Connecting the dots for the future at the Web Summit 2018

As we enter the final day here at the Web Summit Lisbon 2018, we’re still trying to digest all that’s happening. We’re overwhelmed to see the power of so many ideas in action, as start-ups, as well as established, well-known companies, reinvent ways of doing – including (proudly) many of our clients using Exago innovation software.

They are leading the way to transform how we work and live in ways we cannot fully grasp at the moment: from pharmaceuticals through to sustainable living, retail, music, banking, games and heavy industries. Some ideas and projects will fail, some will succeed. This is how innovation works. But you try, you learn and, either way, you help shape bits of the future.

We are around and connecting with business leaders to empower people within companies to build what’s coming next together. Get in touch to meet via the Web Summit app: Diana Carvalho and Andreia Dias.

Good news for medium enterprises looking to innovate

Medium enterprises fit right in the middle of the innovation spectrum, between the resources of large multinationals and the flexibility of its smaller peers. Size does matter. They face several barriers in their path to good innovation management, such as limited resources to invest, lack of incentives and innovation infrastructure, and shortage of innovation specialists. But there is some good news, too.

If you are leading innovation management efforts in a medium company, remember that the following is playing in your favour:

  • Medium companies still have flexibility in their structures;
  • You have more resources than smaller companies – and research has shown that radical innovations can also occur within a context of tight slack resources, without requiring a full team devoted to innovation;
  • Your company can also be more open to risk (but judiciously);
  • Your reality often boasts close ties to your workforce, whether the company stems from a family business or a strong connection with the local community, making it easier to reach them.

The following table sums up this reality:

Corporate innovation per company dimension

Taking all this into consideration, there is no single bulletproof formula for companies to innovate, but rather multiple possibilities. Very diverse companies find their own ways of bringing about fresh, impactful ideas, based on past experiments and all the knowledge gathered across industries.

All in all, innovation is not a pure science, and must be tailored to the size and reality of each company, founded on industry best practices.

Learn how to leverage them and read more about the 4 myths keeping medium enterprises from innovating here

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

How can medium enterprises innovate successfully?

Though not always fully recognised, Small to Medium Enterprises are the root of economic growth and job and wealth creation. They play a vital role in the global economy, strongly contributing to employment rates, innovation and growth. For instance, in the European Union they represent 99.8% of all enterprises, where they generate 60% of GDP, and provide 70% of employment in the private sector.

Yet, such a fundamental role is only possible if SMEs are able to continue reinventing themselves in order to innovate actively and remain relevant.

First suggested in 1931, the theory of innovation dynamics proposed by the founding father of innovation, Joseph Schumpeter, is more fitting now than it has ever been: the generation of new ideas and ways of doing is imperative for economic growth. All organisations, no matter how small or large, are facing challenges today that were unheard of only a generation ago.

Trade liberalisation and the movement of financial capital, paralleled by the information and communication technology development, have accelerated this trend exponentially.

This means that companies must decide wisely, fast and continuously how to invest and use an array of new methods and technologies while fighting to compete on a global stage.

According to Schumpeter, the only way to respond to this growing competitive business environment is to develop an economy based on innovations, knowledge and educated people. And nowhere is this fight to succeed more marked than in medium-sized companies.

Why then do medium enterprises still fail to innovate? We’ll see that next.

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Learn more about the The 4 myths keeping medium enterprises from innovating here

The 5 steps for strategic cost-cutting in your innovation agenda

In times of uncertainty, when business models are challenged, managers and financial directors are bound to cut costs to make organisations more agile, robust and adaptable to change. Leaders with a clear vision then tend to use cost-cutting and improvement to align costs with business strategy, to lower costs, focus on the aspects of the business that are controllable and free up resources to fund transformation and future growth.

However, aggressive cost-cutting tactics will not salvage companies under pressure. The change must go deeper, reaching a strategic and cultural level. This means that a company’s most valuable assets – people and their talents – must be mobilised to innovate and to find new ways of working that do not require high investments in new product research and development. Together you can save substantial amounts of time and money.

