Small Businesses Innovate but Call it Tweaking, Says Report

Small business innovation reportDo you think your business is innovative? Very often, small business owners and employees will answer that question with a big fat “NO.”

Innovation sounds so … important. So … rare. Like you have to be the next Google or some high-tech startup to be innovative.

Yet, innovation goes on all the time in small businesses, regardless of which industry. We are just so matter-of-fact that most of us don’t label what we do as innovation. We call it something like “tweaking.” 🙂

But look underneath, and it’s really innovation.

That was a key finding in the latest installment of the Intuit Future of Small Business Report. The study found that small business owners are natural innovators.

Not only that, compared to large corporations, small businesses have six inherent advantages that make it easier and simpler to be innovative:

Personal passion: Entrepreneurs often start small businesses based on their passion for a hobby or business, or to live out a dream. Often wearing many hats, from receptionist to CEO, their personal stake and enthusiasm for their ideas makes them willing to try new business approaches to make their business more successful.

Customer connection: Because of their close customer relationships and deep market understanding, small businesses can anticipate customer needs, identify new opportunities and fix problems quickly and efficiently. This deep and direct market involvement creates many more innovation opportunities.

Agility and adaptation: Unlike large corporations, small businesses can quickly and easily adapt their business practices, change course or even pursue entirely new direction. Because of this agility, innovation takes fewer resources and is easier to implement than for larger corporations.

Experimentation and improvisation: When pursuing new opportunities, many small business owners and managers aren’t afraid to experiment and improvise, accepting failure as part of the path to success. They see the rewards and the risks associated with potential innovations. Rather than avoiding all risk, small businesses will try new solutions, address setbacks and move forward to attain future rewards.

Resource limitations: Small businesses are adept at doing more with less. And these resource constraints lend to their innovative mindset. With small staffs and often fewer dollars, small businesses are forced to focus on high-impact or low-cost innovation efforts, or both. Successful small businesses use their resources effectively.

Information sharing and collaboration: Small businesses traditionally rely on strong social networks – trade associations, the Rotary Club, chambers of commerce and extended friends and family – to share information and inspire innovative thinking. These networks provide feedback on ideas, input on solutions and assistance when resources are scarce.

The key message that comes out of this report is: don’t sell yourself or your business short. You’re probably more creative than you give yourself and your team credit for. You’re innovating all the time in your daily business, in all likelihood.

You have natural advantages that big corporations do NOT have. Keep doing what you are doing, and it will help drive growth of customers and sales, and also drive more profits.

You can check out the entire Report on Small Business Innovation at the Intuit Future of Small Business Report site. (Note: the Report was written by Steve King, one of the Small Business Trends Experts, and Carolyn Ockels — both of Emergent Research. I participated in the underlying research study.)

Think about it: what have you done that is innovative this year? And did you sell yourself short by calling it “tweaking”?


Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

19 Reactions
  1. Martin Lindeskog

    Great to hear! This report could go well together with my post on innovation hubs on the map! 🙂

    Right now I am tweaking a new online business venture together with the founder of an innovative idea on how to spread a personal message in a social context.

  2. I love this point of view. As a small business owner with corporations as clients for 25 years, I can vouch for the fact that the behemoths are not the ones innovating on a daily basis. They don’t have the flexibility or insight to turn on a dime — but they expect me to consistently. It’s a matter of survival for a small business, and we do it without sweating a bead.

    That’s one reason why I’m shifting my focus to work with small businesses — they’re so much more creative. Cool that someone’s reporting on what we do so naturally and suggesting that we give ourselves some credit. Better stop before I hurt my arm patting myself on my small business back! 🙂


  3. Was a management consultant with medium to large businesses as my clients and you hit the nail smack on the head with this post. I became a small business consultant three years ago and have never been more content with ease of innovation than what see in this clientele.

  4. Hi Anita,

    Thank you for sharing this article. I find this very interesting and information, specially when in the process of setting up my very own business.

    Eddie Gear

  5. And Oh, do stop by and let me know what you think about my site. 🙂

    I would love to hear and improve my site as much as I can.

    Eddie Gear
    Sorry, forgot to add great post! Can’t wait to see your next post!

  6. Thank you very much for that article. It is really easy to underestimate your achievements somehow, especially with terms like ‘innovation’ that are commonly associated with big brands and new projects. It is an eye opening article.

  7. Hi Anita,

    Why was the term tweaking in a lower level? I didn;t get that point. 🙁

  8. There’s nothing I appreciate more than a tiny change in perspective that recolors my entire outlook. I will never downplay a “tweak” again. Thanks, Anita.

