Summary
How do technology companies use innovation as an international strategic management technique?
Market variations have always been present, as the global economy is formed around a more interdependent profile, its effect makes it necessary to define competitive, innovative and profitable strategies that allow companies to respond to the demands of customers, have more dynamic operations, be competitive in sales prices and costs.
In this situation, it is necessary to implement business strategies that allow the different market segments to improve their performance and projection, focus their price campaigns, attract consumers, product innovation and guarantee financial viability.
Technology companies have identified that customers are looking for technology partners, to provide them with solutions to improve their competitiveness, improve economic growth and the performance of their processes, and integrate products and services.
As part of this plan, there are initiatives to provide world-class solutions focused on different industries, which allow customers to obtain rapid returns on investment and added value to their internal processes.
Technology companies introduce innovation to their strategies, processes, products and services, impregnated with ethical and cultural quality, developing an organization at the service of consumers, with a constant investigative attitude. Hence an interrelation between commercial factors and the managerial need to implement technological innovation.
Innovation in technology companies
Methodology
This article uses research as a data collection technique, which will be mostly documentary, whose method focuses on the collection of existing information in books, texts or any other document, related to the topic of study.
Field research will be used, which corresponds to the collection of information in the specific environment, for which the interview will be used as a tool.
Introduction
Today, companies are more frequently targeting expansion in international markets and attracting foreign investment, hence market strategies have been redesigned and the tendency is to invest more in research and development costs.
Traditional strategic thinking has argued that competitive success is based on choice and attention. Stakeholder compliance is treated as obvious, and market effectiveness is an assumption in most models.
Over the years, international markets have faced recessive economic processes and have required strategies from governments and companies to overcome them. Some that can be mentioned are the crisis of 1929, the Asian crisis of 1997, the bursting of the technology bubble in the year 2000, the pressures after the attacks of September 11, 2001, among others.
For the economists Paul Krugman and Robin Wells, the inertia of the different economic and political authorities presages a prolongation of the crisis with high unemployment and low growth if solutions are not undertaken that in the short term avoid a deep recession causing governments to issue debt and spend more. For Krugman and Wells, when the crisis situation is more intense, budget deficits are not only good, they are necessary. (Source: El Financiero, 2009).
According to the article "Ernst & Young: Globalization recovers despite the tension between nations" (Summa Magazine, 2011) gives us a current picture of how developed and emerging markets are influenced by globalization and how it has become a challenge for developing strategies that allow companies to stay afloat in the face of aggressive competitors, product innovation and international crises.
The market tends to become more interdependent, generating a global economy characterized by common macroeconomic factors that govern competition. Every day more effort is required by companies in creating new products, low costs and growth of the customer portfolio.
The interaction between the economic policies of modern industry, a period that begins with the Industrial Revolution, gives way to a productive process where it is necessary to apply technological advances as part of automated and optimized processes.
By using information technology efficiently, competitive advantages can be obtained, but it is necessary to find correct procedures to maintain such advantages as a constant, as well as to have alternative courses and resources of action to adapt them to the needs of the moment, since the advantages are not always they are permanent.
The information system has to be modified and updated regularly if continuous competitive advantages are to be perceived. The creative use of information technology can provide administrators with a new tool to differentiate their human resources, products and / or services from their competitors.
This type of competitive advantage can bring with it another group of strategies, such as a flexible system and just-in-time standards, which allow the production of a wider variety of products at a lower price and in less time than the competition.
Many companies focus their strategy on the internal aspects of the organization where they identify improvement needs, such as strengthening performance in the production process, reducing costs, increasing the profitability of the product contribution margin, investing in new technologies..
Others consider external aspects such as market positioning, strengths and weaknesses of competitors, expansion to new markets, strategic alliances, creation of new companies. These are some of the many factors that are constantly evaluated by consolidated companies or growth paths.
In business terms, the main idea initially was that technology represented an exogenous variable, which companies could acquire in the market. However, in the early 1980s, studies on the role of innovation in economic activity raised the need to include it as one more activity within companies, making it a strategic business element.
Hence the question arises: How do technology companies use innovation as an international strategic management technique?
First, it is important to understand what a strategy is. This is defined as a management action plan to operate the business and direct its operations. Strategy development represents an administrative commitment to a particular set of measures to grow the organization, attract and satisfy customers, compete successfully, direct operations, and improve its financial and market performance. Thompson, Strickland and Gamble. (2008).
Technology companies integrate innovation into their production process, since the needs of the market require them every day to have modern, practical and profitable products that guarantee their clients efficiency, improvement and cost reduction; reason why technological innovation has been introduced as the main objective of the market of this industry.
