Failure to innovate threatens to put a third of SMBs out of business by 2020

innovation

UK and Europe’s SMEs are in danger of falling victim to digital disruption, regulatory requirements and economic shifts that are fundamentally changing their markets.

According to new research commissioned by Ricoh, 34 per cent of the SME leaders surveyed from across 23 countries say they will go out of business by 2020 if they fail to innovate in response to these changes.

With 56 per cent trying to increase profit and 54 per cent to grow their operations, SMEs must be ready to challenge traditional assumptions about growth.

Although 92 per cent recognise the impact of digital disruption in their sector, 59 per cent are not yet in a position to take advantage of its benefits.

Furthermore, in the next two years, a quarter predict they will be unable to react swiftly enough to changing government regulation and 20 per cent to the growth of automation.

David Mills, CEO of Ricoh Europe, says: “While the research is something of a wake-up call, the good news is that SMB leaders are acutely aware of the change happening in their markets and of the need to innovate. Now is the time to take a proactive stance and face disruption head-on. Any business that misjudges how to adapt their processes and strategies risks leaving their future open to chance.”

The research uncovers three key areas where SMBs should be applying technology to help focus their attention:

  1. SMEs must build closer customer relationships by using technology to facilitate and inform product and service development – 54 per cent recognise they need to develop ongoing relationships with their customers

  1. SMEs must use smarter workplace technology to reshape processes, improve agility and make efficiencies – 74 per cent of leaders say technology helps their ability to innovate

  1. SMEs must foster the full potential of talented individuals by using technology to empower employees and develop creative thinking – 42 per cent want to encourage safe spaces for experimentation to see if ideas are successful

Damià Belles, part of the IT team at fashion design company Happy Punt – a Ricoh customer with headquarters in Spain and Portugal – has seen the company’s approach to innovation evolve.

“Traditionally, our approach to innovation was making small modifications to improve our work”, says Belles. “But now we are looking at bigger and more meaningful ways to innovate. In order to gain crucial knowledge about new technologies in the industry, we are continually developing relationships with other companies and universities. This has led to one of the most exciting periods in our history – working with a company to use nanotechnology with our fabrics”.

Mills concludes: “We work with SMEs across Europe who are already realising the benefits of approaching innovation in a new light. Whether that is streamlining operations to introduce products to the market in half the time, using cloud services to speed-up processes or experimenting with new ways to engage with customers and employees, the more innovation-minded SMBs are levelling the playing field against their larger rivals.”