📺 Stream EntrepreneurTV for Free 📺

5 Ways Small Companies Can Out-Innovate Big Corporations Leaders of small companies can leverage their business' size and unique culture to rapidly develop and apply creative ideas.

By Steve Sponseller Edited by Dan Bova

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Developing innovative ideas is a critical activity for growing companies of all sizes. But leaders of many small companies believe innovation is just for big companies that employ scientists and have large research and development departments. This false belief prevents many leaders from effectively identifying and applying innovations in their organizations. As a result, small businesses may fail to identify valuable ideas that would assist them in growing a profitable company.

Richard Branson has said, "Small businesses are nimble and bold and can often teach much larger companies a thing or two about innovations that can change entire industries."

Related: The One Certainty About the Future Is the Pace of Change Will Only Quicken

Leaders of small companies can leverage their business' size and unique culture to rapidly develop and apply creative ideas. Here are five ways small companies can innovate better than much larger organizations.

1. Speed of execution

Small businesses can position themselves to make decisions quickly, allowing them to be first to market with innovative ideas. Instead of spending months or years evaluating new ideas and passing them through multiple departments, a flexible small business can make fast decisions regarding whether to pursue a particular idea. When a valuable idea is discovered, it can be developed quickly and launched to potential customers. This fast action distinguishes the business as an innovator, and causes its competitors to play "catch up."

2. Fast access to business resources

When a valuable idea is discovered, business leaders can quickly allocate resources to develop and market the idea. Multiple departments can get involved at the same time to implement the new idea, and personnel reassigned to the project, which shortens the development time. Larger companies with many product lines must distribute their resources among all of their products and services. A smaller company is able to temporarily reallocate significant resources to the innovative idea that is critical to the growth of the company.

Related: The Forces That Could Drive Innovation in 2015

3. Team environment

Small businesses can develop a team culture that encourages everyone to get involved in the innovation process. Rather than focusing creative activities on a few individuals or groups, business leaders can promote creative thinking throughout the organization. Every individual brings different experiences and perspectives that can assist in the identification and development of new ideas. This team approach accelerates the speed of execution, which helps position the business as a market leader.

4. Company-wide innovation support

To successfully cultivate a team of people who are actively identifying and developing innovative ideas, a company's leaders must openly support innovation activities. This support must start with the CEO and include all other executives, directors and managers. When employees and contractors see unanimous support for creative activities, they understand the importance of those activities and are motivated to participate. This helps to strengthen the team environment and accelerates the development of new ideas.

5. Measure innovation

To further motivate people to spend time identifying creative ideas, small businesses can emphasize innovation by making it part of the company's job descriptions and evaluation criteria. Many companies do not consider innovation when evaluating an employee's performance. If bonuses and pay increases are not tied to any creative activities, it sends a message that new ideas are not important. This message causes employees to place a greater emphasis on other activities that are specifically mentioned as part of their job performance. Start measuring and emphasizing innovation to stress the importance of creative thinking to everyone in the organization.

Regardless of the size of the company, business leaders who start identifying and applying innovative ideas will enjoy a thriving business.

Related: 5 Ways Open Government Data Can Inspire Startup Innovation

Steve Sponseller

Intellectual Property Attorney, Innovation Strategist, SteveSponseller.com

Steve Sponseller is an intellectual property attorney and innovation strategist who has helped more than 1,000 innovators and business leaders develop and protect innovative ideas. Join him at SteveSponseller.com.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

These Coworkers-Turned-Friends Started a Side Hustle on Amazon — Now It's a 'Full Hustle' Earning Over $20 Million a Year: 'Jump in With Both Feet'

Achal Patel and Russell Gong met at a large consulting firm and "bonded over a shared vision to create a mission-led company."

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

These Are the 10 Most Profitable Cities for Airbnb Hosts, According to a New Report

Here's where Airbnb property owners and hosts are making the most money.

Side Hustle

How to Turn Your Hobby Into a Successful Business

A hobby, interest or charity project can turn into a money-making business if you know the right steps to take.

Starting a Business

This Couple Turned Their Startup Into a $150 Million Food Delivery Company. Here's What They Did Early On to Make It Happen.

Selling only online to your customers has many perks. But the founders of Little Spoon want you to know four things if you want to see accelerated growth.