Systematic and creative – how innovations become a success
The transformation of ideas into innovation requires a confluence of factors, including the right people, ample funding, and a well-functioning innovation system. In this context, the role of a culture of innovation and effective innovation management becomes vital, particularly in the realm of innovation systems within small and medium-sized enterprises (SMEs). These challenges were scrutinized by a team of researchers at Stralsund University of Applied Sciences in cooperation with Steinbeis Transfer Center for Network Planning and Evaluation.
Innovation is a key success factor for companies. Given the large number of international and local challenges facing business, compared to large companies there is much more pressure on SMEs to react by developing and launching competitive products and services, or to remain flexible in the face of adversity, or to come up with ways to realign operations according to an ever changing Business Environment. Emphasized by Schumpeter (1), the significance of innovation in corporate development underscores the imperative for decision-makers in SMEs to transcend reliance on experience and intuition only. Instead, cultivating idea and innovation management systems, coupled with fostering a culture of innovation, emerges as a strategic imperative.
Ascribing to a culture of innovation and fostering creativity
This is about more than setting up an employee suggestion program (ESP), which focuses on occasionally (or often randomly) allowing staff to submit ideas. A culture of innovation is an attitude and mindset within the company that calls for and supports innovation and improvement, also creating a framework for change processes. A corporate culture that promotes innovation must be wanted, embraced, and believed in by managers.
It is important to establish an atmosphere and structure in which employees feel encouraged to come up with innovative ideas and implement them in a team. Idea management should be actively pursued and moderated, from problem recognition and idea generation through idea evaluation, idea selection, and project definition. This means that staff should be given space and time to inject life into the culture of innovation within the organization. To raise motivation among staff, incentive systems and other organizational tools can be put in place, such as formalized innovation management, employee suggestion programs, creative workshops, or innovation seminars.
It is also important that creativity is not left to chance, even if many ideas pop up spontaneously. There are already numerous moderation and creativity techniques [2] that can help with idea generation, or provide food for thought and foster creativity. These include the 635 Method, ABC lists, mind mapping, brainstorming, brainwriting, brainwalking, group discussions, as well as lesser-known techniques such as the Osborn Method, the morphological box, relevance tree analysis, and design thinking – a method currently lent particular importance. Teams look at a so-called problem space using clearly defined processes, which are repeated until an issue has been worked through to completion, from brainstorming to prototyping and testing. An essential aspect of design thinking is the change in perspective: Issues are analyzed from a customer or target group standpoint. [3]
Funding programs and research partnership – drivers of innovation
To Core with the necessity to innovate, it is important to recognize and systematically leverage potential within the company with a proactive culture of innovation and agile innovation management. If a company wants to develop, grow, and gear itself properly to future challenges, it must not stop at ideas. Innovations must be implemented for products, problem-solving, processes, workflows, and partner innovations. It is also therefore important to recognize and systematically exploit potential within the company by fostering a new culture of innovation and agile innovation management.
There is no doubt that SMEs are characterized by qualities such as speed, flexibility, and entrepreneurship. However, many small and medium-sized companies lack the financial, organizational, and human resources to run research programs on their own. This is why it is important for the government to offer SME and startup support programs targeted at innovation and research, as well as regional innovation strategies. The German Federal Ministry for Economic Affairs and Climate Action (BMWK ) promotes the innovation projects of SMEs through a variety of programs, which are open to a variety of topics and technologies. These funding programs place particular emphasis on future fields of technology and on technology that transcends different areas. [4]
Making good use of R&D funding programs and the support offered to startups helps boost innovation and the competitiveness of SMEs. It is important, however, not just to think about financial support. Assuming innovative capability is borne by the creativity, knowledge, competence, and willingness of individuals, groups, institutions, and networks to innovate – and SMEs only have limited resources to contribute to innovation and R&D projects – collaboration with research institutes and universities is always worth considering as a particularly appropriate approach to market-centric R&D.
Networking – It’s all about collaboration and cooperation
Partnerships and networks of any kind are always suitable instruments for boosting a company‘s performance. For three decades, researchers at Stralsund University of Applied Sciences and the Steinbeis Transfer Center have been intensively exchanging ideas with decision-makers in politics, local authorities, and business, also organizing joint publications and events on the regional economy and entrepreneurship. As part of a series of studies on the success factors of small and medium-sized companies, a paper on collaboration between SMEs and startups [6] published by Deloitte [5] examined whether both sides can get on with each other and benefit from one another. The answer: “Yes, but…” Since collaboration between the two sides is generally based on different objectives, unsurprisingly their final assessments are also different.
