By Andrew Lester, Managing Partner, Carr-Michael Consulting

In the changing world of 2011, the economy is looking to SMEs (Small and Medium Enterprises) to provide the impetus for innovation and growth. Why SMEs? Because although large corporates have the resource muscle they do not have the nimbleness and breadth of capabilities of SMEs.

During the last half of 2010 Carr-Michael saw a substantial increase in the number and quality of pre-revenue innovations coming to the market for investment. Recessions do that. They drive innovation because the old order no longer produces the financial returns needed to provide sufficient shareholder returns. So with no great surprise new ideas are needed, ideas that will get customers to part with their money for good reason. The new idea is better, solves a previously insolvable problem or is just plain lower cost and better value.

Perhaps this explosion in pre-revenue innovation is the most basic of relationships with Froes and Frenemies: innovators without the necessary commercial skills or funding needed to commercialise their intellectual property, being forced to share equity with foes (commercialisers bent on making money from you) and enemies (keen to take your equity and IP) who for practical purposes have to become friends as well if success is to be achieved. However, across the whole market there will continue to be a major shift in the need for enemies and foes to work together productively to open up new opportunities.

Key to working effectively and generating a powerful relationship is the need to break down the short hand used to describe competitors. Just because they are competitor does not by definition make them a bad company, yet our own short hand descriptions often reinforce prejudices and aversions that are fine in history but may not be appropriate for the future. Who would have predicted that BP with its troubled history in Russia with the authorities would end up at the start of 2011 signing with them a share deal swop and exploration agreements. This is not expediency. This is increasing the order of doing business. This year more than any other requires us to take a close look at how each of us interacts with suppliers, customers and new entrants to check if our preconceived oppositions are valid or just historical prejudices that get in the way of developing powerful and effective relationships to attack new markets and newly emerging customer needs.

Please feel free to comment by contacting me: andrewlester@carr-michael.com - Andrew Lester is Managing Partner of Carr-Michael Consulting, specialists in growth management and business performance improvement.

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