Those which succeed in establishing themselves in abroad
countries rank themselves as vastly effective innovators who are able to go beyond their confines

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and benefit profoundly from external know-how. As they venture in other places, they get the
chances to invest in very lucrative yet risky projects.
From the above analysis, it is evident that the majority of mid-innovators do not have the
capabilities to invest outside their motherlands. Majority, also find it costly to hire consultants or
agencies to help them in conducting their innovation undertakings. Therefore, most of them
(around 72%) depend on their own teams and senior leaders in their innovation processes.
However, researches have proved that depending on external providers like agencies normally
come along with some benefits such as access to new knowledge and skills which might lack in
in-house. From the analysis we also find out that mid-market innovators carry out innovations
mainly to fill a certain business niche or gap. Thus, it is noted that the bigger the number of
diverse innovations their bigger the company benefit because it manages to fill several niches.
Despite their importance in meeting the business goals, innovations come along with some
expenses which many mid-market innovators try to evade by embracing what is called a fugal or
low-cost innovation. These forms of innovations normally help mid-market firms lower the
expenses incurred in bridging niches and thus maintain the primary business objective which is
making profits. This fugal innovation can be termed as an efficient pricing strategy since gives
customers a chance to first consume a product and then help the manufacturer determine its
worth depending on their views. However, as they endeavor to accomplish this goal, incumbent
mid-market companies, as noted from the analysis are susceptible to various challenges such as
uncertainty due to massive technological changes and cybercrimes. These challenges often slow
down their productivity and negatively affect their effectiveness in the long run.
Recommendation

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This research has proofed that cybercrime is the main menace dragging down the development of
middle market innovators. Cybercrime continues to evolve, with new threats dragging down the
productivity of these particular firms. I suggest that it is good to know how to recognize
cybercrime since this can be the first step to helping mid-market innovators protect themselves
and their information. Taking some basic precautions knowing who to consult when they see
others committing cybercrimes online are also vital steps. In addition, there are other tips middle-
market innovators can use to safeguard themselves against cyber threats including using strong
passwords, managing social media settings, and strengthening their home network. When it
comes to pricing strategies, middle market innovators can just rely on the common strategies
used by other form of companies. By doing so, mid-market innovators will be in a position to
compete favorably with other corporations.
Conclusion
Mid-market innovators are facing stiff competitions from each other forcing them to be
responsive and agile. Most of the customers who consume products from mid-market innovators
have diversified tastes and preferences and as a result, these firms are being forced to continue
innovating to avoid losing them to their competitors. Some countries like China are saturated
with mid-market innovators, something which is impelling these corporations to extend their
investments outside their home-countries in search of new markets and ample customer base. We
have also noted that the majority of middle-market innovators rely on their internal senior leaders
and teams who help them in their innovating processes among other business undertakings.
However, others take advantage of external agencies and consultants who once engaged in
business, bring in new knowledge and skills which might be lacking in-house. Surprisingly,
some of the middle-market innovators use conventional innovation methods claiming that they

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have enough knowledge about and unlike the modern ones; orthodox ways of doing business are
more effective and cost-effective. They help them keep track of their innovations and accomplish
the main objective of their business that is making profits. These conventional methods of
innovation are said to be risk-free and even though they have some hazards, they can easily be
managed. Mid-market innovators are afraid of trying new or upcoming innovation methods
because they might pose huge cyber risks to the entire firm.

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References
Agnihotri, A., 2015. Low-cost innovation in emerging markets. Journal of Strategic
Marketing, 23(5), pp.399-411.
Dong, M., Hirshleifer, D.A. and Teoh, S.H., 2018. Stock Market Overvaluation, Moon Shots,
and Corporate Innovation (Presentation Slides). Moon Shots, and Corporate Innovation
(Presentation Slides)(May 1, 2018).
Down Jones & Company, I., 2018. THE WALL STREET JOURNAL: Digital Transformation:
The Midmarket Catches Up. [Online] Available at:
https://deloitte.wsj.com/cio/2018/01/03/digital-transformation-the-midmarket-catches-up/
[Accessed 15 January 2019].
Gebremeskel Tesfaye, H. and Nguyen, T.H.N., 2012. Incumbent firms and Response to
Disruptive Innovation through Value Network Management: Lessons from Eastman Kodak‟ s
failure in the digital era.
Guillot, C., 2018. Mid-Market Companies are at the Frontier of Innovation. [Online] Available
at: https://chiefexecutive.net/mid-market-companies-frontier-innovation/ [Accessed 15 january
2019].
Guimón de Ros, J. and Agapitova, N., 2013. Why should governments of developing countries
invest in R&D and innovation?. African Journal of Business Management.