Competitive advantages gained through the establishment of Innovation. Paula Salomão Martins Universidade Federal de Juiz de Fora, MG Brasil - PDF

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Competitive advantages gained through the establishment of Innovation Authors: Paula Salomão Martins Universidade Federal de Juiz de Fora, MG Brasil Phone:

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Competitive advantages gained through the establishment of Innovation Authors: Paula Salomão Martins Universidade Federal de Juiz de Fora, MG Brasil Phone: Address: Rua Dr Dirceu de Andrade, 107/apt 402. Juiz de Fora, MG, Brasil. Zip Code: Thais Cristina Pereira Ferraz Universidade Federal de Itajubá, MG Brasil Phone: Address: Campus Prof. José Rodrigues Seabra, Instituto de Engenharia de Produção e Gestão. Itajubá, MG, Brasil. Zip Code: Luiz Henrique Dias Alves Universidade Federal de Juiz de Fora, MG Brasil Phone: Address: Rua José Honório Loures, 235. Juiz de Fora, MG, Brasil. Zip Code: POMS 23 rd Annual Conference Chicago, Illinois, U.S.A. April 20 to April 23, 2011 1 INTRODUCTION For the business world, innovation can not be regarded only as an opportunity to start a business, to grow an existing business, or even to survive. It also is a way to define the direction of the industry, business, or community where the organization operates. However, in every instance of dealing with the theme of innovation, whether for a new product, a new process, or even a new management practice, one faces the obstacle of development and implementation. According to Tidd, Bessant, and Pavitt (2008), a major problem in Brazil is that there are few companies that have accounted for the importance of the organization, deliberate and formally managed, of the process of innovation. According to the IPEA, in a study conducted in 2005, only 1,199 companies, in a population of over 72,000 companies - that is, 1.7% - could be regarded as innovative and having differentiated their products. Moreover, studies of product innovation, for example, point safely to a high rate of failure between initial concept and implementation and launch of a successful product to market. Current figures range from 30% to 95%; an acceptable average is around 38% (CRAWFORD, 1999). Not unlike the business world, in academia still very little is discussed and studied on the themes of Innovation and Innovation Management, in Brazil. And most of that knowledge is not yet widespread and well established among the researchers who could benefit from studies in this area (PEREIRA; MUNIZ, 2006 and FREITAS; GONÇALVES, CHENG, 2010). Evaluating opportunities in this scenario, this paper aims to talk about innovation development and its management in Brazil, presenting together a quantitative and qualitative study on the perceived importance of innovation, and the application of innovation management and development tools, by researchers from teaching and research institutions, and businesses. The work is part of a study conducted by Martins (2011). 2 INNOVATION Innovation is a broad topic that is being increasingly discussed in both the academic and the business context. As a result, various authors have distinct views on innovation, as seen in Table 1. Table 1 - Definitions of Innovation AUTHOR C.K. Prahalad (University of Michigan) Ernest Gundling (3M) Operational Policies FINEP Joe Tidd, John Bessant, and Keith Pavitt Innovation Management (2008) Joseph Schumpeter (economist) Michel Porter (The Competitive Advantage of Nations, 1990) Peter Drucker (Claremont University) (Innovation and entrepreneurship, 1985) Price Pritchett (Price Pritchett consulting) Richard Branson (DTI Innovation Lecture) Ronald Jonash and Tom Sommerlatte (consultants) Roy Rothwell and Paul Gardier (Invention, innovation, reinnovation and the role of the user, 1985) DEFINITION Innovation is the adopting of new technologies that increase the competitiveness of the company Innovation is a new idea successfully implemented, that produces economic results. Innovation is the successful introduction, in the market, of products, services, processes, methods, and systems that did not previously exist, or containing some new feature different from the standard in force. Innovation is something new that adds social value or wealth, is the development of new values that maintain or enhance the competitive position of a company (generating profit). What counts is the competition for new consumer goods, new technology, new source of supply, new type of organization... competition that... does not affect the existing companies' margin of profits and results, but their foundations and their very lives. Companies achieve competitive advantage through innovative actions. They approach innovation in its broadest sense, including both new technologies and new ways of doing things. Innovation is the specific tool of entrepreneurs, through which they exploit change as an opportunity for different businesses or services. It can be presented as a discipline, which can be learned, which can be practiced. Innovation