It is evident that one of the most pressing needs in companies is to sell their products and services. Commercial departments work to generate sales in the short term and good commercials are highly valued by companies. Instead, Innovation is a long-term investment, doubly unpredictable. On the one hand, the very uncertainty involved in obtaining a successful result in an Innovation project. On the other hand, external variables cannot be controlled, and even less so when the innovation process can extend over several years.
However, now that we are in a deep financial crisis, the short-term view of the economy has proven very weak and dangerous. In part, the explosion of the crisis has been promoted by remuneration systems that “encouraged” managers to achieve very short-term results in order to obtain the juicy bonuses committed.
While the economy grew rapidly, the accounts have been made up, but the first crises caused the chain collapse of countless companies. In Business Schools it is taught that a company has to maintain two fundamental objectives: to obtain benefits and to maintain those benefits in the long term. It seems that we forget the second.
A classification of business strategies.
In the market we can find companies that follow different success strategies to achieve their objectives. A widely accepted classification is that of prospecting, analyzing, advocating, or reactive companies. Table 1 shows the characteristics that define each of the previous strategies. The ability to obtain positive results depends on market conditions. However, all the studies agree that companies with a reactive strategy achieve the worst results.
Table 1. Defining characteristics of the business strategies of Miles and Snow (1978).
Speed: the key to today's competitiveness.
In today's dynamic, changing and unpredictable environment, it is no longer enough to have a good product portfolio, it is also necessary to know how to develop new products and launch them quickly.
Today's markets face very different challenges than previous generations.
The life of products on the market is getting shorter and shorter. A product that goes on the market today may be out of date in a few months. Customers increasingly love the variety of products, among other things, because the high competition between companies makes them available. They are more critical, have information from different sources and can be acquired from anywhere in the world. The Internet has become the best ally for consumers to search, compare and buy what they need and at the best price.
In this sense, we find model companies in the art of running more than anyone else. Zara is a paradigm in the world for its ability to create fashion at a speed that its competitors never imagined.
Considering these factors, it appears that prospecting and analytical companies have a better chance of success than those that defend their position or that only act on the actions of others.
Create an Innovative Organization.
The development of new products and services and new ways of competing in the market requires a series of specific competencies that must be internalized and promoted.
The conclusions obtained from a study carried out by COTEC on the way in which innovation is organized and promoted in companies are interesting. Organizations with a strong culture of innovation have a series of defining features such as the following:
1. Orientation towards innovation. Companies that innovate have an ingrained culture of innovation: values, habits and practices. It is driven at the highest level and is shared by all workers.
2. Participation. Innovation requires putting a multitude of skills, resources and knowledge on the table. Innovation is a complex process characterized by its transferability. It affects different departments of the company: design, marketing, planning, production, quality, commercial, administration. There must be an environment of trust, collaboration and shared learning. Teamwork is essential and a suitable environment significantly improves results. On the other hand, the lack of unity of the team makes the projects fail.
3. Communication. There must be a chain of transmission of knowledge from the people who handle it to the project. A good connection is essential.
4. Creativity. The generation of new ideas and innovative initiatives should be rewarded.
5. Tolerance for mistakes. Innovating on many occasions is synonymous with mistakes, setbacks and failures. Here is always a well-known example. The post it notes were the result of a notorious 3M worker's search for new adhesives. What made it a success: innovative culture, creativity, tolerance for failure, etc.
6 persons. Innovative companies have personnel policies to recruit, attract, train, motivate, evaluate and retain qualified employees for R & D & i. They must be able to act as members of the organization, as components of a research group and as individuals (triple vision).
7. Integration of teams. The synergies of employees in the operation of an innovation project must be considered. The most suitable profiles for the project must be determined and sought within or outside the organization.
8. Leadership. There must be a leader with communication skills, facilitator and motivator of the innovation process. The leader must pay attention to the transmission of the project objectives, fostering motivation and commitment.
9. Collaboration with other entities. Innovation means facing unknown challenges. No company has all the answers. Collaboration with clients, collaborators, technology centers, suppliers, strategic partners… is a very significant part of the success of an innovative project.
