Entrepreneurs value innovation but lack innovation strategies
By Sara Bedal | October 20, 2010
Almost three-quarters (74%) of Canadian entrepreneurs consider innovation a priority for their businesses but less than one in ten (9%) has developed and implemented a formal innovation strategy, a recent survey shows.
Many tend to take a more casual approach, with 69% of entrepreneurs describing their "innovation strategy" as keeping their “ears to the ground” and funneling ideas generated by customers, employees and other sources. The survey by the Business Development Bank of Canada (BDC) polled business owners with 1 to 499 employees.
"Canadian entrepreneurs understand the importance of innovating but they usually do it intuitively," said Jean-René Halde, BDC's president and chief executive officer. "Innovation does not occur by accident, it is a decision. Companies that have an innovation strategy and culture are usually more competitive and better placed to capitalize on business opportunities that arise."
Of those entrepreneurs who did try to innovate, three out of five (60%) think their efforts were successful, while only 11% said their activities were very successful and 11% believe they were not successful.
For the purpose of the survey, innovation was defined as the introduction of something new. It can occur in the way companies are structured, in the products and services they offer and in the way they develop, produce, market and deliver those products and services.
Even though innovation is a priority for many of the survey respondents, the reasons that induce them to take action are quite varied:
|Reasons to innovate|
“What mainly encourages you to innovate?”
|I consider it as a necessary part of business survival||25%|
|A strong desire to improve, to be better||20%|
|I believe that innovation creates new opportunities||14%|
|A strong desire to differentiate my business in the marketplace||13%|
|I always have new ideas and, to me, innovation is part of being an entrepreneur||13%|
|I believe that innovation helps to increase the growth of my business||11%|
Perhaps more Canadian business owners would adopt a deliberate innovation strategy if more of them thought innovation would give them a competitive edge. A meagre 12% of entrepreneurs think their main competitive advantage lies in being more innovative, while many more — 40% — name customer service as their company’s main competitive advantage. Others cite offering an exclusive product or service (12%) or offering the best product or service (8%) as their key advantage.
Not surprisingly, the biggest obstacles to innovation are a lack of funds and a lack of time. More than half (54%) of entrepreneurs think a paucity of funds prevents them from innovating and 46% cite a lack of time.
For survey results and information about the current state of Canadian entrepreneurship, go to www.bdc.ca/sbw.
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