The companies that innovate the most stand out for having changed their business models from a fixed focus on geographies, local markets and products, to a dynamic approach, based on customer experiences, value generation and problem solving.
As a success story, we can mention the company Google, which is considered one of the largest and most innovative technology companies in the world. According to the CEO of this company, by 2020 everyone will be online: “For every person who is online, there are two who are not (…) By the end of the decade, everyone on Earth will be connected” Eric Schmidt, CEO wrote. (Source: CNN, 2013).
In 2013, about 38% of the world's population uses the internet, compared to 35% last year, according to the International Telecommunication Union, a United Nations agency dedicated to information and communication technologies.. These statistics may make the panorama exposed by the CEO of this multinational unfavorable, however, the support of technology giants such as Google and Samsung is beginning to be given to achieve these goals through economic and technological support to regions such as Central America and Africa. (CNN in Spanish, 2013).
The concept of innovation and its importance for development has been underlined for decades by the economic approach (Marx 1863), so there is a need to promote progress in this area.
Innovation is a process whose ultimate goal is to obtain new products and / or production processes. As a result, sometimes new technologies are also obtained. Technology, for its part, reflects a set of industrial techniques that can be applied to a production process.
Beyond these industrial techniques, innovation may consist of the creation of some distinctive element, such as adding a new function to a product with existing technology, or conversely, it may involve more profound changes based on scientific advances and technological. In the latter case, there is talk of technological innovation.
Currently, innovation policy is integrated as part of the operational process, which inspires to look beyond what can really be done and lead the company to a creative path with the aim of solving problems in different ways than usual, with new techniques and elements.
The new set of activities to follow may arise from internal as well as external sources. Some of these can be found in the research and development department in which knowledge is generated and learning is encouraged, in the production process where the creation of knowledge is given by practice and experience, of the employees who jointly or individual generate an idea that becomes an improvement or novelty.
It is worth highlighting the importance of innovation to achieve an interactive approach in the organization, in order to take advantage of the external environment and take advantage of global risks as opportunities for improvement, for example the behavior of macroeconomic trends, technological advances, changes in the environment, among others.
Analysis
Currently, technology companies are characterized by having an organization made up of enterprising people, capable of innovating, who seek to restructure the status quo of existing products and services to create new ones. They seek change, respond positively to it, and exploit their opportunities.
Therefore, innovation becomes a specific tool for an entrepreneur, and therefore, the latter, turns a source into a resource.
Hence the need for technology companies to have efficient talent management that guarantees the integration of resources capable of responding to market needs.
Through talent management, new members are developed and incorporated into the workforce and allow the existing human resource to be strengthened and retained. The process of attracting and retaining productive collaborators has become increasingly competitive among companies and is also of strategic importance within organizations, since it is the basis for strengthening internal competencies that allow them to be distinguished as unique in the market.
On the other hand, creativity leads to innovation and developing talent as the main asset of organizations. (Jeffcutt and Pratt, 2002). The existence of creative people in a region stimulates creativity and has a positive contribution in the formation of new innovative companies.
Regarding technology, the creative classes have become a mass capable of driving the appearance of new trends and world development. The growth and expansion of information and communication technologies play a key role in the economy and are increasingly significant in cultural business initiatives. (Gdaniec, 2000).
Technological convergence occurs thanks to digitization, which is becoming a source of work and economic growth, improving the ability to produce culturally diverse products and services. (Aulake, 1999)
The evolution of new technologies and the impact of innovation through them can be exemplified in the different products offered by the market, for example sales of DVDs, recorders, MP3 players, home theater, flat screen TVs, mobile phones, video games, laptops, ipad, among others; or services such as integration, storage and data management.
These have come to transform traditional arts, adapting them to the new environment, producing a synergy between the cultural and technological sector, where creativity becomes the most important agent of economic development.
In a tour of projects in the Central American and Caribbean region, investments in innovative technologies such as Warehouse Management platforms, satellite systems and customer management software were highlighted. Mobile technology and social media requirements are also driving investment in Customer Relationship Management (CRM).
The security and speed of operations have forced the clients of technology companies to use the products and services of this industry as an organizational strategy, in order to achieve business improvements, cost reduction and response times.
For example, the company COFASA, which achieved automation of the logistics area through the implementation of new software that represented an investment of one million dollars, according to the words of its Chief Information Officer (CIO), Wilberth Chacón.
Inside the warehouses where a large amount of medicines are stored, it was essential to control the expiration, exit and entry of these in real time and with great ease, to be aware of who each batch has been dispatched, on what date and if they have been delivered.
