By Phil Watlington

The intensification of competition, brought on by a more global economy, is driving small businesses to become more innovative. In fact, the rebirth of innovation—the introduction of new products, processes and services—just might be one of the most significant "unintended consequences" of globalization.

Take a look around—innovation reveals itself everywhere and everyday,  and is making it possible for some small businesses to become global leaders. For example, the multinational organization, Martha Stewart Living Omnimedia Inc., started out as a small catering business and is now the world's leading integrated information company devoted to enriching the changing lives of women and their families.

And Starbucks, a global company that expects to eventually have as many coffee shops in China as it has in the United States, grew out of a small Seattle coffee shop and the innovative efforts of an entrepreneur named Howard Schultz.

And some innovator—who I'm sure must be a "gazillionaire" by now-first put those little ubiquitous wheels on suitcases.

The Enabling Force of the Internet
Small businesses, when equipped with the enabling power of the Internet, can now,as never before,more fully participate in the innovation (inventiveness) process. The Internet literally makes possible access to the world's research information, which is needed to generate and evaluate new ideas and concepts, and turn them into profit-making products, processes and services.

In addition to research and evaluation, the Internet also is proving to be an excellent tool for seeking out potential global investors and sponsors for innovation projects, as well as potential collaborators in the innovation process. For example, globally dispersed individuals can work together on a common research and development project from their homes or businesses via the Internet.

Ideation
As globalization, outsourcing and offshoring turn up the heat on small businesses competing in the "flat-world economy" where the use of "cheap labor" from the developing nations seems to rule the day, the process of innovation is taking on an even more important role as the lifeblood of sustainable profitability. Small businesses are rising to the task and engaging in a complementary process to innovation called "ideation." Simply put, "ideation" means brainstorming ideas and seeking out straightforward unconventional solutions to complex problems. To learn more about the ideation process and its use, go to www.planninginnovations.com/ resources/Articles /Ideation %20101.htm.

Innovation Kansas City Style
It may not be well known yet, but Kansas City is becoming a "hotbed" of innovation, especially for biotechnology and related products, services and processes. In fact, Entrerpeneur Magazine ranked Kansas City the best city in the Midwest to start a business in 2006. And, Kansas City ranked 11th-just behind San Antonio, Texas-on the magazine's national "Hot Cities for Entrepreneurs" list.

The globally recognized Ewing Marion Kauffman Foundation and the Institute for Entrepreneurship and Innovation at the University of Missouri-Kansas City are representative of the great organizations in Kansas City spearheading the city's reputation. These local organizations are also globally focused and have major specialized programs to help small businesses and entrepreneurs become innovative. There are many other programs, resources and leaders devoted to the process of innovation and entrepreneurship, as well.

Government Funding for Ideas
The United States has long been the world's leader in innovation. However, for many small businesses, the risk and expense of conducting research and development are often beyond their financial means.

Do you have an idea for a new product or service but don't have the funds to pursue it? Would you like to use your creative, imaginative and inventiveness skills to develop a new product, process or service needed by one or more of a dozen governmental agencies?

To encourage and ensure the continued growth of innovation by small businesses, the Small Business Innovation Research (SBIR) program-administered through the U.S. Small Business Administration (SBA)-provides funding for small businesses to propose innovative ideas that meet the specific research and development needs of the federal government.

An additional federal program, the Small Business Technology Transfer (STTR) program, also provides funding to qualified small businesses that want to participate in developing and commercializing new products and process technologies. Both of these programs target the small business sector of the U.S. economy because, according to the SBIR and STTR programs, "that is where a significant number of innovations and innovators thrive." [VPWC2]Together, these two programs have $2.2 billion available for awards in 2007. To find out more about these programs and how to qualify for funding, go to www.SBA.gov/sbir.

Globalization, Innovation and Intellectual Property
Globalization continues to open national borders, eliminate barriers to free trade and drive businesses to become more innovative. However, along with this openness and increase in cross-border transactions has come the pirating of intellectual property (e.g., patents, ideas and computer hardware/software). Both small and large businesses may struggle to be innovative, only to find out that duplication and sale of their invention is occurring in Southeast Asia, or some other location in the world where the protection of intellectual property is weak, or non-existent.

It is often small businesses that are most vulnerable to the pirating and counterfeiting of intellectual property. For example, according to a recent Business Software Alliance study, about 35 percent of all software running on computers worldwide was pirated. And, it is estimated that the United States loses more than $2.5 billion each year in China alone as a result of the piracy of patented and copyrighted materials.

With about 40 percent of U.S. small companies now doing business globally, protective measures are required as never before. While the pirating and counterfeiting of intellectual property poses a serious threat to innovative U.S. businesses, it has not discouraged small or large companies from participating in the new global economy. To help small businesses protect their inventions, the U.S. Patent and Trademark Office provides informative Web sites ) on intellectual property protection at www.uspto.gov/smallbusiness and www.stopfakes.gov/smallbusiness.

In the new "flat world" global economy of intense competition, small business innovative thinkers are once again leading the way with their products and services.

Like the invention of those "back-saving" little wheels on suitcases—which, by the way, were invented by a former Northwest Airlines pilot named Bob Plath, who went on to grow his small business into the luggage giant Travelpro—small business innovation continues to enrich our lives and make the world a better place to live.

Phil Watlington teaches finance, managerial accounting and strategic planning through the University of Phoenix and is a senior manager at General Electric Company. He is the author of "The World Is At Your Door." You can reach him at (913) 491-1885 or .