“Innovation in small and medium-sized enterprises – do we have to worry? “, asks Sebastian Grimm in his article and bases his question on the results of a study: The market research division of the banking group KFW published its latest results on the innovation activities of German SMEs. In a nutshell, the results can be summed up by one sentence: Germany suffers from poverty in innovation. Is this threatening, or are these, or have the past few years only been characterised by a very high level of innovation, which is now going back to normal?

No wonder when you read headlines like: The computer systems of many banks are complex. Unfortunately, often also completely outdated and hardly anyone understands it yet. For many banks, therefore, pensioners now have to (WiWo) or also in the WiWo: “Old travel in the executive floor make innovation-tired“. Here’s what the article says: This is evidenced, among other things, by the Metz case. The traditional television manufacturer ignored low-cost competition from the Far East and lagged behind in new display technology. Instead, the boss relied on tried-and-tested products: specialist instead of online retail and premium devices at premium prices. In 2014, the company, of which she was chairman at the time, had to file for bankruptcy. It is now in Chinese hands.

But why is this so? What has changed significantly and how can companies continue to innovate? This article examines innovations from yesterday and today, from which I try to derive some theses.

Innovation in Small and Medium-Sized Enterprises Yesterday – Optimization and Improvement

Even today, many organizations are strongly hierarchical and have clear communication structures aligned with hierarchical relationships. They are thus optimized for control, control and coordination (Ahlemann and Urbach).

Many medium-sized enterprises are quite old and have a long tradition. I have already written something about this in the article Tradition in Medium-Sized Enterprises. Often, therefore, they are still organized according to a certain system – Taylorism. But what is Taylorism and how does this innovation produce?

Here, the working person is regarded only as a factor of production. It is important to optimize the processes of this to optimum yield. Taylor based on the idea that the worker also feels personally satisfied in a fully regulated job and that the efficiency of employees must be increased on the basis of work evaluations and performance-based pay. In contrast, the modern approach of humanization of the world of work (Economic Lexicon24).

medium-sized innovation
A department institutionalizes the functional separation and as a result groups of experts (Source: Niels Pfläging)

Thus, the described experts work in parallel in their teams and optimize their product in order, as Taylorism says, to drive the product to absolute perfection. So it is usually not a radical innovation, but an optimization. We often read that when the iPhone is presented, people complain about too much optimization instead of innovation. 12% thinner, 8% lighter – but somehow hardly anyone cares, right?

It seems that customers are tired and optimization no longer brings the WOW factor they expect. On a car manufacturer’s blog, I even found the following example: The new luxury sedan is the first car in the world to have an active and individually adjustable fragrance. The fragrance molecules are not deposited on the textile surfaces of the vehicle or on the clothing. The fragrance impression is subtle, occurs gently and resounds just as gently.

Now one wonders: could this not possibly be an over-optimization? Is this fragrance really an absolute buying argument and a groundbreaking feature that literally knocks the customer off the stool? Isn’t the car finished at some point?

Innovation in Small and Medium-Sized Enterprises Today – Radical Change and Innovation

So customers in the digital age want groundbreaking innovation and radical change. These are often insufficiently produced in the Taylorimus and the goal of optimizing oriented organization. For this reason, agile companies and a new organizational development have established themselves.

Here, Ahlemann and Urbach say: In the future, organisations will be much more networked and project-oriented. Such forms of cooperation support cross-cutting and interdisciplinary initiatives necessary to develop innovative products, services, processes and structures.

This change is also reflected in the team structures. The teamwork as we know it today is usually very plan-oriented, long-term and homogeneous – and thus optimized for the quality of the work results. Modern teamwork in the sense of the knowledge workplace of the future, on the other hand, is speed-oriented, agile and heterogeneous. In addition to the quality goal, the teams are much more focused on creativity and speed (Ahlemann and Urbach).

innovation medium-sized companies
A cell is functionally integrated or cross-functional – the same functions are in different teams (Source: Niels Pfläging)

Many medium-sized enterprises are already in this process – in the first pilot projects this has already produced the first great innovations. Thus, the first digital consulting such as Consulting 4.0 and innovation around Industry 4.0can be found. Also, you hear more and more from agile IT service providers. From 5 July, a follow-up article will be available under this link, which will show how such an organizational development can be structured.

Verdict: It’s not that easy anymore

Focus of work 4.0
Innovation yesterday and today – while the focus used to be often on improving the machine, today it is the real value for humans (own representation)

Innovations are no longer so easy. You now literally have to knock the customer off the stool again and again. Pure optimizations are hardly noticed anymore. But how do you produce them over and over again? It seems to be down to the organization. But exactly what that looks like will only become apparent over time.

Reading tips:

In summary, Ahlemann and Urbach say: The individual employee in the workplace of the past is career-oriented, loyal and patient. The motivation for work is accordingly rather extrinsic. The modern knowledge worker, on the other hand, is much more intrinsically motivated. It is to be characterized as hedonistic, individualistic, impatient and willing to change. This means that the workplace of the future should support work in changing, distributed and dynamic team structures, both virtually and physically. These include, for example, simple collaboration platforms available on different devices, the provision of virtual workstations that are available on each device, or comprehensive social media systems. So it remains exciting what will turn out to be the best model for innovation in small and medium-sized enterprises.

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Verwendete Quellen anzeigen

Niels Pfläging (2014). Organization for Complexity. Munich: Redline Verlag.

Urbach, N., & Ahlemann, F. (2016). The knowledge workplace of the future: trends, challenges and implications for strategic IT management. HMD – Practice of Economic Informatics, 53(1), 16-28. https://doi.org/10.1365/s40702-015-0192-7

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I blog about the impact of digitalization on our working environment. For this purpose, I present content from science in a practical way and show helpful tips from my everyday work. I am a manager in an SME myself and I wrote my doctoral thesis at the University of Erlangen-Nuremberg at the chair of IT Management.

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