Imp³rove high value-consulting 2012


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Imp³rove high value-consulting 2012

  1. 1. ISSN 1830-7841 IMP³rove:HIGH-IMPACTINNOVATION Europe INNOVA paper n° 18MANAGEMENTConsulting services for SMEs Enterprise and Industry
  2. 2. Europe INNOVA is an initiative of the European Commission’s Directorate General Enterprise andIndustry which aspires to become the laboratory for the development and testing of new toolsand instruments in support of innovation with the view to help innovative enterprises innovatefaster and better. It brings together public and private innovation support providers such asinnovation agencies, technology transfer offi ces, business incubators, fi nancing intermediaries,cluster organisations and others.Legal NoticeThis publication has been produced as part of the IMP³rove action under the Europe INNOVAinitiative. Information on IMP³rove is available at The viewsexpressed in this publication, as well as the information included in it, do not necessarily refl ectthe opinion or position of the European Commission and in no way commit the institution. EUROPE DIRECT is a service to help you find answers to your questions about the European Union Freephone number (*): 00 800 6 7 8 9 10 11 (*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls may be billedMore information on the European Union is available on the Internet ( data can be found at the end of this publication.Luxembourg: Publications Office of the European Union, 2012ISBN 978-92-79-25007-1doi:10.2769/3826© European Union, 2012Reproduction is authorised provided the source is acknowledged.Printed in LuxembourgPrinted on elemental chlorine-free bleached paper (ECF)
  3. 3. Europe INNOVA paper n° 18 High-Impact Innovation Management Consulting Services for SMEs 2012  
  4. 4. TABLE OF CONTENTS1. Preface and Acknowledgements 42. Management Summary 6 2.1 IMP³rove as Basis for a European Model for Developing Innovation Management Capabilities 6 2.2 Further Developing the Market for High Quality Innovation Management Support Services 6 2.3 Establishing the IMP³rove - European Innovation Management Academy 73. Introduction 84. Emerging Demand in Innovation Management Consulting Services for SMEs 10 4.1 Innovation Management Consulting Services for SMEs: Still Strongly Needed 10 4.2 Addressing the SME Needs: Offerings of Innovation Management Service Providers 17 4.3 Creating Demand for Innovation Management Consulting Services 23 4.4 Success Factors for Meeting Demand 285. Meeting the Current Demand of SMEs for Innovation Management Consulting Services 30 5.1 The Dimensions of Innovation Management 30 5.2 Value-Driven Innovation Management Consulting Process 35 5.3 Access to Better Innovation Management Consulting Tools 40 5.4 Case Examples of Innovation Management Consulting Services 42 5.5 Conclusions from the Case Examples: IMP³rove Contributes to Effective and Efficient Innovation Management Consulting Support 766. Future Development towards Professionalization of Innovation Management Consulting Services for SMEs 81 6.1 Anticipating Trends for Better Innovation Management Consulting Services 81 6.2 Professionalization of Innovation Management Consulting Services 82 6.3 Outlook 847. Appendix 85 7.1 List of Contributors 85 7.2 List of Publications that Resulted from IMP³rove 87 7.3 List of IMP³rove Service Offerings 87 7.4 List of Abbreviations 101 7.5 List of Figures 102
  5. 5. 4 High-Impact Innovation Management Consulting Services for SMEs 1. Preface and Acknowledgements “Growth champions have better functioning innova- ing. To compensate for their time and commitment tion management systems – and better managing to IMP³rove, we have listed these organisations at innovation saves costs in enterprises.” - the insight the end of this report. May this listing establish from a database on Innovation Management and them as highly professional Innovation Manage- business performance of more than 3500 SMEs ment support providers and consultants and as can be condensed to that simple statement. true promoters of IMP³rove. Despite this Innovation Management consulting for The success of IMP³rove is based on the trust that small and medium enterprises (SMEs) is still a rath- companies, mainly SMEs, have in this approach to er young discipline. The IMP³rove project, estab- Innovation Management. They are willing to allow lished by the European Commission’s Directorate a glimpse into their operations and into the chal- General (DG) Enterprise and Industry to help SMEs lenges they are facing when it comes to Innova- manage innovation with lasting results, collected tion Management. We are most grateful for their insights into this sector for more than four years. trust in IMP³rove. Without their contributions, this Starting with the IMP³rove online self-assessment IMP³rove study would not have been feasible nor on Innovation Management for SMEs, it became could it demonstrate the versatility of the IMP³rove obvious very quickly that SMEs need support. First approach. In return, we hope that with the IMP³rove of all, they need assistance in completing the support services for SMEs, we can contribute to IMP³rove assessment. After receiving the IMP³rove their superior Innovation Management perform­ benchmarking report, they need qualified support ance and competitiveness. providers who can help derive the right conclusions and recommendations from the IMP³rove bench- IMP³rove also benefited from many extraordinary marking report. organisations that were willing to promote and disseminate Innovation Management services. We The IMP³rove network includes more than 500 would like to thank especially the EU’s Executive trained support providers across Europe and be- Agency for Competitiveness and Innovation (EACI) yond. This is a solid basis for an overview on the in Belgium, the European Association of Develop- various types of Innovation Management sup- ment Agencies (EURADA) in Belgium, F.A.Z. Institut port service providers and how they deliver high- in Germany, in Sweden impact support services. These organisations are, ( and Innovations- to some extent, pioneers and innovators because Manager in Germany. they adopted the IMP³rove approach as part of their consulting approach. Working with them we IMP³rove benefited not only from practitioners’ in- were able to learn about the challenges and needs sights, but also, to a large extent, from the con- in Innovation Management consulting. This experi- tinued support of the European Commission’s DG ence helped us to further develop IMP³rove sup- Enterprise and Industry. Reinhard Büscher and es- port services for professionals and assist IMP³rove pecially Sven Schade have strongly supported the network partners in marketing and delivering their development of IMP³rove from a project to the own Innovation Management support services. future IMP³rove – European Innovation Manage- Thus, IMP³rove developed from an online platform ment Academy. They took the vision developed for providing an Innovation Management assessment IMP³rove and provided the basis on which to build tool to what will be the IMP³rove – European In- with creative ideas, constant promotion and un- novation Management Academy in the future. This bureaucratic solutions to overcoming constraints organisation will offer a suite of value propositions and challenges. Lisbeth Bahl Poulsen helped pro- for Innovation Management. Key customers will be vide the required marketing material to communi- the Innovation Management professionals who are cate IMP³rove results. IMP³rove was supported by active in consulting, in public agencies, in academia the European Commission across directorates. Jörg or in the area of innovation financing. Lackenbauer from the European Commission’s DG Regio significantly supported the dissemination of Without the contribution and feedback of various IMP³rove in Hungary to ensure high-value consult- members of the IMP³rove network, the insights into ing services there in the future. Innovation Management consulting services could not have reached the depth and breadth necessary IMP³rove support services strongly depend on to show the level of professionalization that has the uninterrupted software platform. Our special been reached in Innovation Management consult- thanks go to Dirk Röhrborn, Tino Schmidt and the
  6. 6. High-Impact Innovation Management Consulting Services for SMEs 5support team at Germany’s Communardo, who en-sured that the IMP³rove platform was available forbetter Innovation Management support.Valuable feedback and recommendations for futuresupport services in Innovation Management alsocame from the IMP³rove Advisory Board. We wouldlike to especially thank Dr. Peter Noyes at the Uni-versity of Wales in Newport in the United Kingdom.He always had the right advice when it was mosturgently needed to move to the next stage.We are also grateful to our colleagues at A.T. Kear-ney, Fraunhofer IAO and the Agency for the Promo-tion of European Research (APRE), who supportedIMP³rove in many ways. At A.T. Kearney, our specialthanks go to Olivia Nowak, who never lost her can-do spirit, even when the workload seemed unman-ageable; to Branko Zibret, Robert Kremlicka, Tomis-lav Corak, Jochen Graff, Luca Olivari and BerndSchmidt, who ensured that IMP³rove gained visibili-ty across Europe; to Patricia Sibo and her team, whoensured that the IMP³rove publications met highprofessional standards; and to Benjamin Schultejo-hann and Deborah Kanthack for supporting the var-ious work streams of the project. Such a project’ssuccess depends highly on the background support.Therefore, we would like to thank Jörg Weinmannand Tanja Maly, who ensured that the financials metthe requirements of the European Commission’s Fi-nance Department; to Frank Schröder, who helpedmarket IMP³rove insights; to Stefan Berruti, whopaved the way for IMP³rove from a legal perspec-tive; to Petra Werner, Anja Mainzer and Heidi Wag-ner, who were most flexible in providing the meetingfacilities and hosting the participants of the vari-ous IMP³rove events; and to Andreas Thomé, FrankMoczala and Andreas Lindner, who always went theextra mile when trainings and IMP³rove events hadto be prepared. At Fraunhofer IAO, special thanks goto Hans-Jörg Bullinger, Joachim Warschat, YvonneSiwczyk, Cindy Rojas, Larissa Scheifele, Claus Pe-cha and René Schneider. At APRE, special thanks goto Diassina DiMaggio, who was and still is a strongpromoter of IMP³rove and of Innovation Manage-ment, and to Christin Pfeiffer, Martina DeSole andRocio Escolano.March 2012Dr. Eva Diedrichs Dr. Sabine BrunswickerDr. Kai Engel Theo Malcotsis
