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How to Build Innovation Centres?
Ján Košturiak, 20. 02. 2015

What’s Important – to Save or to Make Money?

During the company top management meetings we often solve disorders in production, production planning and control that do not work, missing material or employees who are not fully utilised in the warehouse or the tool shop. We know the standards do not suit us, people have reserves in the area of discipline, and maybe 50 % of the working hours are wastage which does not add any value. We know all of that and 90 % of our effort and time is spent on these activities. We call it "operative management” – solving problems which emerge suddenly. We curse it, however, we like it. We sometimes feel indispensable and very important when we are to solve urgent things.

And What about Important Things?

E.g.: What machinery will we use for creating value within five years? Which new solutions are being prepared by our customer? On which novelties are researchers working in our line of business? Which new technologies we do not know are approaching us from other lines of business? And what about new materials, technologies and applications we have heard something about, however, we have no experience with them? What opportunities is the world bringing – the things the experts call "transformation and metamorphosis”? All of them say that the best strategy is to be ready. But what are we to be prepared for? In the companies, when we discuss new trends and changes which are taking place enormously fast, a lot of people are speaking about a "bad era”. However, there is neither bad news nor bad time, there are only companies and people who miss appropriate information about changes in their business, they are not able to interpret it and have no knowledge for them to be able to respond adequately. In other words – they are not able to innovate – themselves, the processes, products and services. They have no time for their future.

 

Innovation Centres – Where to Start?

Each company needs an innovation centre today. It is no "Potemkin Village” or a theoretical and research Moloch which spends a lot of paper and money. It is a centre creating the future, a centre which processes information and snapshots from the "satellite map of the global business”. Each company contains two firms – that one which makes money (company of production) and that one which prepares the future business (the company of innovations). Which of them is more important? You yourselves find the answer – if it is your current life (survival) or a long, safe and quality life.


Let’s Answer a Few Basic Questions:

What an innovation centre should do?

  • To scan and assess the changes in the entrepreneurial environment – customers, competition, other lines of business, trends, new materials, technologies and business models, etc.
  • To prepare effective actions for changing the surroundings – utilising the opportunities and eliminating the threats
  • To create an innovation eco-system – the company’s surroundings, interconnection with experts in various branches, in the area of research and innovations, in the customers´ world, etc.
  • To prepare new entrepreneurial opportunities and innovation projects – ideas, prototypes and their implementation to business (see the figure 3)
  • To host workshops and lead innovation projects – organisation, methodology, training people, consultancy and coaching
  • The workshops with customers, recognising their environment, problems and expectations, creating long-term partnerships of innovation collaboration, improving the image in relation to customers
  • To prepare and test innovations in the prototype phase – feedbacks from the customers, fine-tuning the business models, quality, price, etc.
  • To get new deals up to the realisation phase together with the trade and marketing departments, technical department and production, etc.
  • To develop positive energy creativity and innovations in the company, to build a culture of freedom and collaboration, risk and error tolerance during the prototyping phase, attracting talents from the company surroundings instead of negative emotions and criticism.
  • To organise activities which support the innovation culture in the company – meeting with inspiring personalities, seminars, trainings, workshops, visits of other enterprises, etc.
  • To prepare materials and to collaborate on preparing and realising the company strategy
 

How an Innovation Centre Should Work? 

  • One full-time and skilled person with an entrepreneurial way of thinking and practical knowledge in the area of innovations, who is able to link various experts and specialisations, to build relations in external environment, to create networks, projects and project teams, is enough for an innovation centre. Don’t you have any person like this? We will prepare him/her at our Entrepreneurial University.
  • A CIO – Chief Innovation Officer or a Business Excellence Manager should belong to the company top management or should be at least subordinated to the CEO or the company owner. Besides building the innovation culture his/her task is to create an effective organisation and methodology of work for innovation projects – methodology and methods, there should be time for solving projects, training people, clear rules and metrics for the innovation assessment, etc.
  • It is good when the company has employees whose working hours include time determined for innovations – e.g. 15 – 20 % of the working hours. One part of this time period is determined for preparation and another part for meetings. The results of these activities are assessed, of course, in a different way than the work results in the "company of production”.
  • Approximately 50 % of employees in the framework of the innovation projects are people from the external environment possessing special knowledge (innovation experts, experts dealing with new technologies, materials, working methods, industrial designers, graphic designer, etc.).
  • When measuring results of the innovation centre we have to include here also the experiment phase which can bring failures, however, it brings knowledge and experience. Innovations also attract exceptional people and create a positive corporate culture.  

How to Start? 

  • To appoint a person who will be responsible for innovations.
  • To appoint an innovation team.
  • To define clear rules – time, competences and responsibility, assessment of results, etc.
  • To work out and master methodologies for the team to work effectively – how to scan opportunities, how to generate and choose ideas, how to prepare and test the prototype and business models, how to change the prototypes into successful deals.
  • To create an innovation ecosystem – a network of contacts, partners who possess knowledge, technologies, etc.
  • To define appropriate formats for building the innovation culture and DNA – positive inspirations, workshops, projects, seminars and discussions, conferences, intranet, manuals, visiting various companies, etc.

Where to Find Resources for Financing Such a Centre?

And where do we find resources for financing unnecessary activities which have never created any real value? Here we are speaking about the core of doing business and the enterprise – here we have to invest resources similarly as we invest into new machinery and technologies. After the start-up, within 2 – 3 years the centre is to be able to make money independently, if the company creates a suitable system of the "innovation tax from the value added”. I do not know any better investment than such an investment that creates an above-average value added, builds a competitive lead, reduces the entrepreneurial risk and develops knowledge, people and corporate culture from a long-term point of view. Of course, if the company creates an "innovation office” and employs there incompetent theoreticians or bureaucrats then it is an investment in vain. Similarly, if you find a skilled innovator for your centre and the company top management does not support him/her.

Let’s summarise some pros cons of creating an innovation centre:

Cons:

  • We do need any new departments (there are more than enough departments spending money and inventing stupid things) and moreover, we have no time to create them. As a matter of fact we innovate – which in other words means that we do our best to do what our customers want and from time to time we update our working methods and technologies.
  • Business goes on also without innovations.
  • When something new arrives, we adapt – in the same way as in the past.
  • Inventing new things slows down our pace; we need to concentrate on what we are just doing.
  • Let’s be honest – we are not in the mood to do anything and are only looking for excuses.

Pros:

  • We need to dig ourselves out of a business where we can compete through low prices only.
  • We would be happy if the company strategy was in our own hands and not in the hands of unpredictable customers.
  • We would like to attract demanding customers who are looking for exceptional solutions to our company.
  • We would like the best people to work in our company.
  • We want to be ahead of our competitors and to sell with a higher margin.
  • We are tired of copying what others are doing; we are motivated to do something properly.
  • We do not want to be unpleasantly surprised by the development we did not catch early enough - we want to make use of the turbulences and changes in the area of business.


John Fitzgerald Kennedy once wrote that problems of the world could not be solved by sceptics and cynics whose horizons were limited by the visible reality. We need men and women who are able to dream about things they have never done before. Kennedy thus was dreaming about things that had never existed before. And in the end he was assassinated by a murderer who was probably sent by sceptics and cynics. Those companies which are not able to dream about things that have never existed before and to realise them, will themselves kill them.

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