CORDIS Archive

June
2004

Playing too safe

Knowledge is the most important resource for today’s – and even more for tomorrow’s – companies, yet it is rarely managed as well as it might be. To get ahead, Europe’s firms need to take more risks and manage innovation better.

Oil and its rising cost may be the current focus of global markets. But the most precious commodity in the world today is not any one mineral resource – it is knowledge. For countries at the vanguard of the world economy, the production of knowledge rather than the exploitation of mineral resources has become the most important factor determining the standard of living, according to the World Bank.

In these most technologically advanced economies, knowledge has become a commodity that can be packaged and traded. It is the commodity most linked today with innovation, which itself is the major driver of business success. Today, establishing the right environment for innovation is seen as key to creating competitive advantage and better customer value in firms.

New information and communication technologies such as the internet have enhanced the innovation process by dramatically reducing the cost of gathering and disseminating knowledge. But challenges still remain, particularly for companies trying to understand how best to manage innovation in their businesses. For most forward-thinking companies, as well as for academic centres, business schools, consultancy firms and business support organisations, innovation management has thus become a major preoccupation.

Ten key techniques

A Spanish-led consortium has now stepped in to help firms understand this process better. It has conducted a major study for the European Commission’s Enterprise DG that aims to provide a comprehensive review of the scope, trends and major players in the development and use of methods to manage innovation. The study, led by the Universidad Politécnica de Madrid, did not only analyse the current literature on the subject. It also surveyed a cross-section of stakeholders from industry, consultancies, business schools, financing organisations and from government and other policy-makers across the European Union, Japan and the United States. The researchers concentrated on so-called Innovation Management Techniques (IMTs) that aim to improve competitiveness, and that focus on knowledge as an important part of the process. They came up with ten different IMTs that formed the basis of their study, among them knowledge management, market intelligence,human resources Playing too safe Knowledge is the most important resource for today’s – and even more for tomorrow’s – companies, yet it is rarely managed as well as it might be. To get ahead, Europe’s firms need to take more risks and manage innovation better. management,project management and business plan development. The study also includes case studies of companies which have successfully used these techniques. But the report reveals a disturbingly unsystematic approach to innovation management among the major actors in the field. While 43% of people surveyed said they had successfully used IMTs in their own organisation, another 32% said they did not use IMTs at all, although they knew the techniques.

Learning to take risks

Companies were seen as the least aware of the benefits of IMTs – nearly one-third of respondents believed that firms were not even aware of their existence. Several major actors said the traditional culture of organisations, and the opposition of sometimes quite senior management to any change,was a major barrier to innovation. “In general, most companies possess a corporate culture that sees innovation as a risk, with a consequent lack of motivation to implement new, innovative technologies,” the study concludes.

The study suggests that the European Union consider setting up a scheme to promote innovation management in Europe, with the aim of developing a global network among the various actors to encourage the exchange of knowledge and experience, and to help harmonise practices and competencies. It also says the EU should consider increasing support for “well-designed awareness initiatives to enhance citizens’confidence in innovation as a means to foster competitiveness in companies and well-being in our societies”.