💡 What South Tyrolean SMEs Learned from Crowdsourcing

Lessons from the Open Innovation South Tyrol project

Can small and medium-sized enterprises really benefit from open innovation?That’s exactly what a fascinating South Tyrolean experiment set out to discover.

In 2012, the LVH (South Tyrolean Association of Craftsmen) joined forces with the Munich-based innovation agency Hyve AG and the University of Innsbruck to launch a crowdsourcing platform for local SMEs.The initiative was part of an EU-funded project designed to explore one key question:

👉 Does open innovation make sense for SMEs?

A new foundation for collaborative innovation

Aware of the many challenges faced by SMEs: limited financial and human resources, lack of R&D capacity, and few opportunities for innovation collaboration LVH aimed to overcome these competitive disadvantages.

Together with Hyve and the University of Innsbruck, they built a digital crowdsourcing platform that connected small firms with the wider community to gather ideas and solutions.

This platform became a living laboratory for innovation, where several South Tyrolean SMEs experimented with crowdsourcing: inviting the public and external experts to submit ideas, co-develop solutions, and help prototype new products.

Researching what works — and what doesn’t

To understand how this process worked in practice, I conducted interviews with participating SMEs, a project manager from LVH, and an innovation manager from Hyve AG.The goal was to identify what helped, what failed, and what other SMEs can learn from these experiences.

Here are the key findings from this study:

🧩 1. The Power of Asking the Right Question

The first and perhaps most critical success factor: how well the problem is defined.

SMEs often underestimate this step.Too broad a question (like “What can you do with an apple?”) leads to irrelevant answers. Too narrow a question, and creativity dries up.

The most successful campaigns had clear, specific, and inspiring challenges that reflected the company’s real needs while also motivating participants to contribute.

💡 Lesson: Spend time defining the real problem before launching your crowdsourcing campaign. It’s the foundation of everything that follows.

🧭 2. Align Ideas with Your Core Business

Several SMEs generated creative and promising ideas yet failed when it came to implementation. Why?Because the ideas didn’t fit their existing business model.

Without the right sales channels, production capacity, or internal expertise, even the best concepts couldn’t survive.

💡 Lesson: Crowdsourcing is not just about generating ideas, it’s about selecting those that align with your company’s strengths and strategy.

📊 3. Don’t Skip Market Research

Innovation without market validation can be risky.

Some firms launched great-looking products that were simply too expensive or too similar to existing offers. Without understanding the target audience, pricing expectations, and competitors, they struggled to sell.

💡 Lesson: Before investing in production, validate your idea. Analyze the market size, demand, competition, and potential distribution channels.

🧱 4. Implementation Is the Hardest Part

Even with LVH’s full support, most SMEs found the implementation phase the most challenging.

Turning ideas into products required time, technical expertise, and motivated employees — all scarce resources in small firms. In some cases, employees weren’t convinced by the winning idea, creating internal resistance.

💡 Lesson: Involve your team early. Crowdsourcing is not a one-person project — it’s a collaborative process that requires engagement at every level.

💰 5. Crowdfunding as the Next Step

One interesting insight: crowdfunding can complement crowdsourcing.

After collecting ideas, some SMEs used crowdfunding to test whether customers were truly interested, and to receive early feedback before scaling up.

Even when the funding goal wasn’t reached, the campaign still provided invaluable insights about pricing, demand, and customer perception.

💡 Lesson: Use crowdfunding not only to finance your innovation, but also as a market validation tool.

🎯 6. Niche Is the New Big

The most successful projects came from SMEs that targeted niche markets, such as products for elderly users or innovations in local tourism.

By focusing on a smaller segment, they reduced competition and positioned themselves as specialists.

💡 Lesson: Innovation doesn’t have to be global. Sometimes, solving a very specific problem can open up big opportunities.

🌍 7. Local or Global? Both Have Value

The project thrived because it engaged the local community, creating trust and visibility.However, some entrepreneurs also wished for international participants to bring fresh perspectives and more diverse ideas.

💡 Lesson: Local roots are powerful, but the best innovations happen when local insight meets global creativity.

👩‍💼 8. The Mindset Matters Most

Ultimately, success depended on the entrepreneur’s mindset.

Open, curious, and committed founders created the most value from the process.When founders disagreed internally or treated the project as a side task, even great ideas failed to take off.

💡 Lesson: Innovation begins with leadership. Stay engaged, flexible, and willing to experiment.

🧠 Final Thoughts

The South Tyrolean experience shows that crowdsourcing can be a powerful innovation tool for SMEs, but it’s not a quick fix.

It requires:

• Careful preparation

• Strategic alignment with the core business

• A supportive, open-minded team

• Continuous learning and iteration

When done right, crowdsourcing can deliver:

✅ Fresh ideas from unexpected sources

✅ Faster innovation at lower cost

✅ Stronger customer engagement and brand visibility

And perhaps most importantly it gives small businesses the confidence to innovate.

📌 If you’re an SME owner or innovation manager considering open innovation, take inspiration from South Tyrol: small firms can innovate big when they collaborate.