Derived from this need, and under the premise of finding a system that would achieve an improvement in competitiveness and agility, they decided to undertake the acquisition of custom software.
"We installed wireless technology software, radio frequency antennas with Wi-Fi, we eliminated papers, we reduced the possibilities of errors to almost zero and we expedited the time by an estimated five to one," said Chacón.
This resulted in cost reduction, optimization of process times, 95% decrease in product expiration and improvement in process quality. (IT Now Magazine, April-May 2013 edition).
Another example is the company Grupo Tecún, located in El Salvador, which has combined agriculture with satellite technology.
This company has started to implement controls using GPS and RTK satellite information on tractors. According to Víctor Santos, manager of agricultural machinery and irrigation, this has contributed to being more efficient, reducing costs and increasing profits.
“In our country, we no longer have land to grow, therefore, we have to be more efficient with our land. One of the ways to do it is using new technologies, "he added.
Through the system it is possible to optimize resources, detect the degree of development of a plant and use the correct application of the liquid, keep the machinery under proper operation, control the use of fertilizers, monitor crops, level land and avoid waterlogging.
The economic cost of this type of technology is around a farmer between US $ 5,000 and US $ 200,000, depending on the equipment and controls to be installed. (IT Now Magazine, April-May 2013 edition).
At the Hotel Punta Leona, in Costa Rica, the implementation of a CRM has given visibility to the internal work, achieving greater control and speed of response for external clients.
It started with the need to comply with ISO standards in the hotel sector, however, it became a strategy for customer satisfaction.
“Cases, internal requests and complaints from external clients are opened. It has allowed us to measure the times and movements of workers. We have reduced response times, now we know who works and who does not, "said Gustavo Castro, IT manager. (IT Now Magazine, April-May 2013 edition).
It is interesting to see the effect of the application of innovative technologies in different types of industry. Each of these clients becomes a target market with specific characteristics and needs, which are transformed into creative solutions by technology companies.
Results
To measure the impact of innovation as a strategic management technique in technology companies, we have proceeded with the application of interviews to people who interact with this industry, in order to know their criteria.
First, the most important elements that make up the strategy of a technology company were consulted and how innovation has become part of it.
In addition, it was investigated about the main challenges they face, what are the customers that make up the target market in this type of industry looking for and how products and services are marketed today.
Mr. Alfredo Darquea, who serves as Chief Financial Officer (CFO) of the GBM company, which is dedicated to the integration of information technology solutions in the Central American and Caribbean region, was interviewed.
“In order for a technology company to plan a strategy, it needs to understand the industry under which it operates, know the tastes, preferences and needs of the target customer and the characteristics of the type of product that it is going to offer, in order to define the model of market and the "skills" that are required within the organization ", indicates Darquea.
The current trend for technological innovation is being oriented to the study of unexplored areas for mankind, so that interpersonal relationships, human development and the needs that each person experiences have become the raw material for the development of new products and services in this area.
According to Darquea, talent management will be a key to success for technology companies, since human resources are the main source of new ideas, models and entrepreneurial practices that translate into what is currently called innovation.
In addition, he explains “that the main challenges facing technology companies are linked to the global change marked by globalization and the search for how to meet the needs of the industry, which focus on being competitive, being more productive efficiently and profitable.
Customers are looking for tools that allow them to streamline their processes, communications and have greater access to information. "
As mentioned, the technology industry is being marked by trends imposed by consumer needs, which are aimed at obtaining means that facilitate lifestyle, streamline processes and represent savings.
This brings as a consequence, that the leaders in the technology industry have the challenge of developing new skills and approaches that allow them to be innovative, which makes it essential to obtain knowledge about the business in which it operates, customers, suppliers and competitors and be aware of the different lines of command in the organization on the plans that make up the corporate strategy.
Innovation in technology companies
Mr. Luis Díaz, CEO of the company LAT Capital Solutions SA, which is dedicated to the implementation of SAP in the Caribbean region, Central America and Venezuela, made reference to the global trend for technology companies.
For Mr. Díaz, this has been divided into “waves”, which have different characteristics according to market demand and consumer needs.
"The latter have been shaping technological products and services, which need to be more innovative and profitable every day to satisfy customer requirements.
Díaz stressed that the key factor for the strategy of a technology company will be combining tools with the efficient use of human resources, identifying customer needs and offering competitive solutions at the price level.
"Maintaining a medium and long-term strategy requires innovation, cost reduction through value-added technological tools that allow us to be analytical and cover consumption patterns," he said.
To succeed in today's environment, companies need to lead in an environment of greater complexity and volatility, drive operational excellence and enable cross-collaboration between company functions, develop higher-quality leadership, and boost talent, as well as manage in the midst of constant change.
