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Small Business Plays A Big Role In Innovation

By Ralph Dannheisser

Small Business Plays a Big Role in Innovation

Paula King had a problem. Diagnosed with cancer in 2003, King was inundated with goodwill gift food baskets from her friends. But her digestive system had an intolerance for corn products, commonly used in foods but sometimes omitted from ingredient lists, leaving her afraid to eat the well-intentioned gifts.

Nor could she just give the baskets to her friend Susan Lawens, who had her own allergy to wheat, another frequent ingredient.

King and Lawens turned a problem into a thriving business: they started, marketing customized gift baskets to those, like themselves, with special dietary needs. Two years later, their business received a Stevie Award for Women in Business as the most innovative company of 2005.

Their success story carries several interrelated messages:

* Innovation is a key to the success of businesses in the United States and around the world.

* The simplest ideas, often spawned by necessity, sometimes bring spectacular results.

* It is not necessary to be a corporate giant to innovate. It does not require spending millions of dollars on research and development, or having a major university laboratory at one's disposal.

Some big corporations, of course, also have won Stevies -- a business equivalent of filmdom's Oscars -- celebrating their innovations. Such companies as Dow Jones, AT&T, Humana, Textron and Expedia have trumpeted their awards in press releases.

For all its legitimate importance, the word "innovation" has become something of an all-purpose cliché. Punch it into the Google search engine -- itself a prime example of innovation on a grand scale -- and one gets no fewer than 87,800,000 "hits." A dictionary definition is quite straightforward: Merriam-Webster Online sees innovation as "a new idea, method or device."

Peter Drucker, the management guru who wrote the classic Innovation and Entrepreneurship in 1985, saw innovation as "change that creates a new dimension of performance." And, Drucker wrote, "Innovation is the specific instrument of entrepreneurship ... the act that endows resources with a new capacity to create wealth."

The U.S. government long has recognized the potential for small business to advance such change. The Small Business Innovation Development Act, passed in 1982, created the Small Business Innovation Research (SBIR) program for that purpose.

President Bush reaffirmed the importance of the program in a 2004 executive order in which he declared continued technological innovation to be "critical to a strong manufacturing sector in the United States economy."

"The federal government," Bush said, "has an important role ... in helping to advance innovation, including innovation in manufacturing, through small business."

In 2005, the 11 federal agencies participating in the program, administered by the Small Business Administration's Office of Technology, disbursed more than $1.85 billion in competitive awards to qualifying small firms. The great bulk of those awards -- some 96 percent, according to a National Research Council study -- have been made by the Department of Defense, the National Institutes of Health, the National Aeronautics and Space Administration, the Department of Energy and the National Science Foundation.

As the nature of the key agencies involved suggests, such government-backed programs are skewed heavily to the technological. A compilation of successful 2007 proposals posted on a Defense Department Web site, for example, lists such arcane items as "Direct Diode Pumped Blue-Green Laser," "Ambient Temperature, Solvent-Free Plating of Dense Aluminum Coatings," and "Extremely Low Frequency for Anti-Submarine Warfare."

But if government awards focus on the technological, there is much opportunity for small business entrepreneurs to make their mark with more down-to-earth innovations like King's food baskets.

The Web site listed one such example that literally is down to earth in an October 2002 article: it recounted the realization of hosiery maker Jim Throneburg that Americans were buying different shoes for different sports.

"If the shoe changed for function, I figured I needed to design a sock that complemented the shoe," quoted him as saying. His company went on to create more than 25 types of sport-specific socks -- including one designed to meet the needs of a golfer who complained that her socks slipped down into her shoes.

A companion article chronicled some of the many revolutionary products developed by small companies over the past century: items like the hard hat for construction workers, the Brannock Device for shoe store use in measuring foot size, the parking meter, the Phillips-head screw, the shopping cart, WD-40 lubricant (so-named because it was perfected on the 40th try) and a host of others. Among the more recent: an insulating sleeve for coffee cups invented by an erstwhile realtor in 1999, and a folding keyboard for hand-held devices developed in 1999.

To tweak the old saying that "good things come in small packages," it does appear that splendid ideas often come from small business.


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