Innovation in turbulent times: Navigating the business landscape ahead

As we get ready for the final push of the end-of-year season – the busiest on the calendar for many South African small and medium enterprises (SMEs) – many business owners are contemplating the rapidly changing times.

The ongoing shifts happening in business landscapes seemingly leave no industry unaffected. But what does it all mean for South Africa’s SME owners, whose businesses are the biggest employer of our economy?

A spokesperson for the SME services provider Lula has some practical tips on how small businesses should navigate the year-end ahead to ensure they achieve full success this season and in 2024.

Entrepreneurs must be smarter and more strategic than ever about their market offerings, how to keep their hard-won niches and stay afloat. Many are planning around how to innovate to start 2024 on a strong footing, and get ahead of the curve rather than play it safe.

But any innovation comes with risks, so SMEs must only pursue what makes sense for their business.

Selective use of resources is paramount. As an SME in a small market, you must carefully choose your innovation focus areas. Though it’s a very natural entrepreneurial (and human) urge to diversify – to avoid putting all your proverbial eggs in one basket – as a business owner, it’s often more useful to stay laser-focused.

Understand your true targets by focusing on your customers’ needs. History’s greatest business ideas were born out of solidarity with the consumer and empathy with their specific needs. Conduct in-depth market research and dive into your consumer data and audience analytics. Craft a clear image of your ‘buyer persona’ and keep this in mind constantly as you strategise, ideate and innovate.

Your ‘buyer-persona’ shouldn’t just be basic demographics like male, 35–55 years old’. That gets you nowhere. On the other hand, “Harry is a devoted family man, in his 30s. He loves authentic and vintage fashion, craft beer and watches rugby religiously on weekends. He values honesty in the companies he supports and appreciates a bit of creative audacity in the messaging he receives”, is something you can work with.

Your buyer’s persona should be like a character in a novel; you know their likes and dislikes intimately, and you tap into their passions and inner drives. This also gives you a pathway to the sensitivity you need to avoid creating any unintended negative feelings with your marketing, because you understand the hypothetical buyers’ dislikes and pet peeves as well.

Brainstorm all your possible areas of innovation, and then relentlessly narrow down the list. Choose only those that resonate deeply with your hypothetical buyer, and the ones that best serve your business vision and goals. 

Then out of those, select only the most feasible, profitable and quickly actionable ones for which you can see a clear way forward, and identifiable stepping stones to get you there. If there are more good ideas, park them for the moment (you can always revisit them down the line if you need another iteration), but first go for the low-hanging fruits you’ve identified.

Once you’ve identified a key area in which to innovate, the real challenge comes next: striking a balance between profitability and customer-centricity as you innovate, pivot or bring new differentiated offerings to the market.

The smartest businesspeople realise that this isn’t a process of creating the product we think customers want most, and then hope they buy it. A better approach turns this upside-down: It starts with putting yourself in your buyer persona’s shoes, walking a mile in them, and then asking yourself ‘what do I need?’ From there, you can better understand how your business may be able to solve for the issues they’re facing, fill the gap in their life, or supply to their needs.

After that, check up on the competition. Is there already a solution that’s very similar or in the same niche that you’re planning to move into? If so, go back to the drawing board and rethink your strategy. Just like a journalist can’t cover an old story, there’s no use in putting resources into an idea if someone in the same market’s beaten you to it. To truly innovate, you must break new ground.

The strategising around all this can get complex as you brainstorm on what innovations could work for you, and what the SWOT analysis (strengths, weaknesses, opportunities and threats) is.

A great approach is to draw out a choice-map. A choice-map is a bit like a school-style ‘mind map’, but slightly more structured. With this technique, you look at specific problems like “What’s the best method for safely transporting donated organs?”, and then examining how in-domain contemporaries (like hospitals, in this example) have solved it, as well as out-of-domain, or other industries’ solutions, like food and technology companies’ cold storage.

This method guides your thinking, keeps you on track and your business plans grounded.

Test permutations and configurations of your new innovations. Experiment with price points and solicit feedback. Make use of smart digital tech like integrated business cash flow management apps to really zoom in on what’s working financially, and listen carefully to the responses you’re getting in questionnaires and surveys.

These insights will help guide your business moves, and help you plan as you prepare to launch new innovations for year-end, in 2024, and beyond.