  7. 7. 6 High-Impact Innovation Management Consulting Services for SMEs 2. Management Summary Innovation in times of economic challenges means current best practices when striving for innovation taking risk in a risky environment1. With systematic and competitiveness. Innovation Management and true entrepreneurial skills these risks can be prudently managed for The IMP³rove Approach offers a holistic view on value creation. If Innovation Management is geared Innovation Management. It includes all dimen- to tangible business impact it helps companies sions of Innovation Management and addresses to grow faster than their competitors that do not all kinds of innovation not just product innovation. innovate at all or do not manage their innovation The IMP³rove Approach is applicable for all indus- projects effectively. This is proven by the IMP³rove try sectors and all types of enterprises, although it database, the various IMP³rove research results has a strong focus on SMEs. The comprehensive ap- and other (academic) research. 2 IMP³rove has de- proach as well as the high quality of the IMP³rove veloped service offerings to develop the Innova- tools and their versatility resulted in the up-take of tion Management capabilities on a European scale. the IMP³rove services by policymakers, Enterprise These services will be provided in the future by Europe Network partners, financial actors, aca- the IMP³rove – European Innovation Management demia and of course private consultancies in vari- Academy in response to the demand for better In- ous European countries and beyond. The IMP³rove novation Management support and to the need for Approach is perceived as the “gold standard” in In- professionalization of these services. novation Management support. The IMP³rove Approach has become part of the first 2.1 IMP³rove as Basis for European pre-standard on Innovation Management assessment. It is also congruent with the CEN Tech- a European Model for nical Specification that is currently developed on In- Developing Innovation novation Management System. Thus IMP³rove has Management Capabilities contributed to the development of a common Euro- pean approach to Innovation Management support IMP³rove has created the basis for a European mod- and a common market for Innovation Management el to develop the Innovation Management capa- support services. bilities in Europe. The IMP³rove Approach provides a comprehensive suite of Innovation Management support services for the different actors in the in- 2.2 Further Developing the novation eco-system. It combines Innovation Man- Market for High Quality agement assessment and benchmarking for SMEs with Innovation Management consulting services, Innovation Management with training and certification in Innovation Man- Support Services agement and in Innovation Management consult- ing. Many of these services are provided in different The market for Innovation Management support European languages to facilitate access to these services for SMEs in Europe is still rather frag- services for SMEs in the various European coun- mented. Many consulting companies – often small tries. Meanwhile more than 3000 SMEs across Eu- with only one or two employees – are rendering rope and beyond have benefited from the IMP³rove their services to SMEs. Each is using their own ap- Approach. They have benchmarked their Innovation proach. Therefore, it is not surprising that this mar- Management performance and gained valuable in- ket is rather in-transparent. A consistent European sights on the strengths and weaknesses that are approach to Innovation Management consulting as presented in the detailed IMP³rove benchmarking well as clear quality criteria will increase transpar- reports. Here the SMEs see the gap between the ency for SMEs, policymakers, financial actors and Growth Champions that set the benchmark, the av- for consultants themselves. It will also contribute to erage and their own Innovation Management per- the professionalization of these services. formance. These SMEs gained additional insights in 1 Marco Annunziata, Macroeconomic Perspectives, Global Trends in Innovation,2012 2 For IMP³rove research results see list of publications in Chapter 7.2; Gavin Cameron, Innovation and Growth: A survey of the empirical evidence, Nuffield College, Oxford, OX1 1NF, UK, 1998; GE Global Innovation Barometer 2012 confirms that innovation and growth are “inextricably linked,”
  8. 8. High-Impact Innovation Management Consulting Services for SMEs 7Consultants that have experienced the benefits of rope – creating jobs in an emerging service sector inthe IMP³rove online assessment are now asking Europe. IMP³rove will respond to this demand andfor a European approach to Innovation Manage- take the risk of innovation itself. The innovation willment consulting. Almost 500 consultants have be the IMP³rove – European Innovation Manage-been trained in the IMP³rove Approach and are ac- ment Academy.credited as IMP³rove Guides. They have the certifi-cate to support SMEs in completing the IMP³roveAssessments. Some of them have acquired suffi- 2.3 Establishing the IMP³rove -cient practical experience with the IMP³rove Ap- European Innovationproach and proved their Innovation Managementconsulting skills. They are already on their way to Management Academyobtain their certificate as IMP³rove Expert level I.This will give them the accreditation for conduct- The increasing demand for better Innovation Man-ing the consulting workshops under the IMP³rove agement support services comes from consult-brand. They will be eligible to render Innovation ants themselves, from policymakers, financialManagement consulting services to SMEs within actors, and last but not least from SMEs. Havingpublicly funded programmes that require proven experienced the benefits of a common EuropeanInnovation Management consulting expertise. approach to Innovation Management assessmentThese first movers see the benefits of continuous and support services as provided by IMP³rove thedevelopment of their own Innovation Management request for more such services on a European scaleconsulting skills and in differentiating themselves the market. The IMP³rove – European Innovation ManagementDemand for high-quality Innovation Management Academy will build on the achievements generatedconsulting services comes mainly from intrinsic during the IMP³rove project. It will further developmotivated SMEs and from policymakers and inter- the Innovation Management support modules andmediaries. The number of intrinsic motivated SMEs products by branding them as truly European, highthat request Innovation Management consulting quality and value-adding IMP³rove offerings thussupport – and are willing to pay for it – is still rather contributing to the professionalization of the In-small. However, once they learn about the differ- novation Management consulting services and theence in quality they will ask for better Innovation European Innovation Management support market.Management support services - and acknowledgethe value that they received. Stronger promotion of The transition from IMP³rove as a successful pro-these high value-adding services to all stakehold- ject to the IMP³rove – European Innovation Man-ers will contribute in further developing the market agement Academy as a sustainable business is anfor Innovation Management consulting. innovation. The success of this innovation will be based on the willingness of SMEs, policymakers,Demand for professional Innovation Management consultants, intermediaries, financial actors andconsulting services for SMEs is still very much stim- academia to adopt the IMP³rove offerings and con-ulated by publicly funded programmes. The qual- tribute to their further and continued development.ity of these programmes can be enhanced. Not the The past success of IMP³rove as a project is encour-number of SMEs reached should be the perform­ aging to take the next step towards the vision ofance criterion but the impact that the Innovation leading Innovation Management support services.Management support generated. High impact sup-port modules such as Innovation Managementbenchmarking, consulting, training, coaching andmentoring for continuous improvement of the In-novation Management capabilities have to be inte-grated in the public programmes and disseminatedon a European scale.Proven tools, training and certification with Euro-pean reach are the pre-requisite for the necessaryvalue creation of the public programmes and forcompetitiveness of SMEs in Europe. They are alsoessential for developing the European market forhigh quality Innovation Management support ser-vices. These can be exported to regions outside Eu-