    Gayle Kesten

  9. Small businesses must innovate to stay ahead of the game. These advantages are very true, but the one thing that hurts them is the lack of capital. Whether it is human capital, money, or resources, larger corporations have more of it. To innovate on the small business level it takes creativity and natural insight.

  10. Interesting take on this. I guess I would have never thought of tweaking as innovation. You have a great way of motivating us with articles like these.

  11. Anita,
    One great thing about being a small business owner is having the ability to adjust your business based on the current market trends. Big businesses cannot seem to be able to do it very well.

    Examples are so easy to find.

    The Franchise King
    Joel Libava

  12. Zach, you are absolutely right. A small business owner must be creative to overcome any challenges it may cross with in the future.

    Have you checked out the creative tips on saving money and growing your business here in smallbiztrends?

    Just in case you haven’t, you can check it here ->

  13. Anita: Thanks for your help on our innovation study. As always, your insights and knowledge on small business were extremely useful.

    We’re getting a ton of feedback on the report. One question we are getting a lot is are small, incremental innovations -what we call “tweaking” – really innovation and really important?

    I like to answer that Toyota “tweaked” their way to worldwide leadership in the automotive industry via their kaizen approach to incremental innovation.

    But these questions tend not to come from small business owners. As the comments to your post illustrate, small businesses understand the importance of incremental innovation.

  14. Steve King,

    As an experienced purchaser, I have great interested in supply chain management, lean, theory of constraints, etc. I want to discuss the topic of incremental innovation and an ongoing improvement and development, and how to build in quality into the process. The way of Kaizen has made Toyota the leading automotive company in the world. It is fascinating that it was an American that trained the Japanese manufacturing companies on how to reach the world class level. You see the great results of implementing this ideas. His name? Dr. W. Edwards Deming.

    Here is an excerpt from my post, Five Trends According to Inc. Magazine (01/02/05):

    I am a deputy board member for the Western region (i.e., the area around Gothenburg) of the Swedish National Association of Purchasing and Logistics. In the latest issue of the Purchasing & Logistics magazine you could read an interview with Masaaki Imai. I read Mr. Imai’s book, Kaizen: The Key To Japan’s Competitive Success, several years ago. You could find a solution to the long lead times in the article, Your move.

    Click on “Martin Lindeskog” Says: if you want to read the whole post.

  15. I make crafts and sell them from my home. I decided that I wanted to make my business my full time job, but in this recession, I knew I had to keep my expenses low to accomplish that.

    I’ve changed the way I do shipping, which is one of the larger expenses of my business (I spend $100 a month right now, but I expect that to go up as the annual “craft lull” lifts in April). I used to package everything and get it weighed en masse at the post office. I ended up joining, which is affiliated with USPS, to save myself time and money. I can weigh my items at home and print out postage there, too. USPS also gives some pretty nice shipping discounts for people who use, which really has helped pare down my budget.

    Right now, I’m looking for more ways to innovate…I think the other commenters are inspiring me already!

  16. In addition to the six inherent advantages small business has over big business, I suggest that Ability to Focus is a seventh advantage. In big business, there are many distractions (not the least of which is reporting to head office). In small business, focus on the primary ‘reason for being in business’ is enabled by the operating environment. Great article.

  17. Small Business Owners must be proud of themselves! We innovate! We don’t just simply tweak! 😉

  18. Hi Anita
    This piece and the underlying research reminds me that this is why I describe myself as an entrepreneur — one who creates something new, or innovates/tweaks on something that needs improvement. I’m not saying I’m always in that box, but i’ve been in and out of it most of my life.

    Look at the PaperPro guys — reinvented the common stapler. I would call that innovation. Some might call it tweaking. Who would have thought you could tweak the stapler…?

    I look at my client Shiftboard with their Online Scheduling solution — definitely innovative and they tweak things all the time! See NY Times article by clicking my name. Some folks were just happy with a simple online calendar (sometimes that’s all you need), but founder Bryan Lhuillier knew there was a better way to help staffing agencies schedule their workers.

    As you have pointed out before in other posts, we HAVE to innovate because that’s our DNA, that’s our strength, and because we don’t have much choice. We’re small, like David in the famous Bible story — so we sure better we’re the best with those three smooth stones when we face Goliath. Today’s web tools make it faster and more possible than ever before. And if we miss Goliath with one of our stones, we’re likely a whole lot faster when we run away to regroup and figure out what next…

  19. This is a great point. Change is vital to a small business success. It’s so vital, it’s like breathing. No one notices they’re breathing…until they stop for awhile. And if we don’t resume breathing quickly, there’s all sorts of drama and expense and procedures and books and equipment and experts to resume it on our behalf. Kinda like what happens when a big company realizes it hasn’t changed anything in decades and it’s dying.