Why Lower Mid-market Businesses are Uniquely Positioned to Leverage Innovation to Grow Revenue, Profit, and Valuation

When you think of innovation most people see either the startup company hacking out a new software product in a coffee shop or a Fortune 500 company creating a new self-driving hovercraft. However, mid-market businesses are best suited to create the most powerful and economically impactful innovations.

They Are Close to the Customer

Established mid-market businesses with revenues of $5M and up are uniquely positioned to drive innovation because they are close to the customer. Fortune 500 companies have lots of data but managers in corporate complexes are typically too far-removed for their customers to witness the nuances of demand. Startups simply don’t have customers, or at least they don’t have many. As a result, many are often more enamored with their invention than actual customer needs.

Mid-market businesses have a unique advantage when it comes to innovation. They have feet on the ground and are close to the customer. Thus they are able to see trends and opportunities unfolding in real-time. Employees have face-to-face conversations with customers on a regular basis. Mid-market businesses have established relationships of trust with many of their customers.

This creates a powerful opportunity for mid-market companies to innovate.

Yet, many mid-market companies fail to innovate intentionally. Sure, the founder comes up with new ideas from time to time, but rarely is there an intentional group of employees working together consistently to innovate. (Founder-dependent innovation may drive some new ideas, but it also drags down the value of a company when it comes time to sell. You can read more in my recent article The Measurable Difference Between an Innovative Company vs. a Company with an Innovative Founder.)

They Are Practical

Innovation goes beyond technology. While there are important technological trends that mid-market businesses can exploit, many other practical ways to innovate can drive business results.

In his classic, Innovation and Entrepreneurship, Peter Drucker outlines seven sources of innovative ideas:

1. The Unexpected

2. Incongruities

3. ProcessNeed

4. Industry and Market Structures

5. Demographics

6. Changes in Perception

7. New Knowledge (Technology)

Employees of mid-market businesses (especially those with Working Geniuses® of innovation) are uniquely positioned to capitalize on the shifts. Ideas that emerge are highly practical. Some may be new products and services. However, the most impactful innovations may be in things like:

1. Go-to-market Strategy

2. Customer Experience

3. Internal Process

Enhancements in these areas can quickly move the needle in a mid-market company.

The Mid-Market Opportunity

Established companies have an incredible opportunity to capitalize on innovation to grow revenue, profit, and valuation. All it takes is the founder committing to get strategic about innovation.

For more ideas on how this could happen in your company, I invite you to grab a copy of The Visionary’s Guide to Unleashing Strategic Innovation. Then, join me for a 90-minute Innovation Briefing.

Originally published on Darrell Amy's LinkedIn.