In mid-October 2009, I was visiting with a client, a large, Midwest-based paint and coating manufacturing company.

As part of their product development process, the company’s engineers built a powerful outdoor pump to paint industrial buildings. The pump worked beautifully in indoor testing, but when the engineers tried to use it outdoors, the pump started to clog frequently, making it essentially useless. The client wanted me to help them run a crowdsourcing campaign aimed at redesigning the pump.

When speaking with my counterparts at the client’s innovation group, I pointed out to them that the indoor and outdoor conditions they used to test the pump weren’t identical: the indoor testing was done during the summer, with the temperature even in the air-conditioned lab often reaching the mid-seventies, while the outdoor temperature in the Midwest at this time of year rarely hit the 60°F mark. Could it be that the clogging was somehow caused by the temperature shift?

My hunch turned out to be correct. The problem was not the pump design. The problem was the paint: it was rapidly becoming viscous with a small drop in temperature, causing the pump to clog. The engineers fixed the problem by simply adjusting the paint formulation.

As an innovation manager, I like to remind my clients that the most important part of the problem-solving process is to correctly define the very problem they’re trying to solve.

The sad reality is that many large organizations, both corporate and non-profit, fail to identify the root cause of their problems. Instead, they immediately start looking for something—anything!—that may look like a solution.

To me, this is equivalent to taking Tylenol to relieve a headache even before knowing what caused it: hangover, mild cold, chronic migraine, or advanced glioblastoma.

The situation is even worse for small- and mid-sized companies (SMEs). They’re under constant pressure to innovate, but often lack the dedicated innovation departments, large budgets, and internal resources that their larger competitors rely on. While traditional consulting firms primarily cater to enterprise-level clients, SMEs are often left underserved, leaving their internal problem-solving capabilities ad hoc at best.

The AI Revolution: A Generational Moment for SMEs

Advances in AI, particularly large language models (LLMs), dramatically reduce the cost of domain expertise. By using tools like ChatGPT, Claude, or Gemini, everyone can now tap into knowledge that just a few years ago was accessible only to large and resource-rich organizations.

This presents a generational opportunity to level the playing field. The AI-based tools can stimulate the creative process, energize problem-solving, and support decision-making at SMEs with unprecedented speed and affordability.

What we’re witnessing isn’t simply an upgrade to existing business tools—it’s a fundamental shift in how problems get solved. Consider the cognitive cleanup that AI enables: where SMEs once struggled to sift through mountains of data, identify patterns, or generate multiple solution pathways, AI tools can now process complexity in real-time, offering structured thinking frameworks and systematic approaches to innovation challenges.

This transformation enables real-time business unblocking. When an SME faces a technical hurdle, market challenge, or operational bottleneck, AI tools can immediately provide relevant domain expertise, suggest alternative approaches, and help teams think through consequences before committing resources. The days of waiting weeks for external consultants or struggling in isolation are rapidly ending.

The emergence of problem-solving intelligence through AI represents more than efficiency gains—it’s about democratizing strategic thinking itself. SMEs can now engage in sophisticated scenario planning, competitive analysis, and innovation forecasting that were previously the exclusive domain of large corporations with dedicated strategy teams.

What makes this moment truly generational is the compound effect: as AI tools become more sophisticated and SMEs become more adept at leveraging them, the competitive advantages traditionally held by larger organizations begin to erode. Agility becomes more valuable than resources. Creative problem-solving trumps bureaucratic processes.

The Future of Innovation Services

This is also the moment to redefine traditional consulting by combining human expertise with AI tools and bringing cutting-edge innovation practices to SMEs across industries. It’s time to introduce AI-augmented innovation services for SMEs.

The new paradigm isn’t about replacing human insight with artificial intelligence—it’s about amplifying human creativity and judgment with AI’s processing power and knowledge synthesis capabilities. This hybrid approach enables SMEs to punch above their weight class, competing not just on price or niche expertise, but on the quality and speed of their innovation processes.

It’s not a transient trend. It’s a blueprint for the next generation of SME decision-making. The organizations that embrace this shift now will find themselves equipped with sustainable competitive advantages that compound over time, while those that hesitate risk being left behind in an increasingly AI-augmented business landscape.