2 nd International SEPneT Workshop Organization of Innovation Processes in Companies and Institutions. Workshop Abstracts

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1 2 nd International SEPneT Workshop Organization of Innovation Processes in Companies and Institutions Workshop s September 26 30, 2005 Buenos Aires, Argentina

2 Building Technological Capability in Vietnamese SMEs to Increase their Innovative Ability and Strengthen their Competitiveness Tam Thi Bich Nguyen The research focus on Vietnamese SMEs in tea industry is based on two broad bodies of literature: Theories of innovation management and theories of technological capability building. Vietnam is known as the home of tea. North and North-Central mountainous regions are the main area for tea plantations in Vietnam. Tea is a high volume commodity. Its fortunes can therefore affect both individual farmers and national economies. The industry has experienced up and down but in general it growths continuously. In 2004, Vietnam s tea plantation expanded to 130,000 hectares to produce 94,000 tones of tea, to earn $90 million as total turnover. This made Vietnam the ninth largest tea producer in the world. Presently, Vietnamese tea can be found in 59 countries. Iraq, Pakistan, Taiwan, Russia, India, Poland, Japan, Germany, the U.S and Belgium are main importers of Vietnamese tea. They account for nearly 91% of quantity and 90% of turnover. According to the Vietnam Tea Association (VITAS), Vietnam has 80% of the share of the tea export in the region. The research assess if lacking of strategic learning management is a problem of technological capability building process. In this research the strategic learning management is measured thought 3 variables: Strategic learning method, strategic knowledge management and innovative working culture. The assessment s result confirmed this problem does exit among Vietnamese SMEs. Keywords: Technological capability, learning, competitiveness

3 Institutional Settings and Innovation Processes Xiuhua Zeng The knowledge on innovation has expended from the linear, non-linear to a systematic paradigms. The origin of technological innovation has been subject to a long and vigorous debate on the importance of technology push versus demand pull. In the former case (technologypush), organizations engage in research and development (R&D) that are driven by internal actors and that result in new products or processes. In the latter case (technology-pull), organizations respond to external inducements, such as new market demand or government regulation, to which no adequate responses can be formulated with their existing stocks of technical knowledge. More recently, we have witnessed increasing consensus in the innovation literature about the need for a combination of pull and push factors (Mowery and Rosenberg, 1979; Dosi, 1982; Barabba, 1995; Piper and Naghshpour, 1996). The recent innovation management literature has focused not only on the internal organization of innovation, stressing the importance of limited structure, low-cost trials, and good pacing (Brown and Eisenhardt, 1997), but has also highlighted the external acquisition of know-how by means of strategic alliances, mergers, and acquisitions (Hagedoorn and Duysters, 2002; Vanhaverbeke et al., 2002; Duysters and De Man, 2003), as well as the involvement of suppliers and customers in the innovation process (Jolly, 1997; Primo and Amundson, 2002). Under the open and systematic dimension, supplier and customer matters, linkage matters. Last but not least, institutional settings matter. Keywords: Innovation process, technology push, institutional setting

4 Technological Innovation in Vietnamese Export-oriented SMEs: A Sub-sector Analysis of the Furniture Industry Pham Lien Anh In recent times, there have been substantive changes in the world economy. Globalization has created the new world of competition, which is characterized by fierce contests with more capable players, higher stakes, and vastly different rules of engagement from those that we have enjoyed to date. This new economy is led by those who are able to find and combine knowledge into new products, services, and distribution methods faster than their competitors. In this context, innovation becomes the crucial factor determining the competitiveness of individual enterprises as well as the national economy as a whole. Firms who want to have a foothold in the international market will have therefore to focus on development of knowledge-based competitive advantages and sharpen its technology competitiveness, which is a direct outcome of its innovation capability. Vietnamese export SMEs are newcomers to the global economy. They have been able to enter into the export market based initially on labor cost advantages. However, their success in the international market, in the long run, will depend to a larger extent on their ability in application and commercialization of new technology and new production process, which help to enhance not only product quality but also productivity and efficiency. The furniture industry has been recently emerging as a big exporter in Vietnam. The industry, consisting mainly of SMEs, is among the top-ten export-income generators and has been chosen as one of the key export sectors in the export development strategy of the country. Companies in this sector have made a great improvement in technology within a rather short period, which enable them to move from export of raw materials to export of finish products to demanding markets. This paper, based on a case study of the furniture industry, is an attempt to analyze the technology innovation process of the export SMEs in Vietnam. Keywords: Furniture industry, technology, innovation