We show you how to add strategic cost-cutting and improvement to your innovation agenda, and how the development of an innovation culture is a powerful tool to align people’s focus, change behaviours, save costs and deliver continuous and effective results. To make it work, we guide you through the following five steps:

 

1. Define your strategic cost-cutting goals, which can be incorporated in your innovation agenda.

You need to have a clear view of your company’s strategy and map out good and bad costs for programme intervention, at macro and micro levels. On the one hand, bad costs should be seen as those that do not align with the growth strategy. On the other hand, good costs are those that support business capabilities to achieve growth and may be worthy of more investment.

2. Guarantee C-Suite engagement from the beginning and have a clear direction for your cost strategy.

You should deliver cost optimisation with the support of the CEO and top managers, defining areas of improvement from the beginning, as well as how to address each of these areas.

3. Invest more in bottom-up approaches, engaging and having your people contributing.

Simply externalising tasks and reducing headcount are often ways to overshadow a complex problem. You need to call on people’s knowledge and experience to help you separate the wheat from the chaff and find concrete and innovative solutions.

4. Be resilient in creating a cost-conscious culture for continuous optimisation of resource use.

Over time, as you seek new ways to rationalise and optimise costs, a new culture of strategic cost-cutting will be embedded.

5. Explain to your workforce your shared mission and remove fears,

ensuring that both needs and strategy are consistently understood across the organisation. Your employees must feel they have a role to play and can have an active voice in the decision-making process, being welcomed into the discussion about the best ways to reach the proposed goals.

 

A well-structured innovation management programme for strategic cost-cutting and improvement can be particularly useful to get employees identifying ground-level enhancements, with several additional advantages:

  • allowing you to develop a cost-conscious culture
  • easily uncover bad costs and inefficiencies
  • assure more dialogue and engagement
  • build up an ongoing, resilient process

Strategic cost-cutting is never blind cutting. It is, in fact, a method to accelerate the discovery of new and more effective ways of doing business, at a lower cost, challenging you to look at the larger picture, to seek the root cause of the problem. It should be seen as a way of questioning how we do things, even why we do them, exploring new innovative routes and building the foundations of tomorrow’s growth.

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Get to know the Five Steps to Introduce Cost-cutting in your Innovation Agenda here

Why your idea management programme is so helpful for strategic cost-cutting

As business models are being challenged, organisations need to be more adaptable and resilient, naturally also by becoming more efficient and cutting inadequate costs. This change must happen from the bottom up, with the right leadership and sponsorship, to define the areas of improvement clearly and separate the good costs from the bad at both micro and macro levels. Innovation managers can, and should, lend a hand to address this shared challenge.

A well-structured innovation management programme for strategic cost-cutting and improvement is useful to get employees identifying ground-level enhancements, with several additional advantages:

BUILD A COST-CONSCIOUS CULTURE
Involving employees and challenging the organisation’s cost and waste culture will help you develop a cost-conscious culture for a more sustainable business approach. Keep cost optimisation as a strategic priority, even when there is no immediate pressure on costs;

AN ONGOING AND RESILIENT PROCESS
Having your cost-cutting and improvement strategy embedded in your innovation management programme will bring you continuous results, building a sustainable process and putting more robust and flexible foundations in place before introducing transformational initiatives.

EASILY UNCOVER BAD COSTS AND INEFFICIENCIES
Engaging and empowering everyone in the organisation, from shop floor to top management, will expose inefficiencies that would not usually be identified in a typical consulting diagnosis project. Your employees know more about your everyday business than anyone else, so tapping into their knowledge and efficiently getting everyone involved in signalling cost improvements will deliver interesting results for your strategy;

MORE DIALOGUE AND ENGAGEMENT
With effective and transparent communication regarding cost cuts and improvements, companies can face less resistance from employees and more easily ensure business management support. It can also bring higher employee engagement, as more frequent interactions are needed between finance and the operating managers and between managers and teams to keep costs aligned with business and to track results.

Strategic cost-cutting is, however, never blind cutting. It is in fact a method to accelerate the discovery of new and more effective ways of doing business, at a lower cost, which is even more relevant in difficult times. On the whole, it should be seen as a way of questioning how we do things – even why we do them – , exploring new innovative routes and building the foundations of tomorrow’s growth.

 

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Get to know the Five Steps to Introduce Cost-cutting in your Innovation Agenda here