  9. 9. 8 High-Impact Innovation Management Consulting Services for SMEs 3. Introduction IMP³rove – the initiative of the European Com- would require professional support for SMEs in mission, DG Enterprise and Industry – aimed at improving their Innovation Management perform­ improving the Innovation Management capabili- ance. Therefore, IMP³rove support services now ties and performance in Europe as a pre-requisite also include the consulting and coaching of SMEs for the competitiveness of Europe. This includes for better Innovation Management. To address the the improvement of the Innovation Management need for consistent support in Innovation Manage- of enterprises, especially small and medium sized ment, IMP³rove initiated trainings in the IMP³rove enterprises (SMEs) as well as the further develop- Approach in 2007 and in Innovation Management ment of professional support services in Innovation in general in 2008. This was the starting point of Management for these enterprises. the concept of the IMP³rove – European Innovation Management Academy. In 2010 the curriculum and In 2006 the IMP³rove project was launched with certification scheme of the IMP³rove – European the objective to provide an online self-assessment Innovation Management Academy was developed for benchmarking Innovation Management per- and implemented. This curriculum covers both In- formance. Very quickly it became obvious that novation Management and Innovation Manage- a thorough and value-adding assessment tool ment consulting topics. Figure 1: Short History of IMP³roveSHORT HISTORY OF IMP³ROVE • 2011 more than 3,000 SMEs have benefited from the IMP³rove Assessments and related services • 2011 almost 500 IMP³rove Consultants are trained in the IMP³rove Approach • 2010 IMP³rove has been adopted on all continents • 2009 he European Commission launched IMP³rove II with the aim to establish the IMP³rove – European Innovation t Management Academy and to develop a sustainability concept for IMP³rove • 2008 IMP³rove Assessment is a European pre-standard documented in the CEN Workshop Agreement CWA 15899 • 2008 IMP³rove receives the Europe INNOVA Award “Best Innovation Tool” • 2008 ore than 1,500 SMEs have successfully completed the IMP³rove Assessment and benefited from the IMP³rove m consulting workshops • 2007 the IMP³rove Assessment is available in 5 European languages • 2006 going live of the IMP³rove online platform • 2006 Initiated by the European Commission, DG Enterprise and Industry Lessons learned and insights from the develop- During the past years IMP³rove has developed ment and implementation of the various IMP³rove a comprehensive suite of Innovation Management services were published on a regular basis (see also support services for the development of highly ef- Appendix 7). All these publications are available for fective IMP³rove powered Innovation Management download at: ecosystems. sme/valuable-links/publications/.
  10. 10. High-Impact Innovation Management Consulting Services for SMEs 9 Figure 2: Overview of IMP³rove Innovation Management Support ServicesWith the IMP³rove – European Innovation Man-agement Academy the services developed withinthe IMP³rove project will be offered on a sustain-able basis. Thus the IMP³rove - European Innova-tion Management Academy will contribute to bet-ter quality of Innovation Management consultingservices across Europe and beyond on a continuedbasis. It will increase the transparency of the qual-ity of Innovation Management support services forSMEs. It also aims at further developing the marketfor Innovation Management consulting, coachingand mentoring. Experience during the last yearsclearly show that enterprises do gain competitive-ness if they can achieve better Innovation Manage-ment results either with professional support fromoutside or with better qualified internal resources.Hence the demand for high-quality InnovationManagement consulting services is emerging bothfrom enterprises as well as from the public sector.
  11. 11. 10 High-Impact Innovation Management Consulting Services for SMEs 4. Emerging Demand in Innovation Management Consulting Services for SMEs Innovation Management consulting services are ment consultants in improving Innovation Manage- crucial to increase the proficiency of Innovation ment in SMEs is well understood in many SMEs in Management in SMEs. In addition, innovation in Europe. For this reason, the intrinsic demand for In- SMEs has become more complex and requires a va- novation Management consulting services is not yet riety of managerial capabilities. As discussed in self-sustainable. Nowadays, the demand is often the following chapters, there is an emerging and created by other actors in the innovation ecosys- increasing need for high-impact consulting services tem, mostly by public support. High-quality Inno- for Innovation Management in SMEs. The following vation Management support services are therefore chapter describes how this demand emerges at the needed to effectively help enterprises improve their interplay of the variety of actors involved in the in- position and stay competitive. A high proficiency on novation ecosystem. First, it highlights the fact that Innovation Management and its support is there- SMEs need a systematic approach to Innovation fore critical. Management. Many SMEs do not yet fully under- stand the importance of Innovation Management 4.1.1 THE PERFORMANCE GAP IN MATURE as a driver of long-term competitiveness; there- SMES IN EUROPE fore, the average SME needs Innovation Manage- ment support. Second, we will describe different SMEs are the backbone of the European economy mechanisms that create the demand for Innovation in terms of job creation and economic growth. Eu- Management consulting services in the innovation rope’s SMEs are exposed to a range of competi- ecosystem, such as active promotion of free ser- tive challenges, such as globalization, increased vices via innovation policies. Third, we will provide research and development (RD) costs and con- detailed insight into the variety of services and ap- tinuously shortening development life cycles, just proaches offered by private and public consultants to name a few. SMEs in Europe do not just encom- to address the needs of SMEs for higher proficiency pass young SMEs; many European SMEs are family in Innovation Management and to increase demand owned and have been established for more than for Innovation Management consulting services. a decade. Existing trends in the Innovation Management con- sulting market also put pressure on private actors A closer look into the IMP³rove database highlights in the Innovation Management consulting market. that mature SMEs are less agile than young SMEs. To conclude, this chapter presents success factors They grow at a slower pace in terms of both income for meeting the emerging demand in Innovation and the number of employees, and they achieve Management consulting services. a lower profit margin than their younger peers. While young SMEs from the age group of two to 4.1 Innovation Management 15 years achieve an average income growth rate of 27.4%, mature SMEs that have been established Consulting Services for more than 15 years grow with an average yearly for SMEs: Still Strongly growth rate of 8.6%. In addition, they show lower Needed activity in innovation (see Figure 3). IMP³rove has provided the evidence3 that higher One might assume that these older SMEs have proficiency in Innovation Management helps SMEs achieved a level of size where, by nature, their outperform their peers in terms of profitable growth rate has slowed down. However, a closer growth. However, neither the impact of Innovation look reveals that a large share of older SMEs have Management nor the role of Innovation Manage- stayed small. 3 Insights in Innovation Management, EuropeINNOVA paper 10, 2008; IMP³rove II Innovation Management in High-Growth SMEs from the Knowledge-intensive Services (KIS): Setting the Pace for Growth in Europe, 2010; IMP³rovew II Study: Gaining Competitiveness with Innovations beyond Technology and Products: Insights from IMP³rove, 2011
  12. 12. High-Impact Innovation Management Consulting Services for SMEs 11 Figure 3: Average Yearly Firm Performance (Young versus Old SMEs in the Sample) Figure 4: Number of Firms per Size Class (Comparison of Young and Old SMEs in the Sample)
  13. 13. 12 High-Impact Innovation Management Consulting Services for SMEs As shown in Figure 4, more than 50% of SMEs Figure 5 highlights the growth gap between old and that have been established for more than 15 years young SMEs in the size class of five to 20 and 21 have fewer than 100 employees. More than 20% to 100 employees. SMEs with an age of 15 years of these older SMEs employ between five and 20 or younger in the smallest size class (five to 20 people. employees) grow with an average yearly income growth rate of 30.6 %. In contrast, the older peers Mature SMEs grow much more slowly. When com- of the same size class being older than 15 years paring the income growth of different sizes and age grow with a yearly growth rate of only 8.3%. The classes, IMP³rove highlights that mature and small same situation is prevalent for size class 21 to 100 SMEs with an age older than 15 years and with employees. Young SMEs in this size class grow at fewer than 100 employees show a much slower a rate of 24.1% while older SMEs that have been growth rate than their young peers with an age of established more than 15 years ago grow only two to 15 years of the same size classes. 8.1% in income per year. Figure 5: Income Growth across Different Size Classes (Comparison of Young and Old SMEs in the Sample) One might assume that the growth gap results from income from innovation of about 42%. On average, little innovation activity in mature SMEs. IMP³rove older SMEs generate a share of innovation income of reveals that mature SMEs do innovate and manage only 27%. Indeed, old SMEs cannot keep up with the to generate income from innovation launched no innovation agility of really young and small SMEs, longer than three years ago. However, their innova- which by nature generate most of their income from tion activity is lower than that of young SMEs. This innovations. Overall, IMP³rove data indicates that suggests that mature SMEs are struggling to link older SMEs are less active in innovation and achieve innovation to value growth and capture the value a lower income share from innovation across all size from innovation activities (see Figure 6). classes. Further, they have difficulties in linking their innovation to income growth and profit growth. Comparing SMEs with five to 20 employees high- lights that young SMEs―with an age between two Indeed, profit growth is a key issue for older SMEs to 15 years―show a much higher innovation activity that have been established for more than 15 years. than older SMEs that have been established for more In particular, older SMEs that have stayed small and than 15 years. Young SMEs achieve a yearly share of employ between five and 20 people achieve little
