The last decade has seen an unprecedented growth in digital innovation in a whole range of areas:
Lowered Entry Barriers for Innovation
Firstly, falling prices in a range of areas have lowered entry barriers to new forms of technological innovation: widespread access to broadband technologies, smartphones and tablets, social media, 3D printing, Internet of Things, increasing availability of government datasets to the public. New knowledge can be applied in many disciplines and arenas, by a wider range of people than before.
Community Driven Patterns of Activity
Secondly, traditional incubation pathways have been supplemented by free-form crowd or community-driven patterns of activity, often linked to social media, such as crowd sourcing/funding, new workspaces or the intricate multidisciplinary ‘bar camp’ or ‘unconference’ style events, which combine creative artists and scientists of all kinds with computer scientists, amplifying the energy and resulting in the emergence of multiple value outcomes, including new creative projects, new educational opportunities (formal and informal), as well as ideas for commercialization.
Development in Digital Economy
Some of these new ideas are quite familiar in everyday life and easy to develop in the workplace, for example the use of broadband and mobile technologies combined with smartphones and tablets. Tradesmen in SMEs working from people’s homes, for example, can now invoice and take payment for small jobs on the spot, using mobile devices, internet banking and dedicated application software. Many SMEs make use of the ‘cloud’, with even simple developments, such as Dropbox for data storage and access proving useful. Other application are relatively new, such as 3D printing, ‘Internet of Things’ or Big Data, but are relevant to SMEs, particularly those at the leading edge of such technologies. SMEs have also changed the way the interact with others, in some cases using social media for better marketing and customer relationship management or even funding new projects through mechanisms such as ‘crowd funding’. These developments in the digital economy have led to falling prices, enhanced the value and use of product and services, sped up the development of new products, eased entry barriers and intensified competition. The digital competitive space for SMEs and calls for new business models. The digital economy revolves around innovative and often unorthodox collaborations where numerous large, small and micro-businesses come together for the duration of a single project, then disband and form new partnerships for the next project.
More widely, there has been an explosion of change and innovation that present a challenge to the traditional conceptualizations and development of business models.
The digital economy presents important opportunities for SMEs, which have the flexibility to take advantage of novel technologies. There are also challenges, as the new business models required to successfully implement the innovations are not always obvious. The diversity, fluidity, interconnectedness and potential range of novel new combinations, for which there may be currently no precedents, presents a challenge for researchers, educators, and policymakers. They need to not only know but explain and anticipate what is going on so that appropriate development and support mechanisms can be put in place.
So what should managers of entrepreneurial SMEs do to get ahead and stay ahead in the fast-changing digital economy?
- Take an Anticipatory View: In regard to business model development, take an anticipatory view and keep business models as fluid as possible for as long as possible. Keep strategic options open while still moving forward in business context that was changing very rapidly.
- Foster a Culture where Experimentation is Encourage: Some experiments, such as prototypes or demonstrations are obvious expressions of potential ideas that are then tested for further development. However small-scale experiments – mental models, stimulated by conversation with new and different communities of practice, both inside and outside the firm can be productive. For example, attending trade shows outside the sector ‘norms’ can lead to new thinking, or ‘sideways innovation’ that may persist over the long term.
- Strong Vision for the Business: Develop and promote a strong vision of what the business ‘is’ and what it might become. It is important to reflect on the identity of the firm when making strategic decisions.
- Organize for Flexibility and Agility: On the one hand, the Digital Economy moves quickly which is challenging. On the other hand, the entry barriers to experimenting with digital innovations, particularly the internet are quite low.
- Horizon Sensing: Improve skills of foresight and ‘horizon sensing’ and knowing when to engage and take new ideas forward. When are the critical points for assessing whether a new idea becomes part of the firm – or not? Such skills can be honed to carefully reflect on the possible new business models in the firm.