Breaking the innovation code

Managers in SMEs operate under very challenging conditions and need to create competitive advantages. One potential route to do this is through innovations. Often, this is easier said than done.

A recent survey by SBF suggests that about a quarter of companies here have been slow to transform their businesses, and as a result are lagging behind1. The lack of innovation in SMEs in Singapore was often blamed on lack of funds, quality of workforce, lack of partners, etc. With the abundance of government’s assistance schemes available and with one of the best educated workforce in the world, companies have little reasons not to innovate and transform themselves.

Innovation is hard. The process involved in innovation can often be complex, dynamic, and a result of cumulative dynamic interaction and learning processes involving many actors, with contrasting views and diverse expertise. Most firms want to develop a culture of innovation. But, they don’t know how to do it. It is almost like breaking the code to a locked safe containing a prized treasure. How do SMEs break the innovation code?

Breaking the innovation code means creating the right conditions for a winning culture of innovation to develop and for innovation to succeed. It starts with having a Dynamic Mindset. One study suggests that one of the most significant barriers to innovation resides in the firm’s own management and their ability to conceive of their market and environment as dynamic2. In a survey involving 158 respondents from Singapore and Hong Kong representing large global firms, regional firms and local domestic firms, it was found that firms that perceived the environment as dynamic have a competitive advantage that enables them to have a higher propensity to innovate2. SMEs need to adopt a Dynamic Mindset.

The study further revealed that mid-sized regional firms appear to be more entrepreneurial oriented and organisationally more innovative than large global firms and local domestic firms. During the interview with some of the survey participants, it was revealed that regional firms are more entrepreneurial orientated and organisationally innovative because they are in a growth expansion phase. Sandwiched between the large global firms and the local domestic firms, mid-sized regional firms must grow and win market share by being more innovative2.

In addition to having a Dynamic Mindset, assembling and nurturing the right team, and recognising and harnessing the right interpersonal conflicts is equally critical.

Innovation happens when things are disrupted. And, disruption means a disturbance or problems which interrupt an event, activity, or process. The best innovation happens not with people that one agree with, but with people who holds opposing views and will challenge or interrupt one’s thinking. The opposing views create disharmony and disalignment. But, this disharmony and disalignment is absolutely crucial to innovation. This is where things get uncomfortable for most firms as few firms know how to recognise and harness the energy in these conflicts to create something new and better. If SMEs want to successfully innovate, they need to forget about harmony and alignment; and learn to embrace constructive conflicts. Business managers need to recognise that conflicts, disruptions, and challenge of the status quo are the basis for innovation. SMEs need to learn to disrupt itself by embracing contrasting perspectives, disruptions and conflicts.

According to Jeff Degraff and Staney Degraff, in any business, there are four dominant worldviews represented by: “The Artist, who loves radical innovation; the Engineer, who constantly improves everything; the Athlete, who competes to develop the best innovation; and the Sage, who innovates through collaboration.”3 Each of these four dominant worldviews hold distinctive values and approach the world through contrasting perspectives (Table 1). The Artists, being the visionary, drive growth through radical breakthrough innovations and wild experimentations. While, the Engineer, being the logical thinker and pragmatist, seek efficiency and quality and seek growth through incremental innovations. The Sage seeks out connection, harmony and togetherness, and growth by focusing on building the underlying organisational culture and competencies. While the Athlete are results-driven workhorses and focuses on speed of innovation. Assembling and nurturing the right team that can bring contrasting perspectives to the table is thus crucial for innovation in any business.

Table 1: The Four Dominant WorldView

Depending at which stage of development the firm is, the need for each approach is very different (Table 2). At the start-up phase, firms may need more Artists and Athletes. Artists give the new start-up a creative edge, while Athletes drive the speed of execution. As the company develops and grows, it may need more Sages to build the organisational culture and stability, and Engineer to develop processes and procedures to drive efficiency and quality3.

Table 2: Organisation Growth Cycle

In summary, SMEs can unlock the innovation code by:

1. Adopting a Dynamic Mindset; 2. Assembling and nurturing the right team, that comprises of Artist, Engineer, Athlete, and Sage; 3. Recognising and harnessing the right interpersonal conflicts to drive growth.

- Dr. Patrick Tan -

Reference: 1 Tan, Wei Zhen. (11 January 2018). 1 in 4 firms falling behind in economic transformation: SBF (TODAYONLINE (

2 Tan, Siong Kuan Patrick. (2017). A study of innovating and noninnovating firms’ perception of environmental dynamism and innovation in a mature regulated industry.

3 Degraff, Jeff & Degraff, Staney. (2017). The Innovation Code: The Creative Power of Constuctive Conflict: Berrett-Koehler Publishers, Inc.