Disruption is everywhere, but one of the predominant narratives of recent years is that smaller companies struggle to adopt new technologies as effectively as their peers.  Startups often drive technological change, so they’re generally fine, and large companies have the budget and human resources to adapt to change reasonably well, but mid-market companies have traditionally struggled.

It’s an issue that is explored in a recent paper published by financial giant Capital One.  They argue that the importance of mid-sized companies cannot be overstated, so it’s vital that they learn to adapt to changes in the marketplace effectively.

The research saw telephone interviews conducted with a number of senior executives at mid-market firms, with the conversations covering a range of issues associated with innovation and disruption. In total, they spoke with around 300 executives at companies with revenues ranging from $100 million to $3 billion.

Myth busting

Whilst the myth has developed that mid-sized companies aren’t very good at innovation, the report reveals that at least half had a dedicated person or team who was tasked with spotting threats and opportunities. This is perhaps why there was growth in the number of firms who felt at risk of disruption. Despite this risk however, relatively few had gone as far as developing proactive countermeasures.

It’s perhaps noticeable that those companies who reported feeling most vulnerable to disruption were those who were investing most in exploring new technologies and making plans based upon their exploration, suggesting a clear case of many being happily ignorant of potential disruptions around the corner.

This propensity to put things off was supported by the finding that most executives believed that any disruption would only occur in the future, with few regarding it as something they need to worry about in the immediate future.

Sources of danger

I’ve written a few times about the difficulties organizations are having successfully conducting digital transformation, so it’s perhaps not too surprising that many respondents thought the biggest threats would emerge from companies who were able to deploy data analytics and mobile capabilities effectively.

“Disruptors will use big data to discover success factors that have gone unnoticed—much as sports teams have done in the post-Moneyball era—and use mobile apps to dramatically improve internal and customer-facing processes,” the authors say.

This perhaps underlines why a majority of executives regard innovation as at least somewhat important, but of course there is a difference between admitting this and actually acting upon it. Whilst many executives said they had mechanisms to solicit new ideas from employees, few had actually turned those ideas into disruptive new products or services.

Being a report from a financial services provider, there is predictably a section on the need to finance innovation appropriately, and that many companies are turning to external suppliers to ensure their pipelines are adequately funded.  Whilst that is to be expected, it shouldn’t discount from an otherwise interesting insight into how mid-market companies view and approach innovation.