The program should result in the development of new products, services, and concepts. Finally, the program should increase the qualifications of employees to take part in the innovation processes in the participating companies and public institutions. The program, which has a yearly budget of DKK 100 million (13.4 million euro or 20.9 million USD) and runs for four years, 2007-2010, is administered by Danish Enterprise and Construction Authority, which is part of the Danish Ministry for Economic and Business Affairs.
Søren Tegen Pedersen is the Deputy Director at the Danish Enterprise and Construction Authority, the administrative authority of the program. He was also one of the key note speakers at the recent European innovation conference in Lund, Sweden. InnovationManagement.se asked him a few questions.
You were talking about user driven innovation. Why do you focus on that and why is it important?
– Surveys show that between 75% and 96% of development projects conducted in companies fail to achieve their targets. At the same time, more than half of the managers in the world’s largest corporations are dissatisfied with the returns on innovation work performed by their companies.
– The traditional focus of innovation has been research and technological development. However, global developments are making new demands on innovation by Danish companies.
– If the innovation of companies is to hit the market with the precision, it is crucial that companies have the best possible insight into the needs and opportunities of consumers and other companies in the market sector. This is the way to improve earnings from existing and new business areas.
Deeper insights into users’ needs, both satisfied and unsatisfied, increases the likelihood of innovations being appropriate and better targeted.
– One important part of the work on innovation is to use the source of innovation from both inside and outside the companies. Deeper insights into users’ needs, both satisfied and unsatisfied, increases the likelihood of innovations being appropriate and better targeted, i.e. hitting the market with greater precision.
– User focus is also able to create better returns on investment in innovation. Applying user driven innovation methods provides the opportunity to launch solutions that offer obvious value to the customer and distinguish products from the competitor’s offer.
What would you say is the hottest trend in the field of innovation management today and why is that?
– There are many different ways of managing innovation today, therefore it is difficult to say which is the ‘hottest’. At the Danish Enterprise and Construction Authority we try to focus on different kinds of innovation methods. Our main focus areas at the moment are:
Open innovation: Instead of engaging in development projects alone and on their own, many companies are choosing to cooperate over innovation with suppliers, competitors, knowledge partners or companies from entirely different industries.
New ideas and trends spread globally in a very short time. The time to market for a new product or service, therefore, may be decisive for competitiveness. It is therefore a great strength to be able to apply the innovation efforts of other actors and gather other competencies and knowledge across geographical distances and organizational boundaries, through open innovation.
Open innovation also provide opportunities for companies with diverse strengths and wide knowledge of markets to venture jointly into new markets that they would not venture into on their own.
User driven innovation: The concept of user driven innovation covers several different approaches to identifying realized and particularly unrealized needs in the market and among users. Examples of user driven innovation methods include co-creation of products and services, and exploitation of lead users and anthropological methods.
Insight into users realized and unrealized needs offer the opportunity to launch solutions that provide obvious value to the customer and distinguish products from the competitor’s offer.
Public-private innovation partnership: In recent years we have seen examples of innovation partnerships between public institutions and private companies.
Private companies engage in such partnerships in the hope of gaining access to the knowledge possessed by the public institution and on the basis of this, develop new products and services. The public sector, on the other hand, hopes to be able to develop better services for the public.
The innovation partnerships are a new trend that contains great potential but hasn’t been examined very well yet.
Everyone is talking about innovation and how important it is. Do you agree – is it really that important.
– Innovation is very important. Innovation is a matter of improving the earnings of companies by commercial application of new knowledge and ideas, either as a result of introducing new or improved products or through the implementation of new processes, routines and procedures. Companies that innovate generally do better than companies that don’t and innovation can increase efficiency and lower production costs.
– Our studies indicate that for innovations to hit the market with precision, it is of key significance to acquire the greatest possible level of insight into the needs and opportunities among consumers and other enterprises in the market. This is the way to improve earnings from both existing and new business areas.
Which (or which ones) are the most important factors to create an innovative organization?
– It is difficult to pinpoint exactly the factors that contribute to creating a truly innovative organization. From the work we have done on user driven innovation we have seen that there are two factors in particular that are important.
– First of all it is important to have the management’s support for the innovation projects you do. Without the management’s support the likelihood of success is very limited. However, perhaps the most important thing that we keep hearing is how important it is to change the mindset of the organization. More CEOs and senior executives need to believe in the power of innovation to increase earnings, employee and customer satisfaction, and global competitiveness.
– It is not enough to do a single innovative project, be it user driven, open innovation or something else. The key element to creating a truly innovative organization is changing the way we look at innovation and adopting an innovative mind set.
By Karin Wall