This is one of the findings of a survey run by the CBI, technology giant 3M and the Design Council, which has showed that 78% of so-called “lacklustre innovators” are small businesses.

Richard Dodd of the CBI defines innovation as the “successful exploitation of new ideas.” He splits the process up into two stages: generating the ideas and then commercialising them.

It is idea-generation that has been found to be lacking, but there are two rich and simple sources of it that Dodd believes are being overlooked by small businesses – their staff and customers.

The survey revealed that many small companies had not even asked their staff if they had any ideas for improving existing products or developing new ones. Dodd suggests that giving staff a specific time and place to express new ideas could improve innovation at little extra cost.

He also advocates “liasing with customers” to produce possible new concepts. This could take the form of general feedback or, ideally, from actually talking to customers about existing products or services and seeing what else they might be interested in.

The survey also discovered that a quarter of small businesses are unaware of the 25% research and development tax credit. This has been in place for two years and applies specifically to small firms, although it has now been extended to companies of all sizes to encourage R&D.

For more information on the sources and benefits of innovation go the Design Council website at www.designcouncil.org.uk.