10. Budget. Like any new project, Innovation requires that sufficient financial resources are allocated. Here it is interesting to establish an approach that considers external financing by obtaining aid.
11. Technological surveillance. Innovative companies establish formal processes to identify innovation opportunities. This includes the identification of internal sources (employees) and external sources (clients, collaborators, suppliers, knowledge centers…)
12. Standardization of the process. Innovative companies have defined the innovation process. In this sense, some models such as the UNE 166002 standard "R + D + i management systems" may be useful.
In search of a fast innovation process.
The innovation process is very complex. It requires the participation of different functions of an organization with different skills. The simplest model to formalize innovation is based on transferring responsibility for the process from one department to another in the company, from its conception to production and marketing.
Unfortunately, this structure requires very long lead times and, on the other hand, the lack of integration of the participants involved can prevent adequate results from being achieved. This model made sense in the past, but with current market conditions it would leave the company at a competitive disadvantage.
A more modern approach to the development of innovation would be an evolution of that presented by Cooper. This author proposed a structure of parallel and multifunctional phases (stages) and evaluation points (doors) in which the decision is made to continue with the process or to abandon. These models are called stage-gate (see graph 1). The stages are carried out by multidisciplinary teams from different areas of the company who share their usual work with participation in the project. The evaluation of each stage is carried out by senior management or a committee that analyzes the results obtained in each phase. The problem with this model may be in the stiffness that can lengthen the execution time.
To solve this, stage-door models have been adopted in which the different stages overlap and progress is made, although not all the steps necessary to cover the previous ones have been completed. In this way, the development time is noticeably shortened.
Regarding the functioning of work teams, studies suggest that the creation of autonomous teams is the best option to reduce development time. Project teams are groups of people with a high degree of multidisciplinarity who carry out development work outside of their usual workplace. There are organizations characterized by their dynamism that promote this type of operation, for example Google. Autonomous teams encourage brainstorming and cooperation, although they could increase development costs by doubling resources and staff.
Graph 1. Product development model. Source: Cooper 1983.
In Spain an initiative has arisen to create a standard to promote R & D & i management. The ISO 166002 standard establishes a system that includes different aspects related to the innovation process, technological surveillance, industrial property management, the structure of work teams, etc. This standard has been conceived in such a way that it can be integrated into the structure of other management systems, such as the ISO 9001 Quality Management standard. The standard could be a starting point for companies that want to formalize their innovation process and they need a formal reference. However, it is important that whatever the path chosen to formalize the process, it is integrated into the Culture of the Organization, otherwise, the system will fail.
Incentives for innovation. Making tomorrow's results profitable today.
At the beginning of this article, mention was made of the difficulty of turning innovation into a competition that offers economic results in the short term. Well, there are public incentives that support innovation broadly and help make R&D investments profitable in a short time. Although there is a wide spectrum of public aid to promote innovation, we will focus this point on Tax Deductions for R + D + i. These grants had an expiration date in 2011. However, their relative success, the requests of different entities and business groups, as well as their implementation in other countries, have forced the executive to ensure their continuity indefinitely. This fact is especially relevant for companies.Tax deductions for R + D + i are one of the most generous incentives that best fit the process of developing innovations in companies.
Tax deductions for R + D + i are regulated by the Corporation Tax Law since 1995. However, it was not until the approval of Royal Decree 1423/2003 that companies had a secure mechanism for apply tax deductions with zero risk of modification by the Tax Department. The process regulates the obtaining of the so-called "Motivated Report" by the competent administration, which requires prior certification of the project by an accredited entity. The current deduction percentages can be seen in Table 2.
Table 2. Percentages of deduction applicable for application to the Corporation Tax of research, development and technological innovation activities. Source: Consolidated Text of the Corporation Tax Law (Legislative RD 4/2004).
R & D & i deductions have obvious advantages over other incentives for innovation. In the economic sphere it has three very clear advantages:
• It is not subject to a budget appropriation, as in the case of grants. That is, regardless of the number of projects presented in an exercise, the deduction percentages will be the same in all cases, there will be no reductions in the deduction percentages to be able to adjust to the budgets.