5 Capacity of Innovation through the Value Chain in the Primary Sector: Case Study in Mexico s Forest and Cattle Industries Araceli López Dueñas Innovation as an area of study has been defined as a generic model of the business which suggests there is an interactive learning cycle. Although significant data to conclude that innovation is developed independently of their stage in the value chain process has been obtained, sector and geographical situation, it has been frequently studied in high tech industries and during the high value phase process. Few have analyzed the innovation process in the primary industries using the value chain tool; where the innovation can be build on the experience of the relationship between different actors. The presentation discusses two cases to understand the capacity of innovation in the rural sectors and its implications on the value chain structure. Evidence from important issue implementations in Mexico s forest and cattle industries will be presented. Keywords: Innovation, value chain, forest and cattle industry

6 Innovation Process Country Case: Palestine Samah Abu Assab Despite the daily hardships the Palestinians are living; this paper will attempt to highlight the present stand of the innovation process, design and implementation in a number of leading companies that are operating in the occupied West Bank and in Jerusalem. Furthermore, special success factors for innovation will be pinpointed in the Palestinian SMEs (PSME). In the final part, some recommendations will be suggested for improving the innovation process in PSME which at the same time might also be helpful for other country cases. Keywords: Palestine, SME, innovation

7 Nurturing Innovation Systems: The Clusters' Role of Learning and Local Capabilities: Example from Africa Freddy Jirabi Gamba The system of innovation is defined as the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies (Freeman, 1987, p. 1). Lundvall's conception of the innovation system emphasizes the diffusion of "economically useful knowledge". The view of industrial transformation rests on the three main assumptions. First, firms do not innovate in isolation but do so within a network of other economic agents, making interaction an important innovation element. More importantly, innovation takes place in all sectors (not only in high tech such as bio-technology and information technology but equally in traditional sectors such as foods and beverages) and across all firm sizes. However, depending on the context, innovation has elements of size bias being more skewed in the favour of large sized firms. Second, all agents are involved in a continuous learning and as such the notion of knowledge, "producer" and "user" has limited conceptual and policy relevance. Learning in turn is heuristic taking place over a long period of time and possessing a systemic and incremental character. This makes proximity an important factor, although mere colocation of firms does not predispose agents to innovation. Thirdly the role of knowledge has become increasingly central to an analysis of economic progress and institutions, a carrier of knowledge. Innovation will be the main driver of competitive industries and enterprises. This paper therefore will focus on three sets of issues. First, we will discuss the system of innovation and its relevance of innovation to clustering. Second, we will explore the role of knowledge and institutions in innovation systems and finally we will present examples based on evidenced studies of clusters from African countries particularly Tanzania and discuss the role of policy in creating innovative clusters. Keywords: Innovation, learning, local capabilities

8 Transformation and Characters of the Chinese National Innovation System Zhenjing Li The innovation ability has become the decisive competition factor for enterprises, regions or nations in today's globalizing world. The theoretical description of the innovation ability of a country is the analysis of the national innovation system. The socialist innovation systems built up under the conditions of the planned economy had completely different characters than the innovation systems of the western industrial countries. To the stimulation of the innovation ability, the socialist innovation systems must be restructured in their transformation process. China started his transformation process about 10 years earlier than the former East European socialist countries. However, the reform process took place gradually (gradual learning strategy), and the Chinese economic development is very successful. Innovation is now coming from both the top and the bottom in China. The presentation will give an overview of the transformation process, primary characters, causations, experiences, problems and perspective of the Chinese national innovation system. Keywords: National innovation system, competition, reform

