Ng: Innovation and small businesses

By Wilson Ng
Wired Desktop

Thursday, October 13, 2011

CONGRATULATIONS to Mr. Erramon Aboitiz for winning this year’s Ernst and Young Entrepreneur of the Year award. Finally, on its eight year, somebody from Cebu got the plum award.

I am currently attending the 37th Philippine Business Conference and for the nth time, most speakers talk about using innovation, especially for small and medium businesses, as a way to be competitive and win in the market place.

Innovation is an overused word. When I taught business, most book authors talked about innovation. When they asked what makes Steve Jobs and Apple click, they say it is innovation. When they talked about why Google or Facebook or Cisco wins in the marketplace, they say it is innovation. Even in cooking contests or music, they always say the way to win is to innovate.

Recently, US President Barack Obama launched the Small Business Jobs Act, in which he also lauded the small businesses and entrepreneurs, who will design new products, and who will create the new jobs to solve the unemployment problem. Ditto also for the
Philippine officials.

However, do SMEs really innovate? Or for that matter, do they even have the capability to do so?

A study concluded after polling many small business that this is wishful thinking.

Most people go into small business not by launching a new product or a new idea but merely by serving an existing customer or perceived need, with an existing product.

Many of them do not have any research budget and as a writer rightly pointed out, they just want to open another massage center, Internet café, or sari sari store rather than launch something untried.

In short, for every Google or Facebook, over 99 percent of the businesses are launching and continuing a struggling businesses that just want to make do or continue what they used to do before. It is simply too much to expect them to do much except survive and exist.

Most new owners started businesses because they want to be their own bosses or keep flexible working hours, not because they have a new business idea.

So the image of an entrepreneur who renders aging technologies obsolete and who takes risks to fulfill a dream is not always true.

New businesses, however, are important. People have an ever-increasing need to buy new clothes, try new restaurants or experience new services. And they do create new employment and increases jobs, which is important.

And maybe because so few people do innovate, it does make it a powerful idea and those who practice it successfully can gain a real competitive advantage.

Published in the Sun.Star Cebu newspaper on October 14, 2011.