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Innovation Management vs Competitiveness

Innovation Management vs Competitiveness

  • Ricardo Velho • Business Unit Manager at InSite Consulting

One of the concepts of competitiveness with which I most identify is: “The competitiveness of a country or company depends on its ability to put on the market products and services that meet the quality standards of local and world markets at competitive prices and that provide income in relation to the resources used or consumed in their production.” (1)

While the concept may seem simple, it is not. Being competitive today, at the pace at which the increasingly borderless world has evolved, means that we have to be constantly aware of our internal and external context, and we have to be continuously innovating.

Our inability, as companies, to anticipate or react in a prepared and effective way to the changes and needs of the new context demonstrates our lack of competitiveness and, consequently, conditions our existence. This is, ultimately, the cost of not innovating.

We can therefore agree that one of the factors that influence the competitiveness of companies is their ability to innovate. Innovation is understood as “a new or changed entity (product, service, process, model, method) that realizes or redistributes value” (3); or, according to Peter Drucker, the means by which an entrepreneur creates new wealth-producing resources or endows existing resources with greater potential for wealth creation.

There is also a broad discussion about whether we should let innovation happen spontaneously, or whether we should create conditions for it to happen in an organized, planned, and structured way. There are those who argue that having processes for innovation compromises creativity. But on the other hand, what good is it to be creative if we cannot systematically and effectively transform the idea into value?

In a survey on innovation, 84% of executives globally said that it is extremely important, but 94% were dissatisfied with their innovation performance. (2)

Given these results, we may ask: what is influencing the performance of organizations in terms of innovation? Most likely the approach.

I believe that innovation should be part of the strategy of organizations. As such, it should be managed as a system and the conditions should be created for it to happen in a structured, consistent and continuous way.

Unlike what happens in many organizations, which assign the responsibility for innovation only to the Department of R&D (Innovation & Development), innovation should be assumed transversally throughout the organization. It must observe the continuous interaction of all its areas of knowledge, sectors and processes, including the technical area, business development, marketing, legal and financial area, among others.

The Innovation process must take into account the uncertainty about the degree to which the expected results will be achieved and the extent to which customers will accept the product as predicted…

In this approach, innovation is the result of multidisciplinary interaction and knowledge accumulated about and by the organization. This knowledge should take into account market information, customer feedback, and lessons learned from the company’s experience with previous projects (including the positive aspects, but also what went less well), and analyze the existence of opportunities that can be transformed into innovations.

In addition, one can and should also seek information and inspiration from stakeholders, such as Universities, Laboratories, Institutes, other companies, Industries, Businesses, Services, Public Institutes, Technical Experts, Consultants, Standardization and Conformity Assessment Experts, Trade, Business and Industry Associations.

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Finally, the Innovation process must take into account the uncertainty about the degree to which the expected results will be achieved and the extent to which customers will accept the product as predicted, allowing the return on the investment made to be achieved as predicted. When we talk about uncertainty, we are automatically talking about risk. Therefore, the risk associated with innovation must be considered and is of paramount importance in project management.

I believe that those who are familiar with the management systems approach are already putting the pieces together and imagining what comes next. Indeed, for all relevant factors to be considered in an integrated and systematic way, innovation should be managed as a system within the organization, and this is the approach, for example, of ISO 56002.

The system aims to enable the interaction and interrelation of elements and activities, which allow organizations to develop and improve their ability to innovate in a formal, systematic and planned way. The adoption of an innovation management system will thus enable ideas to be defined, planned and executed in order to transform them into innovations.

The organization will be able to adopt a disciplined way of combining freedom and creativity with the formalism needed to manage risk, investment, and project implementation. Operationalizing innovation activities, with sustained and measured monitoring, will lead to continuous improvement (4).

Finally, transforming opportunities into value is one of the conditions, perhaps the most important, for being competitive and valued, and for distinguishing ourselves from the competition. When properly implemented, this system generates knowledge that, in turn, enables the conditions to create or recognize opportunities and transform them into value in a consistent, continuous, and efficient manner. So we can agree that this system enables organizations to become more competitive and valued, enhancing the positioning of companies and their brands at the forefront of the markets.

As Raymond Turner said “Only one can be the cheapest; everyone else has to innovate”.

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