  14. 14. High-Impact Innovation Management Consulting Services for SMEs 13 Figure 6: Share of Income from Innovation across Different Size Classes (Comparison of Young and Old SMEs in the Sample)growth in profits. Although they have managed to 4.1.2 LACK OF SYSTEMATIC INNOVATIONsurvive and have become profitable, their growth MANAGEMENT IN SMESrate is rather low, so they have little financial bufferto reinvest and organically grow. Innovation studies 4 performed by the IMP³rove Global Coordination Team since 2006 revealed thatAs shown in Figure 7, young and small SMEs―the proficiency in Innovation Management allows SMEstypical start-up business―are struggling to survive. to achieve sustainable performance. Growth cham-On average, small SMEs with five to 20 employees pions―those SMEs that show a higher growth rateand an age of less than 15 years show a negative in terms of income, profit and number of employ-profit growth. In contrast, larger SMEs with an age ees―rely on systematic Innovation Management atbetween two and 15 years have achieved stability strategic, operational and cultural levels. To surviveand show a yearly profit growth rate of 4.7%. In in today’s highly volatile innovation landscape, SMEscontrast, older SMEs of the same size category― need to create a continuous flow of new ideas and21 to 100 employees―grow at a rate of only 1.2%. require managerial capabilities to turn these ideas into profitable growth. The IMP³rove publication inTo conclude, there is a significant performance gap 20115 highlighted that innovation in SMEs is not justin mature SMEs, especially in those ones that have about high-tech products and new technologies; in-stayed small over time and are from the two small- novations in services and new business models areest size categories: five to 20 and 20 to 100 em- just as important. There is empirical evidence of theployees. They are not in a competitive position. One interrelation of a systematic and holistic approachof the reasons is that they lack the capability to turn towards Innovation Management and profitabletheir innovation activities into profitable growth. As growth. To turn innovation expenditures into profit-shown in the following chapters, they lack the ca- able growth, SMEs need to address all dimensionspability to manage innovation and are flying blind. of Innovation Management at strategic, operational4 IMP³rove II Innovation Management in High-Growth SMEs from the Knowledge-intensive Services (KIS): Setting the Pace for Growth in Europe, 2010; IMP³rovew II Study: Gaining Competitiveness with Innovations beyond Technology and Products: Insights from IMP³rove, 20115 IMP³rovew II Study: Gaining Competitiveness with Innovations beyond Technology and Products: Insights from IMP³rove, 2011
  15. 15. 14 High-Impact Innovation Management Consulting Services for SMEs Figure 7: Yearly Profit Growth of Different Size Classes (Comparison of Young and old SMEs in the Sample) and cultural level including the innovation enabling their Innovation Management activities throughout factors. One of the key prerequisites for a system- the innovation value chain. Fewer than 40% of the atic Innovation Management is an innovation strat- SMEs in the IMP³rove database define project-spe- egy to guide a firm’s innovation activities. cific parameters, such as time to market or time to profit. An even smaller number of SMEs have a clear However, many of the laggards among European understanding of their performance regarding idea SMEs―those that have stayed small although management or formal processes for developing they have been established several years ago―are innovations. The lack of a systematic approach for not strategically managing their innovations. Only managing innovation is even more prevalent for a small percentage of older SMEs have developed innovations related to new business models or or- and documented innovation strategies that detail ganisational innovations. In 2011, fewer than 10% their roadmap for future growth through innova- of the SMEs had a formal process for developing tion. However, those SMEs that grow faster among process, organisational and business model innova- the laggards and achieve a higher income from in- tions. IMP³rove also highlights that SMEs regularly novation are more diligent in their innovation plan- struggle with systematically managing the front ning. Older SMEs that have been established for end of the innovation life cycle covering the genera- more than 15 years and have an innovation strat- tion and selection of new ideas. New ideas are usu- egy in place generally grow at a yearly pace of 9.5% ally generated in an unstructured manner and are in income growth. In contrast, those that are in the not guided by an overall innovation strategy. About “blind flight” and do not have an innovation strategy 70% of SMEs have not developed and documented grow only 5.8% on average. an innovation strategy (see Figure 8). IMP³rove database analyses provide further evi- 4.1.3 SHOWING SMES THE BENEFIT dence that a high percentage of SMEs really are OF SYSTEMATIC INNOVATION flying blind. They have no transparency about the MANAGEMENT AND INNOVATION impact of their Innovation Management activities MANAGEMENT CONSULTING and do not systematically engage in managing SERVICES their innovation activities. Many SMEs do not define specific performance indicators for individual inno- IMP³rove provides empirical evidence of SMEs’ vation projects and do not measure the impact of lack of a systematic approach towards Innovation
  16. 16. High-Impact Innovation Management Consulting Services for SMEs 15 Figure 8: Percentage of SMEs in the Sample with no Innovation Strategy (in %; Across Different Age Classes; Status as of November 2011)Management. In addition, discussions with associ- ing services for competitiveness. The importance ofated IMP³rove consultants underscore the lack of a systematic and holistic Innovation Managementawareness towards the importance of Innovation for SMEs’ competitiveness has to be highlighted.Management in SMEs. SMEs regularly believe that Discussions with IMP³rove partners suggest thatinnovation is about the success of one individual governmental innovation programmes are neededinnovation project. The “mental model” of innova- to sufficiently convey the relevance of Innovationtion that is dominant among SMEs is that innova- Management and Innovation Management con-tion is about one successful idea that has been sold sulting. They need to address the specific needs ofto one customer. SMEs do not pay attention to the SMEs. For example, the need for Innovation Man-importance of other dimensions of Innovation Man- agement consulting in young entrepreneurial firmsagement and the impact on a sustainable business differs significantly from that of established andperformance. Associated IMP³rove consultants family-owned organisations. The number of SMEsregularly report that convincing SMEs about the has to increase that have a deep understandingimport­ nce of a systematic approach towards In- a about the importance of Innovation Management.novation Management is not an easy task. IMP³rove They need to experience the benefit of externalconsultants report that currently only very few consulting support for SMEs that want to build theirSMEs are preparing action plans that allocate ef- internal capabilities for managing innovations withforts towards the development of managerial ca- sustainable impact.pabilities for innovation in the areas of innovationstrategy, organisation and culture, innovation life- The impact of external support service providerscycle processes and innovation-enabling factors. unfolds after the SME has gone through a struc- tured process covering the analysis of the SME’sHowever, this lack of awareness is not the result of Innovation Management and after it has receivedinsufficient information about the importance of in- the first consulting services. IMP³rove discoverednovation at SMEs. Discussions with IMP³rove part- evidence for this need for Innovation Managementners showed that SMEs increasingly receive infor- consulting while investigating the impact of the im-mation about innovation from a variety of sources, plementation of the IMP³rove consulting workshopssuch as media and conferences. This is only slowly in the so-called IMP³rove field test in 2008 andcausing a change in SMEs. It still needs to increase 2009. First, SMEs completed the online IMP³rovethe understanding of the importance of Innovation assessment with the support of a trained IMP³roveManagement and Innovation Management consult- consultant and received the IMP³rove benchmark-