As mentioned by Mr. José Coto, GBM Director of Services, technology companies have bet their growth on the integration of infrastructure and services.
“Previously, it was conceived that a technology company was only dedicated to the production, sale and distribution of Hardware and Software, however, the needs of consumers manifested in the development of new industrial and commercial processes, made it necessary to rethink the strategy of sales for technology companies and looking for value-added elements that will guarantee to meet the demands raised, hence innovation arises as a means to re-emerge in the market.
A model of outsourcing of services emerges, which begins by offering the client the administration of its technological platform (computers, servers), then by managing the functions of the personnel of the information technology (IT) department, to finish with the integration of the management of the activities carried out by other operational departments of the organization (Human resources, accounting, logistics). ”
A successful case of the above, is the IBM company, which is considered one of the most innovative in the world. With the aim of generating knowledge of strategic value for the business community, this company has a large team of professionals specialized in carrying out numerous research and analysis projects in collaboration with experts from different industries and clients, says Coto.
These consultants in dozens of countries identify areas of global interest in order to anticipate changes in the industries, establish strategic and operational priorities for action, design action plans for transformation and change initiatives, and determine the best scale to measure the success.
“IBM manages human talent in conjunction with a technology platform, directing the service to an economy of scale where the main objective is to offer an optimized service model at low cost for various clients. (Business Processing Outsourcing, BPO).
The offer that has caught the attention of customers is related to reducing costs, lower risks in the process and application of best practices. This is achieved thanks to the "Know How" that is acquired through an adequate selection and recruitment of human talent, which has allowed the streamlining and improvement of processes, bringing a cultural change for many clients in the technology industry, "he said..
Today's organizations have a new way of competing through business analysis and optimization, they have higher performance and growth expectations, complemented by searching for sources of information in real time, in order to have tools that allow speed, agility and opportunity in decision making.
Conclusions
The trend of current markets involves competition between existing markets, where the differentiation is due to a drop in costs; and new markets, in which competition is irrelevant, creating and capturing new demand, seeking low costs and an increase in the value of products.
Around this premise, there is talk of blue oceans and red oceans, which are differentiated in three strategic criteria: focus, divergence and a strong message to communicate to the market. (Blue Ocean Strategy, W.Chan and R.Mauborgne).
The boundaries of the industries are defined and known to everyone, as are the rules that govern the market. In this scenario, companies try to have a better performance than their competitors in order to gain a greater share of the market. It is this market (the one in the red ocean) where space becomes crowded and products tend to become “commodities”, and expectations of growth and profitability are low.
In contrast, blue oceans are defined by an untapped market space, and constitute an opportunity for strong profits. While some of these oceans are created beyond traditional industries, they generally arise as a result of expanding the boundaries of existing industries.
After this analysis of the current trend, innovation appears, which tends to be technology-oriented, related to cost-benefit.
The important thing is to create an innovation of value that represents profit, price and cost for companies. This comes to differentiate the strategy between the companies located in the blue and red oceans.
Companies have always relied on IT to increase efficiency and for years they have tried to align their sector with business objectives to drive innovation.
Today is characterized by a sense of urgency to achieve the aforementioned, together with a global financial crisis that created an increase in demand and the creation of new technologies, such as cloud computing, mobile computing, social media and tools such as virtualization, which requires the market to be more agile.
The great complexity of the processes and the dissimilar factors that intervene in it, framed in social, economic and environmental changes that have taken place on a global scale, have led to an increasing number of countries to conceptualize new systems that are not they only understand the scope of the previous ones, but they extend their borders and field of action.
References
- Aulake, K (1999). New Information Technologies: Building a Democratic and Cultural Information Society. Vienna.BBC News (2008). The crisis in depth. Recovered from http://news.bbc.co.uk/hi/spanish/specials/2008/crisis_financiera/newsid.stmCNN en Español (2013). Everyone will be online by 2020, according to the Google CEO. Recovered from http://cnnespanol.cnn.com/El Financiero (February 2009). Krugman's thesis. Recovered from http://wvw.elfinancierocr.com/lGdaniec C (2000). Cultural Industries, Information Technology and the Regeneration of Post Industrial urban Landscapes. Barcelona.Vol. 50 Jefffft, Pratt (2002). Managing Creativity in the Cultural Industries. Creativity and Innovation Management Vol. 11.IT Now Magazine, Technology and Business in Central America and the Caribbean. Innovation, an everyday topic. April-May 2013 edition.Summa Magazine (2011). Ernst & Young: Globalization is recovering despite tension between nations. Recovered from Revista Summa (2013). The Innovation Route. Recovered from
