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Innovation ability of SMEs: a taxonomic approach Palacio Real de El Pardo Madrid 3 de octubre 2012 VIII Encuentro Cotec Europa

Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

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Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España. 3 de octubre de 2012

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Page 1: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Innovation ability of SMEs:

a taxonomic approach

Palacio Real de El Pardo

Madrid 3 de octubre 2012

VIII Encuentro Cotec Europa

Page 2: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

PercentagesSMEs

(0 - 249 empl.)

Big companies

(> 250 empl.)

• Italy 99.9 0.1

• Portugal 99.9 0.1

• Spain 99.9 0.1

• France 99.8 0.2

• Germany 99.5 0.5

• United Kingdom 99.6 0.4

• Main differential feature of IT, PT, ES: scarcity of big

companies

Size class distribution of European companies (I)

Source: SBS Eurostat, 2011

Page 3: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

• Even amongst SMEs

Size class distribution of European companies (II)

Microenterprises

(0 - 9 empl.)

Small & medium

enterprises

(10 - 249 empl.)

• Italy 94.6 5.3

• Portugal 94.6 5.3

• Spain 97.2 2.7

• France 92.3 7.5

• Germany 83.1 16.4

• United Kingdom 87.5 12.1

Source: SBS Eurostat, 2011

Page 4: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Source: SBS Eurostat, 2011

Size class distribution of European companies (III)

• This is important because productivity grows with

company size

,0

10000,0

20000,0

30000,0

40000,0

50000,0

60000,0

70000,0

0 - 9 10 - 19 20 - 49 50 - 249 >250

Gross Added Value per employee (€)

DE

ES

FR

IT

PT

UK

Page 5: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

• Innovation has a double effect on SME’s productivity:

• Increases their added value

• Fosters their growth, and a bigger size eventually increases their

productivity

• The current concept of innovation covers everything that citizens (consumer,

worker or entrepreneur) do to create new value using all kinds of knowledge.

• Up until now, this responsibility was only assigned to the company, and was

limited to knowledge from the natural sciences. So this new concept is called

"innovation in a broad sense"

• SMEs, founded by innovative citizens, have strong needs in marketing and

organizational innovations (non-technological), and because of their small size,

they can rarely allocate staff and resources exclusively to innovation. For this

reason, the concept of “innovation in a broad sense” is well suited to SMEs.

Innovation in SMEs

Page 6: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

A very general definition of "innovation in a broad sense"

well adapted to SME’s features

“Every

knowledge-

based

change,

generating

value”

In a company which

Refuses speculation

Searchs for opportunities

Tolerates failure

All kinds of knowledge: exact and natural sciences,

but also humanities and socioeconomics

Acquired from outside or internally generated both

by artisans as with R & D

Given by the market,

Anticipated by entrepreneur

Page 7: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

What do we need to know about "innovation in a broad sense"

• How do we generate and transfer the kind of knowledge

underpinning "non-technological“ innovations

• How innovation occurs when the company has no

formalized structures for this operation (innovation

implicit in productive activity)

• What are the different innovation behaviors of SMEs,

which are a very large and diverse group

Page 8: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Non-technological innovation (I)

Pending questions

• How to prepare the knowledge of the socio-economic

sciences to be useful for innovation? • In technological innovation we have the concept of "applied

research", which generates technology.

• How is this knowledge transferred to businesses,

especially SMEs?

• How to encourage this new type of "applied research"?

Page 9: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Non-technological innovation (II)

No answers yet

• There are very few known studies on this issue

• We have no references of seminal articles

• Cotec Spain is trying to find the way to stimulate the

generation of answers to these questions

Page 10: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Implicit innovation in productive activity (I)

Pending questions

• How does knowledge reach to the organization?

• Which factors lead SMEs to use it to innovate?

• How the innovation task-force combines his work with

other business functions in SMEs?

• Which are the key actors in the implicit innovation

process?

Page 11: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Implicit innovation in productive activity (II)

Searching for answers

• There are few and still very preliminary

• The European Commission funded the PILOT

project, addressing these questions

• The handed document includes an appendix

devoted to this project

Page 12: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Different innovation behaviors among SMEs

• This is one of the topics addressed this year by Cotec

Europe

• We have defined a model of "propensity to innovation

in SMEs"

• This model has been evaluated in more than 1 000

Italian, Portuguese and Spanish SMEs

Page 13: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Cotec model of SMEs propensity to innovate

Page 14: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Opt for

innovation

Innovation

appraisal

The innovative enterprise

Cu

ltu

re

Pla

nn

ing

Str

ate

gy

Acknowledge

as operation

Pe

op

le/

reso

urc

.

