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Challenges
Creating a culture of innovation Successful companies in the future will build design and innovation into their culture, and work towards creating an attitude inside the business that encourages innovation. In order to create and sustain a culture of innovation, companies need to introduce the necessary processes and relationships to make this happen. Swedish firm Skaltek, which develops products for the cable and wire industry, operates without a structured hierarchy, job titles, promotions, sales or marketing. "We believe that with a sensitive conscience, there should not be a need for managers or supervisors. We do not have a traditional sales staff, and nobody has titles. Our team work is based on honesty, openness and individual responsibility." Companies will need to enhance and mobilise the creative energies of the workforce upon whom the successful execution of the product innovation depends. BP has a commitment to company-wide learning, central to which are its Performance Improvement Teams (PiTS), growth and performance measures which enable employees to recognise their responsibility for the performance of the whole organisation. The culture supports the company's competitive strategy, and provides the energy to sustain it, stretching and extending both the company and the individual. Dupont operates a 'stretch programme' as a way of creating a more challenging and stimulating environment. The company has defined a set of 'unreachable' goals: immortal polymers, zero-waste processes, materials that repair themselves, coatings that change colour on demand. The DTI's Partnerships with People campaign (2000) reveals that a culture has to build up over time, and develop in an atmosphere of fairness, trust and respect until it permeates every activity of the organisation. Establishing environments for creativity Corporate creativity guru John Kao defines creativity as the entire process by which ideas are generated, developed and transformed into value. A Design Council survey of more than 900 Millennium Product companies (March 2000) revealed that one of the key factors for encouraging innovative success was the need to provide the right environments for the generation of ideas, and the right thinking processes to convert ideas into innovation. The inspirations for innovation were created during group brainstorming sessions, informal meetings and formal R&D programmes. According to Kao (1997) if companies are to survive in today's marketplace, they need increasingly to develop explicit systems for managing corporate knowledge. Some companies have made 'symbolic' appointments. Swedish insurance company Skandia has a 'Director of Intellectual Capital,' Leif Edvinsson, and regularly reports on progress in its annual reports. American company Dana Corporation has an ideas generation programme whereby it expects people to have two new ideas each month: management is expected to implement 80% of these ideas. To engage in a debate about the value of creativity visit the CreativeNet website. CreativeNet brings together people from all sectors to share examples of how creativity is being learnt and to discuss what skills are needed. The management of innovation is inherently difficult and risky, and requires different sets of management knowledge and skills at both strategic and operational levels. However, according to the Arthur D Little survey (1997) more than 49% cited a considerable gap in the effectiveness of current practices and 85% of those surveyed were dissatisfied with the way they managed innovation. A DTI-commissioned report on capital expenditure (1999 R&D Scoreboard) revealed that many UK companies are investing at a lower R&D intensity than the top international companies, indicating they are not yet investing the right amount to maintain a sustainable competitive edge. The FTSE 100 and the next biggest 250 companies invested 2.1% and 1.3 % of annual sales on R &D, compared to 5% invested by the world's 300 largest companies. (Financial Times, 9 February 1999). If an organisation is committed to sustaining innovation, it must be prepared to refocus its strategy and long-term goals. The need for a more flexible, responsive and creative climate is moving companies from traditional management-driven to project-driven organisations which are supportive of team-based structures. In an interview between John Kao and the project Director behind Renault's new Twingo car, Kao asked if he had a secret for the company's future success. The reply: "it's a team cocktail. How we combine the mentalities, the perspectives, is everything." Living Innovation is a joint investigation by the DTI and the Design Council which has been set up to find out from Britain's most innovative companies just what makes them tick. If you want to see if this could help your organisation visit the Living Innovation website at www.livinginnovation.org to find out about these innovative companies. Send an email to info@designcouncil.org.uk to get a copy of the Living Innovation investigation findings.
Some of the more forward looking companies are exploring ways to forge links with suppliers, competitors and other external sources of knowledge in order to determine their needs, wants and preferences in a new product or service. "In the
face of shrinking product cycles, rising development costs, rapid technology
changes, and increasing customer sophistication, innovative companies
recognise that they can't go it alone. So they build extended networks
of partners and suppliers to capture emerging opportunities." A study by the CBI/DTI (1992) revealed the importance of looking outside the company to share resources, spread risk and tap into expertise not available in-house. Investors too can be crucial in providing support for the innovation process. Organisations collaborate for many reasons:
Alliances can take many forms ranging from licensing agreements, strategic alliances, or more formal joint ventures. The Macro project, sponsored by the DTI and the European Eureka programme, involved companies such as Shell, Railtrack, The National Grid, and National Power pooling their brains and experiences to resolve cost, performance and risk problems. The project has revealed multi-million pound savings from the use of better techniques in asset management decision-making, although it should be noted that there are risks involved. A survey by UMIST of more than 100 UK-based alliances identifies some of the potential risks associated with collaboration:
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