• They do not have limitation of applicable expenses (except real estate and land). Any expense that is justified as necessary for the development of the research is deductible, including depreciable assets.
• The deadlines. The deadlines for filing and applying the deduction are fixed. The application of the deduction is made in the presentation of the Corporation Tax.
That is, the company can foresee in its budgets the amounts to be deducted and the exact moment of the year in which the deduction will apply. This is very important since companies can count on these aids in their investigations and reduce the amount to be assumed by the organization.
To qualify for this type of incentive, we propose the following methodology that has proven to give good results to identify, prepare and certify projects to obtain a Motivated Report:
1. Preliminary evaluation. Conducting an evaluation of the projects and activities carried out by the organization will help determine the technological challenges that the organization and its sector are facing, the projects that are being carried out and their difficulty.
2. Identification of research, development and technological innovation activities. At this stage, the activities of the company that can be considered deductible are analyzed in detail. For this, the definitions established by the legislation are taken into account (see table 3) but a first analysis of the existing information in scientific databases and research manuals must also be carried out.
Table 3. Definitions of Research, development and technological innovation to obtain a Motivated Report. Source: Consolidated Text of the Corporation Tax Law (Legislative RD 4/2004).
3. Making a plan. For each of the projects identified above, a plan is drawn up to determine the information to be collected at each stage of the investigation, the associated expenses and the personnel who will have to carry out the tasks.
4. Study of the state of the art and classification of activities. The most complex part of the work consists of carrying out a rigorous study of the project's state of the art and classifying the research, development and technological innovation activities according to the corporate tax law. The classification should be well documented based on internationally accepted scientific studies and research manuals.
5. Allocation of expenses. The allocation of project expenses must be done carefully and must be consistent with the stages of the project and the objectives of the investigation.
6. Presentation of documentation for certification and monitoring.
The companies that use deductions as a means to finance their research projects agree that their capacity to develop projects has improved and that they achieve economic results well in advance of what they achieved without these incentives. In many cases, companies establish permanent investigation teams and hire highly qualified technicians. These decisions had previously been postponed due to lack of budget. On the other hand, once companies gain experience with tax deductions, they can more easily apply for other types of aid dedicated to innovation.
Table 1. Defining characteristics of the business strategies of Miles and Snow (1978).
| Type | Defining characteristics |
| Prospect | It constantly redefines its products-markets. Look for new opportunities and is a pioneer. It does not have the capacity to maintain leadership in all the market-products it develops. |
| Analyzer | It makes relative changes in its products-markets. They maintain a stable line of products, but bet on some innovative developments. In dynamic markets they are followers of innovative companies and in mature markets they promote efficiency. |
| Defender | Work toward a stable position. Pursue efficiency and low cost. It has a narrow range of products and services compared to its competitors and ignores those changes that are not directly related to its operations. |
| Reactive | No competitive strategy. It does not assume the risks of developing new products or markets. Without active trading strategy, it only responds when it is pressured by the environment. |
Graph 1. Product development model. Source: Cooper 1983.
Table 2. Percentages of deduction applicable for application to the Corporation Tax of research, development and technological innovation activities. Source: Consolidated Text of the Corporation Tax Law (Legislative RD 4/2004).
|
Deductible cost |
R&D (3) |
I |
| 1. Expenses associated with the project |
25% |
8% |
| 2. R&D expenses higher than the average of the two previous years (2) |
42% |
|
| 3. Contracting with universities, opi and cit |
+17% |
12% |
| 4. Research staff with exclusive R&D dedication (+ 20%) |
+17% |
|
| 5. Investments in fixed assets (1) |
+17% |
(1) Goods exclusively assigned to R&D. Excluding real estate and land
(2) It can be calculated as Gn -, where: G = expense; n = year; n-2 and n-1 to the two years prior to the year analyzed.
(3) The percentages of costs 3, 4 and 5 are cumulative to the previous ones, that is, for some items of expense, a 59% deduction can be reached.
Table 3. Definitions of Research, development and technological innovation to obtain a Motivated Report. Source: Consolidated Text of the Corporation Tax Law (Legislative RD 4/2004).