is how we stay ahead of our environment. The innovations outside of our organization will happen 'when they want to' - ready or not. An innovative business is one that lives and breathes outside the box. It is not just good ideas, but their combination with a motivated team and an instinctive understanding of what its customers need. Innovation is a process of leveraging creativity to create value in new ways, through new products, new services, and new business. Innovation does not necessarily imply only the commercialization of technological breakthroughs (radical innovation), but also includes the use of changes in technological know-how on a small scale (incremental improvement or innovation). AUTHOR Steve Jobs (Former CEO at Apple) Tony Davila, Marc J. Epstein, and Robert Shelton The rules of innovation (2007) DEFINITION Innovation knows only one limit: your imagination. One who wants to win a prominent place must think in an original way, beyond the four corners of the office. Innovation need not be technology, it may be a new way of doing things with greater simplicity and efficiency, a different approach to the customer, a more elegant design line. Innovation is the power to redefine the industry Source: Simantob and Lippi (2003), Davila, Epstein and Shelton (2007), Tidd, Bessant and Pavitt (2008), and FINEP (2011). Regardless of the various ways to present the definition, it is clear that all the definitions are related to doing something new that generates profit and improves the competitiveness of the organization, creating benefits for society. 3 METHODOLOGY To develop this work, a survey study was conducted with twenty-seven companies, prominent in their business segments, and twenty Brazilian researchers. Questionnaires were administered that addressed various issues related to innovation and its management. Thus, it was possible to collect information about the main advantages obtained through the practice of Innovation Management. This study had two research units: companies and academic researchers that develop recognized innovative activity. In both cases, Brazilian organizations and researchers, or those having installations in Brazil, were analyzed. 4 RESULTS AND DISCUSSION 4.1 Companies surveyed Table 2 presents the companies interviewed and their industries. Since not all companies that participated in the survey authorized the disclosure of their names, they were identified by the letters X, Y, Z, and W. Table 2 - Companies interviewed and their sectors COMPANIES Altave Amsted Maxion Antares Acoplamentos ArcelorMittal Br Opportunities bymk (Fashion.me) Disk Caçamba Empresa X Empresa Y Empresa Z Empresa W GE Gerdau Instituto Inovação Kawá Indústria e Comércio Ltda. Marssetti Moagem de Minérios Ltda. Master Alimentos Ltda. Monity MRS Logística S/A Nanoita Ltda. Orbisat Indústria e Aerolevantamento S.A. Pragmatis Consultoria Prática Produtos SA Rodoviário Camilo dos Santos SiliconReef U&M Mineração e Construção S/A Usiminas Mecânica SECTOR Aerospace Railroads equipments Metalworking Steel plant Financial businesses Fashion Services of cleaning and construction Aerospace Consultant services Medical technology & Health Medical softwares Metalworking and others Steel plant Consultant services Footwears, Leather, Belts and Bags Mining Animal feeding Equipments of electronic security Railwais Innovations services Aerospace & Equipments of electronic security Businesses Consultant services Metalworking Logistics services Electronic Mining and Construction Railroads equipments and Metalworking Part 1 - General Approach to Innovation in the Enterprise Tables 3, 4, and 5 show the results obtained from the first questions on the questionnaire for the companies. Such questions are important to elucidate general themes of innovation in the organizations and the main advantages obtained by the company, in its practice. Table 3 - Innovation types developed in the companies TYPES OF INNOVATION NUM. PERCENT. Products and Services 16 59% Process 19 70% Business models 13 48% Other: Technological 2 7% Table 4 - Innovation Focus in the companies INNOVATION FOCUS NUM. PORCENT. Radical Innovation 7 26% Incremental Innovation 20 74% Table 5 - Advantages obtained through innovation ADVANTAGE NUM. PORCENT. Increased competitiveness of the company 23 85% Increased market share or entry in new markets 16 59% Improved financial performance 14 52% Reduction of production costs 17 63% Increase of the flexibility or of the production capacity 12 44% Increased productivity of the company 12 44% Differentiation of products / services offered 16 59% Increase of the quality of the products / services offered 12 44% Diversification of the products and services portfolio 9 33% Reduction of the environmental impacts or improvement of the health & safety 9 33% Fast adaptation to the changes demanded by the consumers or government 5 19% From tables 3, 4, and 5, one can see that the main type of innovation developed by the companies is process innovation, with major emphasis on incremental innovation. Regarding the advantages