The innovation of Entrepreneurship
What is the difference in you as a small business [1-10 employees] creating and/or innovating a product verses larger corporations? Larger firms are better able to exploit economies of scale; that is, they are able to take advantage of the mere fact that they have better access to the liquid capital and other resources like scope in innovation, including research, development, production and sales. However, small firms are less bureaucratic, and are able to flourish in smaller market niches that may be unattractive to larger firms. In practice, this means that neither large nor small firms are inherently more or less innovative or at an advantage. Instead, they tend to exhibit different patterns of innovation due to different relative advantages. There are many ways in which innovative practices can still flourish regardless of the size.
Product vs. Process: Small business and entrepreneurs may have different levels of scope than large corporations may have with regard to the creation of products. The costs that are associated R&D [research and development] in large corporations are sometimes quite astronomical and are usually decided by a board of members with varying degrees of reasoning which means that the cost of labor also weighs in the balance of whether there is a budget to take on new product ideas. However, as an individual or small business, the majority of your costs for innovation is in the prototyping for items of intricate design. Then there is the consideration of processes that are involved in the creation your product. They have varying cost. Larger corporation can be utilized when it is time for the mass production of an item; however, the cost associated can be massive unless the smaller firm creates their own process. Hence, another light bulb moment, if you dare! This may involve another process of being innovative and quite possibly creating a new niche market for many other small businesses and entrepreneurs.
There are times that larger firms tend to sometimes over produce and have surplus of specific items that are then sold for less than their value. On the other hand, smaller firms find it hard to keep up with the production requirements, which may cause them to loose sales. Whatever the case may be, whether you are considering providing a process or product as a part of your business objective, these are factors to include as part of your decision-making strategy.
Niche vs. Mass Market: Determine whether your desire is to design a product or process for a niche market or for the masses. Developing a niche item gives the entrepreneur the advantage of creating a reputation for the product, while establishing your credibility until your are ready to take your product to the next level, whatever that may be within your plan. Of course developing a product for the masses can be proven lucrative because of the larger audience. Mass marketing can be quite costly but with the right market agenda and usage, can make the smallest company appear to be a giant. Marketing for the masses can also be quite expensive. There may be times that your campaigns may bump heads with your competition making for a serious adventure of wits and strategy, but the ride can make for the most informative and exhilarating moment in time.
Final vs component Product: Finally, my last thoughts regarding the innovative process is to decide whether to provide a final product or just a mere component for other firm’s final products. The analogy asks, do you produce the final pie to distribute to the masses, such as stores and shops or do you produce the flour that is necessary to make the pie; yet produce it for as many pie maker that you can add to your arsenal of clients? There is an indefinite need for both phases of innovation that can be proven lucrative.
Sometimes the success of a venture is in knowing where the market trends lie. I hope that you have found the thoughts behind this small article to be useful in your efforts of brainstorming the direction that you are considering making on your road to the innovation of entrepreneurship. As always, I would love to discuss what the possibilities for you are in efforts of guiding you on your road to successful ideation.
Christine YS Malone