  17. 17. 16 High-Impact Innovation Management Consulting Services for SMEs ing report. In a follow-up workshop, the IMP³rove These results underscore the value of high-quality consultant discussed strengths and weaknesses Innovation Management consulting services for with the SME manager and developed a high-level SMEs. These consulting services can significantly roadmap to improve the SME’s Innovation Manage- shape an SME’s business performance. The need ment performance. Indeed, many SMEs didn’t see for Innovation Management support regularly un- the full value of the external consultant when they folds after the SMEs have first gained experience started the journey towards a higher proficiency with consultants who take a holistic and systematic in Innovation Management. However, short-term perspective toward Innovation Management―thus feedback after the first consulting workshop uncov- creating value for the SME. ered the benefit of external support for Innovation Management. Nearly all 829 SMEs that provided Interviews of consultants associated with IMP³rove short-term feedback stated that the consultant had support the need of SMEs for professional support customized the services to their needs. in Innovation Management. A survey of IMP³rove consultants associated with IMP³rove performed In addition, only 10% indicated that they would in 20116 indicates that more than 80% of consult- not continue to work with the consultants. In other ants who participated in the survey consider Innova- words, more than 800 SMEs saw the potential for tion Management a very valuable service for SMEs. continuing the collaboration with an external ad- However, these consultants also reported that SMEs visor. Some SMEs also participated in a long-term are rarely willing to make a financial investment in evaluation of the impact of the consulting services Innovation Management consulting services. Even if after 12 months. Out of 94 SMEs that assessed their SMEs invest in support services, they tend to use only Innovation Management performance via IMP³rove a little of their own money (service fees equalling the and were supported by an IMP³rove consultant, 74% workforce costs of less than four working days). showed a highly positive response towards the im- pact of Innovation Management consulting services. 4.1.4 EXTRINSIC DEMAND FOR INNOVATION One year after the completion of the IMP³rove con- MANAGEMENT SUPPORT IN SMES sulting workshop, they stated that the recommen- dations of the IMP³rove consultant had a significant The need for Innovation Management support ser- impact on their company’s business (see Figure 9). vices is indisputable; however, there is only very Figure 9: Perception of Short-term and Long-term Impact of Innovation Management Consulting by SMEs (IMP³rove Database; Status as of October 2009) 6 IMP³rove online survey in 2011 based on 35 consultant feedbacks, performed by the IMP³rove Global Coordination Team
  18. 18. High-Impact Innovation Management Consulting Services for SMEs 17little intrinsic demand for Innovation Management the demand for Innovation Management supportconsulting. Public actors and public agencies try services is triggered externally. For example, servic-to stimulate demand for Innovation Management es such as an Innovation Management assessmentconsulting because they are aware of the need for to analyse the Innovation Management capabilitiesprofessional Innovation Management in SMEs. In- of SMEs are a mandatory element in the applicationdeed, publicly supported activities and public pro- process. In France, two public institutions use thegrammes in the area of SME innovation play an in- IMP³rove services in the decision processes for allo-creasing role in stimulating demand for Innovation cating grants for innovation projects to knowledgeManagement consulting. intensive SMEs in the energy sector.Discussions with IMP³rove partners highlighted that Because of the importance of public support in themany privately owned consultants see public grants area of Innovation Management consulting in SMEs,as an important trigger for winning assignments some of the IMP³rove-associated consultants take anwith SMEs. Publicly supported Innovation Manage- active part in the discussion in policymaking in thement consulting services offer SMEs the opportunity area of regional, science and technology or enterpriseto benefit from these services―usually limited to policy. Consultants from various countries suggesta small number of consulting days―without invest- an integration of Innovation Management support ining the SMEs’ own money. Thus, consulting services public support programmes, such as via innovationon Innovation Management that are publicly sup- vouchers. Such policy measures can address the needported are more regularly requested. The IMP³rove for Innovation Management support in SMEs.project revealed that there is a range of regional andnational programmes that offer free or subsidizedInnovation Management consulting services. Public 4.2 Addressing the SME Needs:actors offer these subsidized Innovation Manage- Offerings of Innovationment consulting services for at least two reasons:First, SMEs may become aware of the importance of Management ServiceInnovation Management and take action in the area Providersof Innovation Management. Second, these free con-sulting services may also present an opportunity for IMP³rove highlights a variety of consulting servicesSMEs to request follow-up consulting services. For in the area of Innovation Management that addressexample, a free-of-charge assessment and a first SMEs’ need for Innovation Management consult-follow-up consulting workshop have triggered SMEs ing. These services are offered by both private andto invest time and, depending on the design of the public organisations. Recent trends in the area ofsupport policy, also money for follow-up Innovation Innovation Management consulting services showManagement consulting services. that publicly supported organisations become more active and move from awareness-building towardSome public agencies go one step further and in- impact-oriented Innovation Management consult-clude Innovation Management support services in ing services―a trend that puts privately ownedprogrammes and public grants for research and consultancies under pressure to move further todevelopment activities or other project-specific high-value consulting services that are of high value for SMEs.Many SMEs regularly seek access to financial sup- 4.2.1 THE VARIETY OF SERVICEport for individual innovation projects.7 Policymak- OFFERINGS OF INNOVATIONers combine these support programmes designed MANAGEMENT CONSULTANTSfor individual innovation projects with measuresto increase the proficiency in Innovation Manage- Organisations that provide Innovation Managementment of those SMEs applying for project-focused support services to SMEs are very diverse and of-innovation support. This ensures that public money fer a vast array of services. They vary in terms ofspent in the area of research and development is size, age and areas of expertise and in the tools andactually turned into value. Thus, in some new public methods they use. The IMP³rove network showsprogrammes in countries such as France, Hungary that trade associations, chambers of commerce,or Ireland, SMEs are required to provide evidence of regional business development agencies, researchtheir proficiency in Innovation Management before institutes, business schools and others are also ac-they receive funding for their RD projects. Here, tive in Innovation Management support services. Topics with highest consulting demand on RD and innovation activities by SMEs based on the results of the DIHK innovation7 report 2010
  19. 19. 18 High-Impact Innovation Management Consulting Services for SMEs About 600 innovation support service providers are and classify as other special services in Innovation associated with IMP³rove. Services offered by these Management. Examples of these special services, organisations can be classified as follows: which were mentioned more than once in the ser- vice profile of associated IMP³rove partners, are • Innovation Management consulting servic- business modelling and business development, es, consisting of special and targeted inno- training and coaching, market research, Innovation vation support services, such as consulting Management software development and informa- for improving the SME’s innovation strategy, tion management, technology management and innovation organisation and culture and in- quality management. These lists underscore the novation life cycle management processes diversity of service offerings included in Innovation • Innovation enablers, which include offer- Management consulting. ings regarding expertise on specific top- ics that enable innovation targets to be Figure 10 provides an overview of services offered reached: project management related to by consultants that are registered on the IMP³rove innovation projects, financing, human re- platform based on their individual profiles. “Innova- sources, and risk management, intellectual tion strategy” is the most dominating service offer- property rights, knowledge management ing among the IMP³rove consultants. Out of 568 • General management consulting services, consultants, about 70% state that they offer inno- focusing on business planning, strategic vation strategy consulting services in their service planning, controlling, organisational and portfolio. 8 This suggest that consultants consider cultural issues innovation strategy an important area in which they have built expertise over time and where they see In addition, associated IMP³rove partners present a great need and opportunity for future demand additional fields of activity in their service profile (or demand creation) in Innovation Management in that complement these three groups of services SMEs. Given the results from the IMP³rove database Figure 10: Distribution of Consulting Services of IMP³rove Consultants as percentage of 568 Associated Consultants (IMP³rove Database; Status as of September 2011) 8 IMP³rove Core Team 2011; from a total number of 568 consultants registered in the IMP³rove platform