9 Case Study: The Implementation of the 5S Program to increase productivity on Paraguayan SMEs Gisela Romañach Acosta According to the Business Competitiveness Index (BCI) published by the World Economic Forum in 2004, Paraguay ranked 98 among 103 countries. It ranked 98 in strategies and operations in companies and 96 in environment quality of business. However, companies in Paraguay want to improve their competitiveness and do something about it. The case study refers to a medium-sized Paraguayan company founded in 1990 with approximately 46 employees, dedicated to the industrialization and sale of cartoon boxes. This study presents the effective application of the 5 S Program, a simple tool that contributed to improving productivity and competitiveness in the company. After two consultations implemented by the Project Training of Trainers for the SME Development with experts of JICA in production and management areas, the problems and implemented the recommendations were analyzed. The performance of the company has highly improved. The consulting began in November 2003 and finished in June In the presentation will address the implementation process of the 5 S Program in the company. The 5 S Program is based on Japanese words that begin with S. It focuses on effective work place organization and standardized work procedures. It simplifies the work environment, reduces waste and non-value activity while improving quality efficiency and safety. Once fully implemented, the 5 S Program can increase group morale, create positive impressions on customers, and increase efficiency and organization. Not only will employees feel better about where they work, the effect on continuous improvement can lead to less waste, better quality and faster lead times. Any of which will make your organization more profitable and competitive in the market place. Keywords: 5 S Program, productivity, competitiveness

10 Encouraging the Organization of Innovation Processes in Argentintian SMEs as a Means of Enabling Business Performance: An Empirical Study Roberto Luchi, Luis Dambra, Fernando Lizaso, Sofía P. Tanzer There are three main streams of literature on the impact of firms innovativeness on business performance, one regarded to market orientation, other focused on innovation, and the last one related to National Innovation Systems. All of them agreed upon the importance of innovation to business performance and focus on how internal and external facilitating factors influence on it. Successful innovation largely depends on how the process of turning knowledge into commercial ends is well organized and implemented. An empirical study on innovation in Argentinean small and medium enterprises from the Software, Electronics, Home & Electrical Appliances, Iron & Steel, Machinery, Metal Mechanics and Food & Beverages sectors we have performed highlights what strategies companies are pursuing in terms of innovation processes at industry level, and their results. Findings reveals how firms organize and deal with innovation and R&D policies, best practices, cooperation with Science and Technology centers, market or technology orientation, and intellectual property rights and how that impacts on the firm s innovativeness and sales growth. Keywords: Innovation processes, business performance, national innovation system

11 How Innovation Processes are Designed and Implemented in Companies Alvaro Pool Innovation requires knowledge of the productive activities, the labor force functions, the systems administration and the company innovation culture. Aims and goals are two of the basic definitions to implement an innovation plan, some relevant questions are: What do we want to reach? What will we win? Are we capable to lead this procedure? How many times do we have to create innovation? What are the risks? After a consensus is reached on the plan, the allocation of resources and of personal responsibilities begins according the capabilities and available resources, the time and the division of tasks. A very important aspect is that sometimes the small company doesn t have enough personnel, money or time to give exclusivity to innovation so the plan must be flexible and run parallel to the normal production activities. The implementation should be step by step beginning from simple ideas and feedback to evaluate and adjust the old procedures to the new systems. Keywords: Innovation, implementation, innovation culture

12 Customer-oriented product innovation process Carlos E. Zafrané Bravo It is not something new for scholars and practitioners that the company s ability to innovate is a key determinant of its competitive advantage. For instance, companies in the automotive industry offering premium products are dealing nowadays in an extremely dynamic business environment: shorter product life-cycles, overcapacities and commoditization. If in the past the strategic key factors of the industry have been, among other things, lean production and mass customization, the current strategic game is about mass innovation : differentiation through the systematic market introduction of new product features and / or product concepts. However, the ability to innovate does not ensure per-se the sustainability of the companies. Customers will decide at the end if the offered product (with its innovations) is more attractive than the proposition of the competition and if they will (or will not) expend their money for it. A customer-oriented product innovation process should enable companies to achieve two objectives: a) innovations are systematically created and implemented by the company; b) innovations are accepted by the markets and are profitable. The purpose of this paper is to conceptualize a customer-oriented product innovation process that aims to align these objectives, as well as to show some factors, based on the experience as practitioner, that could improve the probability of success by implementing the process. Keywords: Strategy, process, customer-oriented

13 Structuring the Fuzzy Front End of Innovation: Bringing Literature and Practical Experience Together Carlos Andrés Palacios Valdés, Fernando Lizaso The implications of the acceleration of product development had lead to analyze the innovation process more deeply than even before. Some authors argue that the early phases of the process have strong influences on the process as a whole and therefore on the success of new product development. We think that the organization of the early phases differs between incremental and radical innovation. This paper analyzes alternatives of organizing the early process phases to better support successful radical innovations. What are the main differences between incremental or radical innovations processes? What are the main barriers to overcome, and what activities can be done to avoid or reduce the risk of failure in product development. The paper is based on a deep analysis of the literature available and on some authors industrial experiences in structuring the fuzzy front end of innovation. Keywords: Fuzzy front end, innovation management, innovation process