the companies obtained through innovation, the main one was the increased competitiveness of the company (85%), followed by the reduction of production costs (63%), increased market share or entry in new markets (59%), differentiation of products / services offered (59%), and improved financial performance (52%), with all the latter advantages leading to increase the first one. Part 2 - Tools for Innovation Management Tables 6 and 7 show the results obtained in questions relating to the use of tools or systems for innovation management (IM) by the companies, and the advantages obtained through the use of management tools. Table 6 - Use of IM tools by the companies Yes 12 44% Not 15 56% Table 7 - Advantages obtained using IM tools ADVANTAGES GAINED WITH OF THE USE OF TOOLS NUM. PERCENT Improved structuring of innovation process stages 6 50% Stimulated creativity and idea generation 7 58% Encouraged teamwork and cooperation 8 67% Improved knowledge sharing and storing 9 75% ADVANTAGES GAINED WITH OF THE USE OF TOOLS NUM. PERCENT Improved protection of the knowledge developed 2 17% Improved progress monitoring of the innovation process 6 50% Improved communication and service to stakeholders (with an interest in the 7 58% process) Improved monitoring of external changes (market, competitors, and science) 6 50% Improved financial performance of the innovation process 6 50% Reduced risks associated with innovation 6 50% Improved quality of products / services developed 10 83% Continuous improvement of processes and products / services 7 58% Guaranteed fulfillment of stages and requirements of the innovation process 3 25% Reduced environmental impacts of the innovation process 3 25% Other 0 0% From Table 6, it is seen that just under half of the companies surveyed use management tools in their innovation process, and for them, the main benefits generated by the adoption of these practices are the increased quality of products / services developed (83%), improved knowledge sharing and storing (75%), and the encouragement of teamwork and cooperation (67%). Part 3 - Complementary Aspects of Innovation Tables 8 and 9 show the results obtained on issues related to partnerships and the benefits obtained through them. Table 8 - Establishing partnerships Yes 20 74% Not 7 26% Table 9 - Advantages gained in establishing partnerships ADVANTAGE OF ESTABLISHING A PARTNERSHIP NUM. PERCENT Obtaining strategic advantage (leadership and learning) 14 70% Reduced R&D cost 11 55% Reduced R&D risk 10 50% Achieving economies of scale 5 25% Reduced time to market (development and marketing of new products) 9 45% Promotion of shared learning 10 50% Increase existing competencies 15 75% Incorporation of complex technologies and knowledge 11 55% Other: Access to qualified human resources 1 5% Thus, based on the data presented in the table above, the main advantages gained by companies through the establishment of partnerships are: increase in existing competencies (75%), strategic advantages obtained (70%), reduction in R&D costs (55%), and the incorporation of knowledge and complex technologies (55%). 4.2 Universities and Research Centers In relation to the educational institutions and research centers that are known to develop innovative activities, 20 institutions were evaluated. Table 10 lists the institutions that participated in the survey and their respective departments. Table 10 - Lists the institutions that participated in the survey and their respective departments. DEPARTMENT Department of Mechanical Engineering Department of Science and Technology Department of Production and Mechanical Engineering Electric power department Department of Electric Circuits CODAGEO Departamento de Educação Física I Vision Laboratory Department of Chemicals Bioinformatics and Animal Genômic Laboratory Building site department Department of pharmaceuticses Department of Biotechnology Department of Geology Department of Entomology Pró-reitoria de Graduação Department of Materials and Spectroscopy UNIVERSITY OR RESEARCH CENTER University of São Paulo -USP Southeast Federal Institute of Technology -MG Ouro Preto Federal Institute of Technology MG Federal University of São Carlos - UFSCar Federal University of Bahia- UFBA Embrapa Gado de Leite Universidade Católica de Brasília Federal University of Minas Gerais - UFMG National Institute of Research - Amazonia State University of Feira de Santana- Bahia Part 1 - General Approach to Innovation Tables 11, 12, and 13 present the results obtained from the first questions on the questionnaire applied to researchers from universities and research centers (RC). Such questions are important to elucidate general themes of innovation in laboratories and departments, as well as the main advantages obtained through innovation. Unlike the business environment, among researchers the main type of innovation developed is technological (usually associated with a new product, component, or system), but their focus, just like in companies, is mainly toward incremental achievements and minor improvements. Table 11 - Innovation