  20. 20. High-Impact Innovation Management Consulting Services for SMEs 19showing less than 30% of SMEs having an Innova- 4.2.2 PRIVATELY OWNED INNOVATIONtion Strategy, there certainly is a need. In contrast, MANAGEMENT CONSULTANTSonly 20% of the IMP³rove consultants show exper- UNDER PRESSUREtise in the area of intellectual property rights. The landscape of Innovation Management sup-In addition, associated IMP³rove partners present port covers both privately owned and public ser-additional activities in their service profile that vice providers. IMP³rove shows that there are alsocomplement the above mentioned three groups of hybrid forms among Innovation Managementservices and classify as other special services in In- support organisations, such as public-privatenovation Management. partnerships and non-profit organisations. In ad- dition, intermediary organisations have becomeFigure 11 provides an overview of other services of- active in the area of Innovation Management sup-fered by Innovation Management service providers. port and consulting services. A closer look into theThey range from areas such as change manage- IMP³rove-associated network partners revealsment to corporate finance and business modelling. that private consultants are under pressure. Pub-At the same time, it highlights the fragmentation of lically supported consultants and intermediary or-Innovation Management consulting services and of ganisations are changing their services portfoliothe terminologies used to describe different service and actively entering the Innovation Managementofferings. consulting business. Figure 11: Other Fields of Activities of Associated IMP³rove Consultants (Based on 568 consultants; IMP³rove Global Coordination Team; Status as of September 2011)
  21. 21. 20 High-Impact Innovation Management Consulting Services for SMEs As shown in Figure 12, 84% of associated IMP³rove offerings of 568 associated IMP³rove consultants, consultants classify themselves as privately owned data reveals a high similarity among both groups. consulting companies. The remaining 16% repre- This highlights that private and public support con- sent a mix of public organisations and non-profit sultants compete with similar service portfolios. support service providers, such as research organi- Assuming that many publicly supported organisa- sations, trade associations, chambers of commerce, tions offer their services at a lower price (or even technology transfer centres and universities. for free), private consultants can hardly compete on price and need to focus even more on value- A closer look reveals that the line between private creating services to win clients (see Figure 13). and public is blurry. When looking into the service Figure 12: Distribution of IMP³rove Consultants across Different Organisation Types (IMP³rove Database; Status as of September 2011) In addition, intermediaries active in the area of represent public organisations; 39% are privately technology and innovation―such as chambers owned organisations, such as private associations, of commerce, technology transfer centres, clus- private business schools and knowledge institu- ter organisations, industry associations, innova- tions; 14% are privately owned but receive public tion and regional development agencies and many funding from governmental sources. Thus, 60% of more―have moved from information services and IMP³rove intermediaries are publicly supported or- awareness-creating activities toward innovation ganisations (see Figure 14). support and consulting services for SMEs. However, these intermediaries are regularly publicly sup- Intermediaries associated with IMP³rove offer vari- ported and usually do not perceive themselves as ous support services for Innovation Management consultancies. and in related topics, such as technology transfer and networking. Out of 81 organisations that are registered as intermediaries on the IMP³rove platform, 47%
  22. 22. High-Impact Innovation Management Consulting Services for SMEs 21 Figure 13: Service Profile – Comparison of Private versus Public Organisations9 (IMP³rove Global Coordination Team, Status as of September 2011) Figure 14: Classification of IMP³rove Intermediaries by Type of Organisation (Status as of September 2011)9 IMP³rove Core Team 2011; Based on 568 consultants registered in the IMP³rove platform
  23. 23. 22 High-Impact Innovation Management Consulting Services for SMEs Figure 15, 75% of the registered IMP³rove inter- in transferring technological knowledge, methods mediaries consider Innovation Management sup- of manufacturing or skill transferring to different port services as their main field of activity. In this types of organisations such as SMEs, universities field, they report a strong expertise in innovation and governmental entities with the goal of ensuring assessments, trainings and workshops in Innova- further scientific and technological developments. tion Management, as well as innovation financ- To support them in the start-up phase of their new ing. The second most important field of activity of venture, 57% of intermediaries offer services to these intermediaries is technology transfer. Here, knowledge-intensive or technology-oriented start- 67% of intermediaries report a strong expertise ups such as workshops and trainings. Figure 15: Services Offered by Intermediaries based on the IMP³rove Platform (Status as of September 2011) Figure 16: Services Offered by Intermediaries by Type of Organisation based on the IMP³rove Platform (Status as of September 2011)
  24. 24. High-Impact Innovation Management Consulting Services for SMEs 23As shown in Figure 16, 87% of public organisa- Surprisingly, workshops and trainings seem to playtions among the IMP³rove intermediaries offer In- a rather limited role in most countries, except fornovation Management support services. Interest- Finland, which scores highest in workshops andingly, only 63% of intermediaries that are privately trainings for knowledge-intensive service compa-owned state that they are offering support services nies and for Innovation Management the area of Innovation Management. Publicly These workshops and trainings are powerful meanssupported intermediaries show a higher activity in of creating awareness and educating SME manag-services for entrepreneurs and start-ups: 74% of ers to understand how Innovation Management ispublicly supported intermediaries associated with influencing their business performance (see Fig-IMP³rove offer trainings and workshops for entre- ures 17, 18 19).preneurs, while only 41% of private intermediariesoffer start-up support. Analysing this overview of services offered by in- termediaries is often driven by public programmesThese results underscore that intermediaries have as well as by the strategic objectives that theserealized that Innovation Management consulting organisations have. Competition among variousservices are crucial for SMEs in Europe. Thus, they Innovation Management support service providershave moved away from concentrating on tradition- should yield higher service quality and thereforeal intermediary services, such as information days higher impact on the innovation performance andand networking in the area of technology transfer, competitiveness of the SMEs as the beneficiariesand take a more active position in Innovation Man- and customers for these services. It is expectedagement support. In particular, publicly funded in- that high value-adding will increase SMEs’ demandtermediaries have the opportunity to address the for these innovation support services.need for Innovation Management consulting viafree-of-charge services offerings. 4.3 Creating Demand forIMP³rove covers intermediaries from various coun- Innovation Managementtries. One might assume that, in some countries,intermediaries might have more actively shifted Consulting Servicestowards Innovation Management support serviceswhen compared to other European countries. A IMP³rove provides insights that indicate key play-large proportion of IMP³rove intermediaries can ers in the innovation ecosystem can increase thebe found in France, Spain, Finland, Germany, Italy demand for Innovation Management support. Thereand the United Kingdom. Data from the IMP³rove are very different sources: investors and customersdatabase indicate that intermediaries in Finland, of the SMEs, competitors or innovative policies forItaly and Germany are very active in Innovation Innovation Management support. Role models of anManagement support services. In these countries, industry and frontrunners in the SME’s business canthe pressure on private consultants is high. Here, also create the demand for Innovation Managementintermediaries can offer subsidized services in the consulting in order to catch up with the leaders.area of Innovation Management consulting, andthus, they can stimulate and impose the demand 4.3.1 FINANCIAL ACTORS CREATINGfor Innovation Management consulting. In addition, DEMAND TO STRENGTHEN THEIRintermediaries can leverage their existing relation- PORTFOLIOships with their SMEs and offer customized Innova-tion Management consulting services. Financial actors strive to increase the value of their investments. Innovation Management is a keyIn all countries, Innovation Management support driver for achieving this value growth. In the past,services score very high. In Finland, the focus on financial actors relied on traditional measures suchInnovation Management workshops is very high; in as cost cutting and financial engineering to achieveItaly, the network services play a major role. There, value growth. In recent years, IMP³rove has shownhowever, Innovation Management workshops are that financial actors begin to understand the val-less frequently offered by intermediaries. In the ue of Innovation Management as a growth driver.United Kingdom, the intermediaries put strong One of the key objectives of financial investors isemphasis on Innovation Management support, in- to increase the value of their investment. There-novation assessments and technology transfer. fore, Innovation Management becomes a powerfulGermany has a more equal spread across the vari- lever when managing the investment portfolio forous services. In all countries, innovation financing increasing value. Financial actors are seeking pro-offered by intermediaries ranks rather low. Spain fessional support to develop their portfolio compa-shows the highest percentage with 11%. nies. Innovation Management consultants become