14 Case Study: Designing and Implementing a Comprehensive Product Innovation Management Process in a Small-medium sized IT Company Amalia Suzianti The enormous growth of the Information Technology has encouraged the trend of IT utilization in everyday life. Each day new technology develops and offers new innovation for multipurpose product. Therefore, only companies that can consistently bring imaginative, value-adding new products, services and value propositions to the market will survive and grow in today's rapidlychanging markets. Being innovative then will be one of the keys to bolster profit margins and fuel future earnings streams. Innovation should be the core of a company s business strategy. The strategy such as marketing strategies, capital investments, manufacturing plans and research and development expenditures must be developed, built and allocated around innovation. This research addresses the requirements and barriers that may occur in the design and implementation process of a product innovation management system in a small to medium-sized company (specifically for IT Branch). A comprehensive product innovation management system will systematically guide and help the small-medium sized company in generating a new innovative product (killer application) from the idea generation and selection until the post launching phase. This research proposes the adoption of Stage-gate approach and detail tasks that should be performed within stages, concluding the critical points that should be managed in order to build up an innovative process in a small-medium sized IT company and finally generating the innovative products. Keywords: Innovation Management, information technology, SME

15 Promoting Knowledge, Learning and Innovation in Organizations Diego Gonzáles In the intent of getting sustainable competitive advantage, firms provide to final customers with added value embedded in products and solutions, resulting from a complex internal process. During this process firms transform their resources and may transform themselves, aiming to be permanently updated to cope with the changing environment. In order to guarantee a positive, successful change occurring over time, organizations may consider as a whole to get an understanding about innovation, learning and knowledge management activities. In other words, managing change is nowadays the very first need of organizations. Both learning and innovation are defined as the constitutive processes to attain effective change. Managing knowledge, learning and innovation should be understood as one single huge challenge, since those activities are indivisible from each other. Organizations can simply not avoid learning in the way to innovation or during sharing and creating knowledge, as well as they cannot avoid changing during innovating and learning. In this scenario, knowledge appears as the most vital element for organizations. In a way it must be managed, but fundamentally, it must be enabled and fostered. The rapid pace of transformation in the business landscape, the new nature of products and services, the globalization of the economy, the workforce mobility, the globalization and dispersed business positions of companies and entire industries, and the incredible evolution of ICT are molding an increasing need for knowledge. Knowledge is highly affected by these factors, while it impels them to evolve further. In routinely processes the knowledge available to the firm is always employed in the same manner. When referring to any grade of change, appears the demand for new ways of knowledge deployment. That is why the wide process of change is fostered by innovative thinking and creativity. Innovation seen as creative deployment of knowledge provides cumulative potential for organizational transformation. Moreover, firms nurture their innovative potential through adapting its knowledge-base as well. Therefore, knowledge must be regenerated, combined, shared, used and re-used. And this knowledge related activities are grouped under the denomination of learning. In order to develop innovation management competence, organizations must take care of different internal elements. By molding

16 these components and factors, organizations can stimulate and enable knowledge creation, innovation and learning, and thereby foster change. These elements are the firm's strategy, the context, the formal and informal structure, the routines involved in the organizational activity, the managerial systems, and the leadership practiced among managers and other non-hierarchical promoters. So far we have defined the context for this work: we have described interacting processes, which help organizations to cope with the environmental changes, and we have talked about influencing factors, relevant to pursue those processes. Concretely, this paper is about managing innovation and learning processes in organizations, therefore managing also knowledge. On the success of these activities lies the healthy transformation of the organization. Keywords: Learning, innovation, creative knowledge