As with any change, some members of senior management and the workforce are certain to feel concerned and reluctant to tread new paths [7], which may be for tangible or emotional reasons. Typically, the primary obstacles faced by SMEs are a result of their size and resources. There is much to suggest that partnerships between “those in business suits and those from the startup scene” will work together well, especially when it comes to seeking impetus and exploring markets. If you are an established company, banking solely on traditional success factors is unlikely to be productive. This is because “investments in startups and partnerships with young companies can open new doors to innovative products, sales channels, and business models for SMEs expanding digital technology – and at the same time, help the founders of startups to move forward when it comes to reputation and market access. This viewpoint has been championed in practice for many years.” [8] Even if reservations do exist regarding collaboration, SME decision-makers should consider the extent to which such attachments open up the possibility of increasingly attractive alternatives to innovating completely on their own. Collaboration with a startup can range from non-binding project partnerships to investments in the startup or even a takeover.
Conclusion
There is no doubt that well-structured and organized idea and innovation management systems can enhance any innovation processes and, ultimately, contribute to the success of a company. They provide a framework for the systematic development and facilitation of innovation across the entire organization. This means that managers need to establish a culture of innovation that involves employees on an individual basis in order to establish a working environment and workplace atmosphere shaped by motivation, curiosity, and creativity.
Entrepreneurial undertaking is increasingly focusing on the role played by people, because it is the individual that brings in personal commitment that contributes to developing and shaping organizations. The decision-makers of companies should therefore never underestimate the potential of creativity deeply rooted in their employees. instead they should develop a sense of awareness about hidden talents and take opportunities to cut costs through effective idea and innovation management. To foster innovation, strong emphasis should also be placed on relationship management with all relevant stakeholders. [9] All kinds of networks and partnerships with research institutes, universities, schools of technology, and enterprises – as well as collaboration with startups – can offer German SMEs attractive options for dealing with dynamic market environments.
Contact
Prof. Dr. Norbert Zdrowomyslaw (author)
Freelance project manager
Steinbeis Transfer Center Network Planning and Evaluation (Stralsund)
Prof. Dr. Heiko Auerbach (author)
Professor of Entrepreneurship – Marketing – Sales
Stralsund University of Applied Sciences
Christian Wulf (author)
Site management
Assecor GmbH (Berlin/Stralsund)
References
[1] Cf. Schumpeter, J. A.: The Theory of Economic Development; Leipzig 1911.
[2] Cf. Freitag, E.: Creativity Techniques. How to find the right tool for your problem [German]; Tübingen 2020, Zipperle, J: Moderation techniques for problem solving and decision making. An implementation-oriented guide [German]; Saarbrücken 2013.
[3] Osann, I./Mayer, L./Wiele, I.: Design Thinking – A Quickstart [German], 2nd edition; Munich 2020.
[4] Cf. Zdrowomyslaw, N./Auerbach, H./Wulf, Ch.: The Role of SMEs as an Engine of Creativity, Innovation, and Technology. Expanding and fostering the potential of SMEs is a crucial challenge of modern times. In Steinbeis Transfer magazine 01/2023, pp. 44-47.
[5] Cf. Meyer, L.: Deloitte study on “Cooperation between SMEs and startups” from the series of studies on SME success factors [German]; March 2017. Most of the data looked at for this study originates from research projects conducted by the European Competence Center for Applied SME Research (EKAM) at the University of Bamberg and the Chair of Corporate Management and Control at Aalen University. Bamberger Betriebswirtschaftliche Beiträge: BBB Volume 238: Cooperation between SMEs and startups [German]; Becker, W./Ulrich, P./Botzkowski, T./Fibitz, A./Stradtmann, M.
[6] Use is already being made of the term “New Mittelstand” with reference to the startup scene. Cf. Zdrowomyslaw, N./Auerbach, H./Wulf, Ch.: Time for a New Way of Thinking – The Changing Nature of the Mittelstand. Steinbeis Transfer magazine 02/2023.
[7] Cf. Auerbach, H./Zdrowomyslaw, N.: Corporate Development and Management in Medium-Sized Companies. An A to Z of insights into business practice [German]; Greifswald 2023, pp. 32-53.
[8] Meyer, L.: Deloitte study on “Cooperation between SMEs and startups” from the series of studies on SME success factors [German]; March 2017, p. 8
[9] Cf. Zdrowomyslaw, N./Wulf, Ch. and project team: Beacons of the Mecklenburg-West Pomerania Economy. Creative and innovative companies, strategic networks, and clusters aimed at boosting regional value creation [German]; Greifswald 2021.
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