  25. 25. 24 High-Impact Innovation Management Consulting Services for SMEs Figure 17: Distribution of Services by Intermediaries by Country (IMP³rove Database; Status as of September 2011)
  26. 26. High-Impact Innovation Management Consulting Services for SMEs 25 Figure 18: Overview on Intermediaries’ Support Services with Explicit Focus on Innovation Management; Figures in Percent of Intermediaries Offering this Service (IMP³rove Database; Status as of September 2011)important partners in the various phases of the for high-impact Innovation Management consultinginvestment cycle. During due diligence, a consult- services. Access to qualified Innovation Manage-ant can use the IMP³rove assessment to assess ment consultants helps investors reduce their in-the potential for value creation from better Inno- vestment risk.vation Management. Once the company has beenintegrated into the investor’s portfolio, the Innova- IMP³rove has provided some case examples oftion Management consultant can help exploit the the value of Innovation Management consultantsvalue potential. It is an extrinsic demand at SMEs for portfolio and fund management. In one case,
  27. 27. 26 High-Impact Innovation Management Consulting Services for SMEs Figure 19: Overview on Intermediaries’ Support Services without Explicit Focus on Innovation Management; Figures in Percent of Intermediaries Offering this Service (IMP³rove Database; Status as of September 2011) a German financial actor applied IMP³rove to sup- gic partners for innovative value propositions was port the management of its mutual investment defined as an important measure to create value. fund. With the support of an accredited IMP³rove Concrete action plans were developed in partner- consultant and expert in Innovation Management, ship with the IMP³rove consultant in order to grow strengths and weaknesses of the SME’s Innovation the firm of the investment fund. In this case, the Management were revealed. For example, results investment fund created the demand for external showed that the SME lacked the capability to in- Innovation Management consulting services for the novate and would need a solid stream of innovation SME. Another case example where financial inves- that must come from both external and internal tors were involved is presented in Chapter 5. resources. Leveraging the capabilities of strate-
  28. 28. High-Impact Innovation Management Consulting Services for SMEs 27For financial actors IMP³rove offers support in rently looking for new solutions. During the com-identifying innovative SMEs and in improving the pletion of the IMP³rove assessment, the customerInnovation Management capabilities of the SMEs. also learned about the supplier’s Innovation Man-These SMEs might apply for loans or financial in- agement processes, and where they could providevestment. They might be already in the portfolio of new ideas in the idea management process of theirthe financial actor or become part of the portfolio. suppliers, deepening the supplier/customer rela-For financial actors it is of value to know whether tionship. The role of the Innovation Managementthe SME qualifies as innovative company for which consultant in a supplier IMP³rove assessment is toguarantee programmes are available to reduce the facilitate the process, manage expectations and toinvestment risk for the financial investor. ensure a constructive discussion on innovation top- ics where both parties will benefit from.Financial actors can also directly manage theirportfolio via the IMP³rove platform and also invite For supplier-driven Innovation Managementan IMP³rove trained consultant to perform an as- IMP³rove offers support to enterprises who wish tosisted IMP³rove Assessment with one of their port- evaluate their supplier base in terms of Innovationfolio companies and provide Innovation Manage- Management capabilities. This supplier Innovationment consulting services to the portfolio company. Management assessment can be performed for ex- isting suppliers or for potential suppliers.4.3.2 SME CUSTOMERS CREATING DEMAND TO IMPLEMENT 4.3.3 POLICYMAKERS STIMULATING INNOVATION IN THE VALUE CHAIN DEMAND BY INCREASING THE PROFICIENCY OF INNOVATIONIn many industries, SMEs are not directly exposed MANAGEMENT CONSULTINGto the end consumer but are positioned at the frontend of the value chain. Often, the SMEs’ custom- As pointed out above, policymakers play a crucialers are large clients. In the past, these large firms role in stimulating the demand for Innovation Man-were perceived as the dominant force in innovation. agement consulting and support services. Recently,Today, we see a shift toward the locus of innovation public programmes pay more attention to mana-along the value chain. When innovating, large firms gerial aspects of innovation. For example, theyreduce their own innovation efforts and purposely include Innovation Management in the applicationinvolve other actors up and down the value chain. process for research and development grants toThey move from “build to print” to “collaborate to ensure that project-related funding is allocated toinnovate.” As a result, the nature of existing and SMEs with a high proficiency in Innovation Manage-new supplier relationships has changed. In the past, ment. IMP³rove has highlighted that the impactrelationships were characterized by transactions; and success of such public support programmestoday, relationships are more about innovation. Be- also hinges on the mechanism to select the rightcause innovation is more risky and uncertain, man- external consultant and support service provider.agerial capabilities of innovation are important. As In addition, the qualifications of the support ser-a natural step, SMEs’ customers pay more attention vice providers that are entitled to act as Innovationto the Innovation Management capabilities and re- Management consultants influence the impact ofquest SMEs to be proficient in managing innovation the public strategic, operational and cultural level. As partof their supplier and partner management, they ask The implementation of Innovation Managementfor transparency of the SME’s Innovation Manage- processes in SMEs requires that the right approach-ment performance and continuous improvement of es be carried out by Innovation Management con-the SME’s Innovation Management. External and sultants who have both the expertise and the rightin-house Innovation Management support and con- tools. The consulting service providers need to be atsulting plays an important role in providing trans- least T-shaped. Specialized knowledge in a specificparency and helping the SMEs continuously im- area of Innovation Management, such as innova-prove their Innovation Management performance. tion financing or other innovation enabling factors, is not enough. General knowledge in all dimensionsThe IMP³rove assessment has been successfully of Innovation Management – ranging from strat-applied in evaluating suppliers’ Innovation Man- egy, organisation and culture, innovation lifecycleagement. Both, the SME supplier and the customer processes and enabling factors to innovation re-gained new insights on the strategic focus in In- sults – is required and should complement theirnovation Management as well as in operational ac- specialized expertise. In addition, consultants whotivities. In one case example the customer better work with SMEs must be proficient in designing andunderstood the areas where their supplier is cur- delivering consulting services in an impact-oriented