17 Promoting Open Innovation and Knowledge Management for Regional Development: The Case of ITAIPU Jaime Jara ITAIPU, the largest power plant in the world, is located at Paraná River between Paraguay and Brazil. It has been considered one of the marvels of modern world and example of technical cooperation between two developing countries, who managed to overcome cultural, linguistic and technical barriers to make a shared vision happen by the end of 20th century. Three decades after the bi-national treaty was signed, ITAIPU faces new challenges on meeting its new mission. Thus, managing the intellectual capital within and beyond corporate boundaries is a critical issue. In that doing, ITAIPU puts forward a new business model around its main domain (generating energy) adding a technology-based park where knowledge and culture of different parts of Latin America may meet to build avenues towards "new combinations of solutions for current and new purposes". A corporate university, a technology based business quarters, a technology based incubator account for many of several instruments intended for meeting the necessities of the company and for creating new spaces for working at the global knowledge society. ITAIPU started several applied research agreements with universities of Brazil and Paraguay in order to assure strategic fit of two particular endeavors: knowledge management and process oriented management, as corporate processes taking into consideration the enterprise's relationships along its supply chain and the community. Not only productivity is at stake but the capacity to innovate in a myriad of areas like civil, electrical and production engineering, management of the biological reserve and socio-economic development of the communities surrounding its lake. This case illustrates how a bi-national, Government owned company, on pursuing sustainability in its core businesses, become an important instrument of the regional innovation system and its policies. Keywords: Power plant, innovation, knowledge management

18 Technology Forecasting on the Internet Manuel Agustín Rodríguez Technology Forecasting enables the early identification of technological trends that are relevant for the strategic competitive position of a company. Those studies are conducted applying different methods and instruments on scientific and technical information available in publications, digital databases or today on the Internet. The Internet offers tools to search and retrieve information although not always in an effective and fast way. For this reason, researchers are working in the generation of new technologies and tools for optimizing those processes. One of those new Internet technologies is based on ontologies. Ontologies are a latest computational technology that enables modeling common representations of knowledge in specific fields or domains. Such models can be developed to represent implicit knowledge resident on Internet repositories. This work discusses the application of ontologies for searching scientific and technical information resident on the Internet to support Technology Forecasting. It presents theoretical principles about technology forecasting, ontology-based technologies and the application of both concepts to perform technology-forecasting studies. Keywords: Forecasting, ontologies, internet

19 Scenario Technique - a Tool in Innovation Management Advantages and Disadvantages of Scenario Approaches for Strategic Foresight Dana Mietzner Scenarios should provide strategists with various possible futures and not forecast the future. The purpose of a scenario is at a meta level, since the scenario usually does not speak for itself in terms of its purpose. Scenarios, as a prime technique for future studies, have long been used by government planners, corporate managers and military analysts as powerful tools to aid in decision making in the face of uncertainty. In practice, scenarios resemble a set of stories built around carefully constructed plots. Such stories can express multiple perspectives on complex events, with the scenarios themselves giving meaning to these events. The idea behind them is to establish thinking about possible futures which can minimise surprises and broaden the span of managers thinking about different possibilities. Today the question of what scenarios are is unclear except with regard to one point - they have become extremely popular. The paper attempts to shed light on differences in scenario approaches. It will describe the origin of scenarios and the development of different understandings and purposes for managers in innovation management. Categories are developed to compare the different ways scenarios are performed. Finally, the advantages and disadvantages of scenario approaches are analysed. The paper is based on an in-depth literature analysis. It is a glance at our current research on strategic foresight, which will be continued in the future at the Centre of Entrepreneurship and Innovation, University of Potsdam, Germany. Keywords: Scenario technique, scenario building, innovation strategy, technology planning

20 Innovation Initiative Luis Amezcua BAL Group, a group of diversified Mexican Companies, has been working in the creation of an institutional Methodology that supports the generation, the spread and the use of knowledge to improve the competences and to add high value to the processes, products and services of its Companies. The Methodology that BAL Group intends to follow in order to implement the Innovation Initiative in every Company of the group consists of the following elements: I. Innovation Committee (achieve a corporative Structure that drives and coordinates the Innovation Efforts) II. Analyze and Define Options (identify existing Competences and Knowledge) III. Integrate Innovation Strategy (define the Innovation Strategy according to the Company Vision and the Necessities of the key Actors) IV. Develop the Innovation Platform (achieve a capable and flexible Organization that innovates at the Company and that knows how to manage its intellectual Assets) V. Implant the Innovation Strategy (Develop the Innovation Ideas), and VI. Innovation Culture and Organizational Change (keep a competitive Advantage through an Organization that learns and innovates frequently). The Innovation Initiative was defined to be part of a broader effort called The Value Creation Program. All the data to be input to the initiative is generated in accordance to this program. The results of the Innovation Initiative will be evaluated with the support of a Scorecard in order to have a regular Assessment of all the Components (and Subcomponents) of the Innovation Methodology. Keywords: Innovation Methodology, scorecard, value creation

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