However, most small and medium-sized enterprises do not have global ambitions. In many cases, they base their business model on one or a few major customers and do not manufacture their own products, but act as suppliers based on the specifications of the customer or client. It is safe to say that the majority of manufacturing companies manage their operations based on a similar model. These organisations start thinking about innovation when something does not work or when the customer requests a significant change to a previously delivered component or subassembly. This is when problem-solving methods come into play, assessing and clarifying customer needs, and further developing and testing products and services based on customer specifications. The result of persistent development work can be a better functioning, more efficiently manufactured product with more functions, which, if lucky, can be sold in larger quantities, generating more revenue for the company and thus recouping the development costs.

The other path to innovation is when a company has its own product or service and implements innovation in order to increase sales and gain an advantage over its competitors. For example, it may want to bring a higher quality, more functional and better designed product to market. In such cases, the company reinvests the revenue from sales into research and innovation activities. Incremental innovation is when a company implements improvements by continuously refining its products and services in order to outperform its competitors and bring products and services to market that better meet customer needs. A good example of this is the "facelift" of certain car models every two to three years, the incorporation of minor improvements here and there, or the different generations of Apple phones with one, two, and then three cameras, to highlight just one striking feature. But is it right for company management to focus solely on these minor improvements? Can it win new customers with this development approach? Or does it just want to serve its existing customers at a higher level? The problem is that if a company focuses only on the latter, serving its existing customers, it could end up failing miserably. To illustrate this, it is worth recalling the bankruptcy of the long-established KODAK company. Founded in 1892, Eastman Kodak Company dominated the global photographic film market for most of the last century and, at its peak in 1976, held 90 per cent of the American market. Its downfall came about because, despite the dynamic advance of digital cameras in the 1990s, it saw the future in paper-based image processing and the development and manufacture of related materials and chemicals, and then filed for bankruptcy protection in January 2012.