Pro

cess

es

Too

ls

Pro

d./

se

rvic

es

Eff

icie

ncy

Ca

pit

ali

zati

on

Model of SMEs propensity to innovate

Page 15: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

The Cotec model generation process (I)

1. Conceptual design of a model of innovation in a broad sense

2. Preparation of a questionnaire for big companies involved in the project:

a) 50 questions

b) Designed so that each question was answered by expressing their agreement

or disagreement on a scale from zero to one hundred

c) To be completed in a session following the techniques used for the EFQM

Excellence Model (European Foundation for Quality Management)

3. The answers were processed with advanced statistical techniques. Verification of

redundancies and definition of clusters

4. Checking the validity of the Cotec model in thirteen big corporations

First stage: Towards a general model for

innovation in a broad sense

Page 16: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

The Cotec model generation process(II)

1. Based on the information obtained on the redundancy and robustness of the

responses of large companies, a simple (true/false) questionnaire aimed at

SMEs with more than five employees was designed

2. First testing of the questionnaire in 45 SMEs

3. Analysis of the results with the same statistical tools: Definition of five clusters.

Repeating this survey in successive waves, reaching one thousand Spanish SMEs

4. Surveys to Italian and Portuguese SMEs

5. In all the polling process, the clusters consistency was checked

Second stage: Particularization for SMEs

Page 17: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Content of the questionnaire for SMEs

• The concern of management on the information flow of innovation within

the company and with their environment

• How often innovation issues arise in management meetings

• The relationship with suppliers, customers and the technology community

• The responsibilities assigned to staff

• The weight of innovation in the company's strategic objectives

• The budget structure of the company

• Awareness of public programs supporting innovation

• Systematic innovation processes in place

• External relations

• Accounting practices

• The concern for the innovative image of the company

Page 18: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

The five clusters of Cotec model

1. Consistent innovation

2. Latent innovation

3. Image innovation

4. Scarce innovation

5. No innovation

Page 19: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

OPT

OPERATEAPPRAISE

Cluster “No innovation"

Page 20: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

OPT

OPERATEAPPRAISE

Cluster “Scarce innovation"

Page 21: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

OPT

OPERATEAPPRAISE

Cluster “Image innovation"

Page 22: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

OPT

OPERATEAPPRAISE

Cluster “Latent innovation"

Page 23: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

OPT

OPERATEAPPRAISE

Cluster “Consistent innovation"

Page 24: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

STRATEGY

PLANNING

CULTURE

STAFF & RESOURCES

TOOLSPROCCESSES

PRODUCT APPR.

EFFICIENCY APPR.

CAPITALIZATION

C1 No Innov

C2 Latent

C3 Scarce

C4 Image

C5 Consistent

Average values of the nine innovation features on the five clustersTo

ap

pra

ise

Page 25: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

SMEs distribution in clusters (Three countries samples)

0% 5% 10% 15% 20% 25% 30% 35%

Italy (73)

Portugal (182)

Spain (983)

Consistent Innovation

Latent Innovation

Image Innovation

Scarce Innovation

No Innovation

Page 26: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

SMEs distribution in clusters (Different Spanish polls)

0% 5% 10% 15% 20% 25% 30% 35% 40%

Poll #3

Poll #2

Poll #1

Sample 983

Consistent Innovation

Latent Innovation

Image Innovation

Scarce Innovation

No Innovation

Page 27: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Usefulness of this model

• The model:

• Has proved its usefulness in assessing the propensity to innovate of a

particular SME

• Leads to a series of recommendations for each SME to decide which are

helpful in its particular case, to improve their position

• Confirmed that both self and expert-guided evaluations are possible

• The model should help to:

• Define business strategies

• Create specific policies for different clusters

Page 28: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Model availability

• Software for "self-evaluation“ based on this model has been developed

to be used via Internet

• "Events" for different applications were created and additional ones may

be created upon request

• There is an event created for general use, which can be accessed at

Directorate General of SME, Ministry of Industry, Energy and Tourism

website (http://www.ipyme.org/esES/CompetitividadEmpresarial/Paginas/Cotec.aspx)

• Once a company has completed the questionnaire, a report is sent by

email with the cluster where the company fits and the results in graphic

form (three and nine variables).

Page 29: Presentación VIII Cotec Europa 2012 - Juan Mulet, Director General Cotec España

Conclusion

• All countries are "SMEs countries", the important issue is getting

these SMEs bigger to be more productive

• Innovation is plainly using all kinds of knowledge to create value. Thus

we speak of "innovation in a broad sense"

• There are still many pending questions to fully understand

"innovation in a broad sense"

• It is possible to evaluate the innovative attitude of an SME. It is a first

step to help SMEs to have a better understanding of the innovative

process, so they can use it better to increase their competitiveness

• A more detailed understanding of SMEs innovation specificities will

help to design more efficient private and public policies