Innovation hesitation among small companies
Small business owners feel out of their depth when it comes to innovation, research shows.
A survey by MYOB found 61 per cent of respondents see barriers in cost, government regulation, lack of the right people and lack of marketing expertise.
A 2014 study by the Ministry of Business, Innovation and Employment (MBIE) showed a similar story, with fewer small firms innovating than larger companies and the top challenges cited included cost of product development and a lack of the right staff.
MBIE research also showed small business owners tended to invest most in marketing in order to innovate.
Innovation is at the heart of what Auckland-based recruitment solutions business Talent Propeller does.
Founding director Sharon Davies established the company in 2009 and recently introduced skills testing as well as a standard job application, to ensure job-seekers can show off their talents.
Three months ago, Talent Propeller started using video introductions and interviews to help clients with their hiring.
Davies says the motivation to innovate comes from always looking ahead as well as keeping an eye on the current market.
‘‘You must be adapting and evolving your business, whether it’s innovating processes or thinking about what product offerings you can take to market.’’
She says that given new technology is emerging out all the time, companies are not going to want to waste time on laborious hiring processes.
Davies expects that in five years instantaneous connections will be even more popular than they are now.
Currently, employers wait weeks for job applications to come through and job seekers wait even longer to hear back. But people who have grown up with technology will not have the patience.
‘‘You can guarantee they won’t be posting a job ad on Seek or flicking through CVs.’’
Davies says business owners should not be afraid of innovating advises them to just ‘‘have fun and see where it leads you’’.
MYOB New Zealand general manager James Scollay says innovation is not just about building new products or services, although that is important.
Innovation can include a new way of customer service, incorporating technology into the business, new management techniques and new ways of organising and motivating staff.
‘‘Small business owners are endlessly creative and inventive people,’’ he says.
‘‘They know how to take risks. Innovation doesn’t have to be the big breakthroughs.
‘‘Lots of small incremental improvements can quickly add up and customers can a great source of ideas.’’
After putting in the hard yards in cosmetics, a venture using a totara extract targets the medical market.
The reason for this was a unique compound called totarol.
‘‘We manufacture totarol extract from totara . . . it’s only found in New Zealand, and can only be produced in New Zealand,’’ said Mende.
Because the Ministry of Primary of Industries (MPI) has stringent regulations about exporting untreated indigenous timber, the entire process of extracting totarol is done in New Zealand.
Originally, Mende made money by focussing on its specifically cosmetic applications.
The substance has been proved particularly useful in treating acne and enhancing skin.
Because of this, Mende supplies prominent international cosmetic companies with their totarol supply – all from a small farm near Carterton.
In 2007, Mende began supplying totarol to L’Oreal, the worlds biggest personal care company, after passing a comprehensive vetting process from their scientific institute.
‘‘I’m the biggest international drug dealer in the Wairarapa,’’ Mende joked.
A look at his planned exports for the next fortnight shows deliveries slated for places as diverse as Australia, the United States, Poland and Italy.
But from the company’s inception, Mende knew that one day he’d make the switch from cosmetic to medical application.
‘‘It was a long, hard road. To get in the medical market, well, registration is quite expensive and the