At the time of fast changes, companies have to follow progress and continually offer the market new products and services, develop new processes and design new organisational solutions. Today, innovations are the driving force of progress of every economy and the foundation of competitive advantage of companies.
However, innovativeness is not just an exceptional personal quality. Above all, it is hard work, motivation and zeal for work. Generators of innovations are creative and innovative employees and they need an environment that allows them to unleash their creative potential.
This poses a challenge to managers. So, how can we shape an innovation-friendly environment while also developing and using new management styles and ensuring effectiveness and utilisation of the existing capabilities? The purpose of this presentation is to showcase the main characteristics of innovative companies and individual innovation management methods that can help companies better understand innovations.
Innovation is a new and useful idea that is expressed in various forms and successfully implemented in practice. It can be a new product, a new service, method of operation or a new market.
As regards innovations, we often see companies that worry over the fact of not having their own research group or laboratory. However, we need to be aware that a company can be innovative even if it is not planning a new invention or a high-tech innovation. Innovativeness is not just a radical innovation. It is enough for a company to just slightly improve a product, its production methods or launch an already established product in a new market.
Deriving from the modern definition of innovation, an innovative company is a company that grows faster than the market in which it operates, whose added value is growing and which generates a substantial part of added value, scope of sales and profit from the sale of recently developed products or services.
CHARACTERISTICS OF INNOVATIVE COMPANIES
Regardless of their branch, innovative companies share some common characteristics.
The first is their unique strategy. Innovative companies have a unique business strategy, which they consistently follow. Such strategies clearly communicate what the company wishes to offer its users and how the company differs from its competition. Such strategies give the employees a very clear direction for work and they realise only those initiatives that comply with their vision.
The next common characteristic of innovative companies emphasises innovation as a tool for achieving strategic objectives, which can realise the vision. Innovative companies utilise innovations to realise their path to business success.
Another common characteristic of innovative companies is innovation in management. The management of innovative companies does not only offer support to an innovative activity but managements are a part of innovation management and play a crucial part in creating an innovative environment. The managers of innovative companies are the key to directing employees in the search for innovative solutions.
Innovative companies stick to their ambitions. Innovativeness is often linked to failure and innovative companies persevere and draw new knowledge from such experience so as to continue with their vision. Regardless of the failed innovations, innovative companies are aware of the importance of continually improving their products and searching for new opportunities. Ambition and perseverance are therefore another common characteristic of innovative companies.
A common trait is also their user-oriented nature. An innovative company tries to understand the broadest possible spectrum of user needs. It listens to its users and offers them original solutions for their needs. Even if a company cooperates in the supply chain, it tries to understand the needs of the final user and not only those of the first user.
A significant characteristic of innovative companies is also their ability to perceive trends, their broad view of understanding user needs and the ability to understand the time and the changes surrounding it. All who have read or will read Tom Peters’ In Search of Excellence will see that a lot of the companies, which the author showcases as examples of excellence, are no longer as glorious as they used to be, as despite their highly developed innovation activity, they failed to perceive the changes in time.
As mentioned before, innovative companies are distinguished by excellent individuals with a broad spectrum of knowledge and openness to cooperation. Excellent companies therefore do not search only for the best in their environment but also within the company. They encourage their employees and create an appropriate environment for the development of innovations.
When raising the level of innovativeness, we need to first raise the awareness on what is innovation and how to engage in innovation management in companies. Innovation management and the understanding of innovations have to go deep enough. In addition to the definition of innovation, which has to be clearly established, we also need to promote the methods that will help companies and individuals think in the direction of creating and managing innovations.
INNOVATION MANAGEMENT METHODS
There are several innovation management methods and they differ both in terms of purpose and complexity of use. The purpose of this presentation is not to sum up all innovation management methods, but to showcase three less known, however very efficient methods in the awareness raising phase, which help companies quickly understand innovations as added value for their customers.
The first method is the result of a study conducted by Noriaki Kano, who analysed the characteristics of innovative products in 1980 and came to the conclusion that customers react to offered product solutions in one of 5 ways. In this sense, he distinguishes among must-be, performance, attractive, reverse and indifferent product attributes.
- Must-be attributes of a product are taken for granted by the customer, however they result in dissatisfaction if not fulfilled.
- Performance attributes are those for which “more is better” applies and they are closely linked to the price. The customer expects these qualities and is willing to pay for them, however they are disappointed if their expectations are not met.
- Attractive attributes are qualities that surprise the customer and are not normally expected. Customer satisfaction with the innovativeness of the attribute grows exponentially but if this attribute is missing, the effect on customer satisfaction is neutral.
- Reverse attributes are qualities when “less is more” applies. The customer is disappointed if these attributes are present.
- Indifferent attributes are qualities that have no effect on customer satisfaction.
Understanding the Kano curve effectively directs companies towards creating added value, as they begin to be aware that individual product attributes do not have any economic effects and that copying ideas of competitors is economically efficient only if they upgrade the copied attribute in the direction of one of the mentioned attribute categories that increase customer satisfaction. The Kano curve also allows companies to realise that the lack of must-be attributes is dangerous for the company’s success, as the essence of company performance lies in attractive qualities.
The second method of raising companies’ awareness is the innovation cube, which is specifically intended for searching for breakthrough innovations. An innovation is considered a breakthrough innovation if a new technology or a combination of new technologies is used in order to realise new market opportunities. The innovation cube illustrates these new market opportunities. Companies usually deal with known customers who express their current needs. The innovation cube however illustrates that this field is only a minor part of market opportunities. The fields of opportunities represent the covert needs of customers, future customers and future needs in all possible combinations. These needs cannot be established using market research nor can they be perceived by sales managers. They can be perceived with excellent knowledge of the market environment, technological possibilities and forecasts of market trends and technological advancement.
The third method is innovation architecture. This method is more complex than the previous two methods. It is an approach to identifying innovation opportunities for new products, which is based on technological knowledge and market perception of functional needs of users. The focal point of this method are the functions that meet user needs. This method systematically leads marketing and development managers in companies towards perceived user needs through market fields such as leisure time activities, population ageing, etc. and through markets within these market fields. The objective is to establish which product functions could meet the perceived user needs. This way of thinking often leads companies to a completely different or new product or service.
Finally, allow me to emphasise that companies have to be aware that innovativeness is not an end in itself. The ability to advantageously realise an idea in the market is not a one-off successful project. The objective of every company should be the systematic improvement of innovativeness. As already emphasised, innovation ability is what allows the company to quickly adapt to changes in the global market.