In Fortune Small Business magazine this month, the cover story features innovation in small business, and how to achieve it. And for those who think that innovation takes a large R & D budget, there are some eye-opening statistics: • Small business generates 13 times more patents than large business • Those patents are twice as likely to be among the top 1% of patents cited • 77% solicit ideas from customers, and act on them • 70% actively solicit ideas from their employees. In short, these tiny businesses are doing precisely what experts urge all businesses to do: adapt continuously to changing markets. The stories range from products like a single person commuter car to services, like life celebrations marketed by a funeral home, complete with Harley Davidsons, fishing poles and bingo games. There’s a detergent that actually gets rid of sweaty smells from hi-tech athletic clothes, invented by a guy with no background in chemistry or laundry. The keys are these: 1) know your history 2) lose the routine 3)use the brains you hired 4) get cozy with customers 5) share the load and 6) fail quickly. What drives them to follow these rules so successfully that 63% of small business owners have had eureka moments that changed their business? Necessity. They don’t have the luxury of losing money for years or ignoring bad performance. Or, as the director of the Institute for Innovation at the University of Michigan says, “ In an economic downturn, innovation isn’t your best friend. It’s your only friend.”