Innovation imperative: How small businesses can become more competitive

With President Barack Obama’s call for the small business community to focus on innovation and creativity to enhance U.S. competitiveness in the world economy, it’s time for entrepreneurs and small business owners to take up the challenge.

Startup America is an initiative aimed at strengthening access for entrepreneurs and firms with high-growth potential to a range of government and private-sector support — from capital and mentoring to reduced barriers to growth. But whether a new venture in a high-growth sector or a cog in the Main Street economic engine, it’s essential for every business to focus on innovations that will help build and support the nation’s ever evolving business environment.

The legend of the phoenix, the mythical firebird, provides a useful metaphor for looking at the current state of small business in America. Like the phoenix, the small business community must periodically reinvent itself to survive and prosper. And like the recent economic meltdown and subsequent onset of recovery, the phoenix symbolizes the extinction of the old and the creation of the new and rejuvenated. Rising from the ashes of near extinction might be something of a stretch when looking at what’s happened to U.S. small business over the last two years. But for many small business owners and their employees, the experiences and feelings associated with the Great Recession have been traumatic. Such trauma often leads to a crossroad in thinking and attitudes about business operations and the future. The beginnings of rejuvenation should include discovering ways to take businesses “outside the box,” which includes innovation in what’s sold and how it’s sold.

Here are a few suggestions on how to foster a more innovative business environment:

Look at your company culture: Innovation can’t be realized without first establishing a culture that fosters and rewards creativity. This culture is often the result of an entrepreneur’s vision, insight and risk-taking mentality being allowed to filter down through the organization and encouraged to proliferate. Businesses that embrace a culture of risk-taking without fear of failure or reprisal are ripe for tapping employee creativity, which leads to innovation.

Look at your staff: Having a business culture that sustains creativity as a core value works best when coupled with a creative staff. Employees who love marketing, strategy, product development and other similar functions are often a good fit for teams charged with leading the company toward creative and innovative solutions. By the same token, inviting participation from anyone in the company who can creatively contribute to the effort signals a culture of inclusion and helps maximize staff morale.

Don’t try to force creativity: Some of the best ideas come of their own volition, in their own time and from disparate sources. It’s much more important to foster collaboration within a company than it is to try and set up deadlines, goals and objectives that demand creativity and innovation. Some of the most creative minds resist formalized structure and instead thrive on free-flowing, uninhibited “space” from which the best ideas emerge.

Pose innovation-leading questions: Using a form of the following questions with a group of employees can jump-start the creative juices and lead to some amazing mental gymnastics. What is impossible to do in our business today, but if we could do it, would fundamentally change who we are, what we make or how we sell? What could we do differently that would make what we do or sell more exciting to consumers?

Capture all ideas, now matter how crazy they seem: Encourage the practice of capturing all ideas, whether they’re generated through a formal meeting, at informal events or gatherings or even from occasional daydreaming. The genesis of great innovation often comes from the most innocuous sources. Capturing the initial idea forms the basis for future collaboration and development.

Go down multiple paths: Allow the innovation process to travel down concurrent paths, even in different directions. Creative thinking along several paths must be fostered for ideas to be proven to have potential, be tabled for future development or discarded. Since innovation is such a dynamic process, multiple lines of thinking must be allowed to co-exist so ideas can be fully developed to fruition or extinction.

SBA - Daniel Hannaher / Region VIII Administator
Daniel Hannaher

Innovation involves a process that results in creating truly unique solutions in the form of business models, products or services. Whether you’re an active participant in the Startup America initiative or simply a small business owner looking to grow and succeed like a reincarnated phoenix rising from the ashes of its former self, it’s possible to reinvent the small business landscape by creating and innovating the next generation of new products and services that excite consumers.

Daniel Hannaher, the U.S. Small Business Administration Region VIII administrator, works out of Denver. Reach him at (303) 844-0505 or For more information about Startup America, log on to