Ignacio de la Vega. Professor. Instituto de Empresa
9 January 2006
Though innovation is the cornerstone of a successful business strategy, it has long been associated largely with Research & Development at large companies with big budgets and ample resources. But if small enterprises are to thrive, they must find new ways of encouraging innovation throughout their entire business.
In the last five years, the NETI project, developed by AMENA in conjunction with the Instituto de Empresa, has been successful at helping small businesses use innovation to hone their competitiveness.
In recent years, the word innovation is often heard during talks, debates and lectures on business strategies, models and attitudes. Indeed, more and more academic courses now study the impact of innovation on management, while the subject is covered in depth by the financial press.
In spite of all the attention, little consensus exists on what exactly the concept of innovation entails from a practical point of view. First, we tend to identify it as something related almost exclusively to technology, along the same lines as Research & Development. In turn, we fail to consider non-tech related innovation in a wide-range of other sectors.
Secondly, it often seems that innovation (especially the R&D version) is the sole domain of large enterprises with enough human, financial and technological resources to develop an idea or to experiment with new business ideas. But it is imperative for smaller enterprises to draw up innovative strategies aimed at improving their business models, creating value for their clients and, consequently, enhancing their chance of success.
In short, what we propose here is a definition of innovation that not only encompasses the technological processes for improving products and services or for creating new ones, but that also includes improvements in the business models, production and marketing processes and advertising designs, aimed at honing the competitiveness of a business.
At this point, innovation is vital to an entrepreneur's success. The entrepreneur usually is handicapped by scant resources that limit the impact his or her product has on the market. To achieve greater visibility, the entrepreneur is compelled to improve the performance, usability and technology of the product, as well as to reduce its cost and raise market expectations. The late Peter Drucker, when talking of new business and innovation, said: "How the entrepreneur creates wealth through the production of resources/new products or uses existing ones is by doing things in a different way and thus creating wealth."
Five years ago, Spanish telecommunications group Amena, working with the Instituto de Empresa, created the NETI Project--or New Enterprises in Innovative Technologies. During its existence, the NETI has become a fundamental support tool for the innovative entrepreneur. This year's project involves its founding partners Banesto-- working through the Fundación Cultural Banesto-- and Banespyme. The basic objective is to promote the use of innovative technologies as a way to improve business models. This is done with the support of Spanish universities and small and midsized enterprises, two of the most important and under-utilised incubators of innovation in Spain.
It's clear that the figure of the entrepreneur-innovator must receive more aggressive support if Spain is to improve the success rate of its new and small enterprises. In short, innovation is a basic ingredient for boosting competitiveness.