The innovation imperative

It is our belief that no business today can afford to ignore innovation as part of its strategy for competitive success.

There is no doubt that the pace of change and the challenge of competition have accelerated since 1993. From a helicopter viewpoint, some trends are obvious. The marginal cost of communication and information continues to drop. Our earlier work spotted prototype B2B e-businessesusually tagged as EDI (electronic data interchange)some of which continue to be successful in an Internet-enabled environment. The Internet and e-business continue to define and redefine business opportunities, mostly by making certain types of communication much easier and more transparent. Businesses are increasingly interconnected as the means of doing business. Customers are combining to achieve better value for money from their global suppliers. Concepts like value chains, enterprise resource management systems, supply chains and customer relationship management are increasingly a commonplaceeven if somewhat blurred in definition.

The impact of these changes is very substantial. Industries and sectors are being redefined through mergers and restructuring. In telecommunications, technology is powerfully reshaping traditional boundaries between sectors, and convergence is rapidly removing distinctions between media and elsewhere. New technologies are finding innovative applications worldwide.

Outsourcing has been a powerful reshaper of the environment that small and medium enterprises inhabit. It has hollowed out most medium and large organisations. As a result, these organisations are more focused on their core business(es), leaving it to others to provide their non- core enabling functions. Employment tenure with large companies has shortened and the ˜dot. com generation increasingly finds employment in old economy businesses to be unattractive.

Summing this up, the environment for small and medium- sized companies has become tougher. Customers demand more and the capacity for repeat work increasingly depends on being faster, smarter and delivering better value. That said, medium-sized businesses have some important strengths, including the capacity to attract people disenchanted with the traditional employment relationship.

In one important respect size does not matter. All businesses must constantly renew and extend their offerings in ways that create value. Innovation is an imperative.