  29. 29. 28 High-Impact Innovation Management Consulting Services for SMEs manner. Solving problems in Innovation Manage- to work with an external Innovation Management ment is not a trivial task and requires capabilities consultant may also result from good practice ex- in systematic problem-solving, in consultant rela- amples in a related industry. Indeed, manufactur- tionship management and the ability to customize ing firms can be inspired to take action in Innova- Innovation Management support services toward tion Management by firms in the services sector. the SME’s needs. Policymakers that develop the IMP³rove offers the opportunity for such cross-in- capabilities of Innovation Management support dustry benchmarking, which can trigger a change service providers and ensure continuous quality in the SME’s Innovation Management. In addition, management can achieve a higher acceptance of Innovation Management consultants often have ex- their programmes, higher impact and higher satis- perience in various industries and thus can provide faction from SMEs. Satisfaction and positive expe- insights into the leading practices of front-runners rience with an Innovation Management consultant from various sectors. can further stimulate real demand for Innovation Management support services by SMEs. IMP³rove offers those who take the role of front- runners, such as cluster managers or trade asso- For policymakers IMP³rove offers both support in ciations support in designing the best way to effec- the design of effective innovation support pro- tively involve SMEs in their activities to stimulate grammes and a proven approach as basis for their innovation and competitiveness. IMP³rove Contests voucher schemes stimulating innovation and com- and Awards are an effective approach to mobilize petitiveness of SMEs. With international and na- many SMEs and give them a platform to present tional benchmarking of Innovation Management, their Innovation Management capabilities. professional support for developing the Innova- tion Management capabilities of SMEs to increase their competitiveness and thus contribute to social 4.4 Success Factors for value IMP³rove increases the effectiveness of these Meeting Demand voucher programmes. Innovation Management consultants demonstrat- 4.3.4 ROLE MODELS, FRONT-RUNNERS ing good practices are well prepared and informed AND COMPETITORS TRIGGER SMES about the clients’ context. They provide SMEs with TO TAKE ACTION a good understanding about Innovation Manage- ment before starting to assess their performance. Financial actors, customers and policymakers are Examples of success factors are: not the only players that trigger SMEs to take a se- rious step towards improving their Innovation Man- • Face-to-face interaction agement and working with Innovation Management • Customization of support services consultants. Role models and front-runners both • Long-term relationship building in the own industry and in related industries also • The consultant’s capability in complex prob- prompt SMEs to take action. If competitors outper- lem solving and value delivery form their own firm and have significantly improved their business performance, SMEs are usually curi- Personal interaction and face-to-face service de- ous to learn how they keep up with the competi- livery were key success factors for consultants tion. Champions within their own industry―those working with IMP³rove. Consulting services should with the highest profitable growth from Innovation be offered through face-to-face meetings. As the Management―represent an important role model case examples in the following chapters highlight, for the SMEs’ managerial practices of innovation. personal discussions create interest at the SME IMP³rove showed that if SMEs identify that there to gain more value from improvement measures. is a significant gap between their own firm’s Inno- Face-to-face interaction builds trust, which is a key vation Management performance and the perform­ prerequisite for high-impact Innovation Manage- ance of the top firms in their industry, then SMEs ment consulting. start thinking about concrete actions more serious- ly. In addition, transparency about the performance Successful consultants are aware of the relevance gap can stimulate the demand for external sup- of customized consulting services. With customized port from an Innovation Management consultant. approaches, IMP³rove consultants prepare for the External experts create an objective view of SMEs’ discussion with the SME, taking into account the Innovation Management performance and play an relation between the different dimensions in In- important role in helping SMEs catch up with the novation Management, and address potential root competition. Besides role models and front-runners causes. In turn, they take the opportunity to start in their own competitive environment, the trigger developing potential improvement measures with
  30. 30. High-Impact Innovation Management Consulting Services for SMEs 29the client by preparing a customized action planwith clearly defined targets and key performanceindicators (KPIs). In doing so, consulting companiesare forced to adapt themselves to the SMEs’ needs.This requires diverse Innovation Management toolsand techniques to give SMEs a visible competitiveedge. The consulting process must be efficient andcustomized to be in line with the SME’s ambition,time, budget and other resources, without neglect-ing follow-up activities with clients.Long-term relationships and regular follow-upmeetings have proven their value; Innovation Man-agement consulting services should focus on value-creation for the SME. This type of practice shouldbe more widely spread among Innovation Man-agement consultants for meeting SMEs’ expecta-tions of high-value consulting services. Successfulconsultants propose a compelling consulting valueproposition and implement it in an impact-orientedmanner.
  31. 31. 30 High-Impact Innovation Management Consulting Services for SMEs 5. Meeting the Current Demand of SMEs for Innovation Management Consulting Services SMEs are often reluctant to hire Innovation Man- consulting is the effective support for further de- agement consultants. There is insecurity about veloping all or selected dimensions of Innovation what Innovation Management actually is, what im- Management for sustainable and profitable SME pact it has on the company’s business performance growth. These dimensions of Innovation Manage- and how it can be improved. Then there is the ques- ment include: tion of what impact and benefit an Innovation Man- agement consultant might have for helping improve • Innovation strategy performance. The following chapters describe the • Innovation organisation and culture dimensions of Innovation Management and explain • Innovation lifecycle processes how an experienced, professional Innovation Man- • Innovation enabling factors agement consultant can effectively support SMEs. • Innovation results Case examples illustrate the impact of high-value Innovation Management consulting. In the A.T. Kearney House of Innovation, these di- mensions are integrated in a systematic manner. The A.T. Kearney House of Innovation is holistic in 5.1 The Dimensions of the sense that it covers all aspects of Innovation Management and all elements are interlinked. It Innovation Management clearly focuses on generating value and asks for Innovation Management consulting is far more than performance indicators that monitor the contribu- supporting SMEs in applying for public grants or in tion to the company’s value. transferring technology. Innovation Management Figure 20: A.T. Kearney House of Innovation
  32. 32. High-Impact Innovation Management Consulting Services for SMEs 315.1.1 SETTING THE DIRECTION WITH should help the SME management develop possi- INNOVATION STRATEGY ble scenarios and clear plans for their future. This helps the SME managers understand the potentialThe innovation strategy is based on the company’s developments in their markets, in their industry andvision, formulating what its overall aim is as an in- of their competitors. Trends are one of the drivingnovative player in its markets. In SMEs, this vision forces for scenarios. For example, a consultant mayis often in the mind of the company’s owner or CEO ask what kind of impact the ageing society, the un-but is rarely put into writing and communicated to employment of young employees or the significantall employees. However, those visions create the increase of cars manufactured in China might havemomentum and feed the persistency within SMEs on the SME’s continuously innovate. The vision of Bill Gates –a computer in every household – was the basis of Based on these scenarios, the search fields and theirMicrosoft’s success when it was an SME. specific focus have to be developed. If the SME is an automotive supplier, the search field e-mobility mightThe innovation strategy must be derived from be a key for future success. Then the next questionthe company’s overall vision. The following steps is: What is the specific focus within e-mobility thatmust be taken for successful development and the SME should focus on? Knowing the specific focusimplementation: then helps assess the SME’s internal capabilities for developing innovations in this defined search field asConsultants supporting the SME in developing the well as the current project pipeline.innovation strategy need to help the SME under-stand the benefits of such an effort. Consultants, In the last step, the consultant helps describe thetogether with the SME’s management, need to as- SME’s innovation strategy and document it, clearlysess the SME’s current situation in terms of compet- defining the objectives of the innovation strategyitive position and competitive pressure. This might and the roadmap for achieving these objectives.result from low-cost competitors or from changes Part of these objectives is the improvement of thein technology or legal requirements. Equally as SME’s business performance. Here, the consultantimportant as the external view of the current situ- can demonstrate his or her quality of service andation is the internal view. Consultants should ask qualification when he or she helps the SME man-the SME’s management for their level of ambition agement define the new business targets and howto leverage Innovation Management. Some SMEs to reach them. Within IMP³rove consulting, the con-have constraints regarding budgets to invest in In- sultant has to prove the business case for develop-novation Management. Others do not want to take ing the SME’s innovation strategy. Ideally, the con-too much risk with too many radical innovations sultant also explains how this innovation strategybecause they lack the capabilities to successfully affects the organisation and each employee.master all these innovation projects. This leads the consulting services to the next di-When the level of ambition in relation to the cur- mension of the A.T. Kearney House of Innovation:rent SME’s situation is defined, then the consultant the innovation-oriented organisation and culture. Figure 21: Innovation Strategy Development Process