types developed in the institutions or laboratories INNOVATION TYPE NUM. PORCENT. Products and Services 5 25% Process 6 30% Technological 13 65% Social and Sustainable 6 30% Other: Development of Methodologies and Modellings 1 5% Table 12 - Innovation focus in the institutions or laboratories INNOVATION FOCUS NUM. PORCENT. Radical Innovation 2 10% Incremental Innovation 10 50% The two previous answers 8 40% Table 13 - Advantages gained, by Universities or RCs and by Researchers, through innovation ADVANTAGES NUM. PERCENT National and international recognition of the institution and the researcher 11 55% Increased scientific and technological capacity/training at the national and 16 80% individual level Curriculum enrichment arising from individual's participation in the projects 11 55% Publication-patent generation (product development that can generate article 14 70% publication and conference participation, and royalties generated if patent secured) Establishment of partnerships (exchange of knowledge, information, and 18 90% experience between the parties involved in the projects) Obtaining practical results (having an immediate return of a product on the market, 9 45% cost savings, and other financial returns) Obtaining financial resources (through which to buy equipment, acquire grants, 14 70% hire qualified staff, etc.) Other 0 0% For the researchers, the main advantages obtained through innovation are related to the possibility of establishing partnerships for exchange of knowledge, information, and experience among those involved (90%), increased scientific and technological capacity/training at the national and individual level (80%), followed by generation of publications and patents, and obtaining financial resources (both 70%). Part 2 - Tools for Innovation Management (IM) Tables 14 and 15 present the results obtained in questions relating to the use of tools or systems of innovation management (IM) by the researchers, and the advantages arising from the use of management practices. Table 14 Use of Innovation Management (IM) tools Yes 3 15% Not 17 85% Table 15 - Advantages obtained with the use of IM tools ADVANTAGE NUM PERCENT Improved structuring of the innovation process stages 2 67% Stimulated creativity and idea generation 1 33% Encouraged teamwork and cooperation 2 67% Improved knowledge sharing and storage 2 67% Improved protection of the knowledge developed 2 67% Improved progress monitoring the of the innovation process 2 67% Improved communication and service to stakeholders (with an interest in the 2 67% process) Improved monitoring of external changes (market, competitors, and science) 0 0% Improved financial performance of the innovation process 1 33% Reduced risks associated with innovation 2 67% Improved quality of products / services developed 2 67% Continuous improvement of processes and products / services 0 0% Guaranteed the fulfillment of stages and requirements of the innovation process 1 33% Reduced environmental impacts of the innovation process 1 33% Other 0 0% Based on the data presented above, one can see that most of the researchers, for lack of familiarity with the tools, do not use management practices in their innovation processes, and, aligned with this, those using them (15%) perceive various advantages in adopting such tools. Part 3 - Complementary Aspects of Innovation The tables 16 and below show the results obtained in the questions relating to establishing partnerships, and their benefits. Table 16 - Partnerships established Yes 16 80% Not 4 20% Table 17 - Advantages in establishing partnerships ADVANTAGE NUM PERCENT Obtaining strategic advantage (leadership and learning) and recognition 8 50% Obtaining financial resources for research 12 75% Reduced R&D cost 4 25% Reduced R&D risk 3 19% Achieving economies of scale 1 6% Reduced time to market (development and marketing of new products) 5 31% Promotion of shared learning 11 69% ADVANTAGE NUM PERCENT Increase existing competencies 7 44% Development of complex technologies and knowledge 9 56% Incorporation of complex technologies and knowledge 6 38% Other 0 0% Thus, based on the data presented in the table above, for researchers the main advantages obtained by working in partnerships are: raising funds for research (75%), promoting shared learning (69%), the development of knowledge and complex technologies (56%), and gaining strategic advantages (50%). 5 CONCLUSIONS From the research results one can conclude that: 1) In accordance with the literature, companies see innovation as an important factor for increasing their market competitiveness, incrementally improving the quality of their products and processes, and creating strategic advantage over competitors. Such a view is in line with global aspirations for improved quality, reduced costs, and increased markets. 2) For the researchers, reflecting the culture of the Brazilian academic environment, the main benefits perceived are the possibility of accessing and disseminating the knowledge generated, and obt
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