Denmark: Falling behind the top-5 innovation leaders

The most recent European Innovation Scoreboard (EIS, 2009), ranks Denmark among the top-five innovation leaders, an impressive number that hides a rather grim reality. Denmark and two other of the countries in the top-five, Sweden and the United Kingdom, have not experienced annual growth in innovation performance and thus are the slow growers among the innovation leaders. In Denmark’s case, one of the reasons for this is that Danish companies are not entering into external collaborations, according to Jeffrey Saunders, Futurist at the Copenhagen Institute for Future Studies, in a presentation to the Danes Abroad Business Group Online forum. The EIS shows an 8% decline over the last five years in the collaboration among innovative SMEs in Denmark.

This is the ninth edition of the European Innovation Scoreboard (EIS), which provides a comparative assessment of the innovation performance of EU27 Member States, under the EU Lisbon Strategy.





External collaboration triples success

8% decline in the collaboration among Danish innovative SMEs

Addressing all the facets and dimensions of external collaboration is beyond the scope of this article, which aims mainly to highlight the role of external consultants in innovation projects and to propose practical ways to bring experts on board without resorting to the use of consultants.

Research by the Danish Agency for Science, Technology and Innovation (www.fist.dk) reveals the important fact that when companies collaborate, the likelihood of successful innovation doubles compared to projects conducted without collaboration. When several parties are involved in the collaboration, e.g. customers, suppliers, consultants, the likelihood of success triples. So, why do only 20% of the 9,518 companies studied by Monday Morning attribute value to the role of external consultants as the source of ideas for innovation? These numbers stand in contrast to management consultancies’ self-perceptions of their mastery of innovation.

Bringing order to complexity

Only 20% of Danish companies attribute value to external consultants as source of ideas and innovation

If, in spite of these findings, consultants are not perceived as contributing value to companies’ innovation processes, then perhaps their role should be clarified or even redefined. If Danish innovative SMEs are not among the top-performers in Europe in terms of external collaboration, then would a redefined role for external consultants help to overcome this problem: should their role be to bring external experts and explicit expertise to the company rather than introducing companies to potential collaborators and theorem?

Thomas Friedman in his seminal book The World is Flat, changed the way that many executives and the media spoke about doing business in a globalized world, how the ability to bring order to the global complexity is essential for business success and global competitiveness. Pankaj Ghemawat later rebutted Friedman’s views in his Redefining Global Strategy, but the complexity still remains.

”Dealing with complexity is an inefficient and unnecessary waste of time, attention and mental energy. There is never any justification for things being complex when they could be simple”, Edward de Bono

External consultants should have the ability to see, understand, and communicate complexity in simple terms, an attribute that is immensely valuable for the innovation management process, e.g. at the outset to set the innovation horizon. An example of a company with this ability is Firstmove, which was featured in a previous article on InnovationManagement. This company excels at identifying and interpreting firstmovers’ latent behaviours, and communicating these as future trends and market needs.

Tailoring global talents to the local

Outside consultants are not on their own the key to tripling project success. Collaboration must be diversified and must transcend the stakeholders involved, i.e. customers, suppliers, experts, etc.. Expert advice often comes with a hefty price tag and the amount and composition may need to be tailored, especially if concentrated in one or few persons. Throughout the innovation management process, questions arise and problems require resolution, and often are multidimensional, not necessarily adhering to the formal boundaries defined by professions.

The platform MillionBrains (www.millionbrains.com) is a new breed of social media platforms, aimed at solving business related problems. It is based on a hybrid theory of ‘swarming’ intelligence (Gloor, 2006) and open innovation (Chesbrough, 2006). MillionBrains brings together experts from many fields, who have registered voluntarily to provide expertise and expert comment on problems loaded onto the platform by companies, in the spirit of open innovation. 20% of the current group of experts is from China, the rest being split across the rest of the world. These volunteer experts are motivated primarily by fame and exposure to peers since the monetary rewards are modest. For companies, the rewards from opening up are access to a pool of global talent, speedier innovation and monetary benefit since they pay only for the ‘right’ idea.

MillionBrains is not the only platform offering this type of service (e.g. InnoCentive), and as more companies recognize its value and begin to incorporate these ‘talent pools’ into their innovation management processes, it is hoped that the slow growers among the innovation leaders will increase their performance. This potentially could reverse the downward slope of Denmark’s innovation performance growth.

What is your opinion? If business is global but e.g. taxation is local, does it make sense to measure and compare countries on the basis of the innovation taking place within the country’s borders?

By Frode Lundsten, MBA, Editor for Denmark

References

  • European Commission Enterprise and Industry 2010, Pro Inno Europe Paper 15 “European Innovation Scoreboard (EIS) 2009”, European Commission, Brussels
  • Friedman, T.L. 2007, The World is Flat: The Globalized World in the Twenty-first Century, 2rev edition, Penguin, New York
  • Ghemawat, P. 2007, Redefining Global Strategy: Crossing Borders in a World Where Difference Still Matter, Harvard Business School Publishing Corporation, Boston
  • Gloor, P.A. 2006, Swarm Creativity: Competitive Advantage through Collaborative Innovation Networks, Oxford University Press, New York
  • Chesbrough, H. 2006, Open Business Models: How to Strive in the New Innovation Landscape, Harvard Business School Publishing Corporation, Boston
About Frode Lundsten

Frode has more than 20 years of experience in helping companies to sustain or revitalize their growth. He has worked both in national and international contexts of business development and change management, where strategy implementation and applied innovation management has been the focus. Frode also has experience from publishing and media industry, both as a publisher and a columnist. Frode holds a MBA degree from Henley Management College, UK, where his dissertation focused on the adoption of open innovation in Danish companies. Frode is also founder and partner of Strategy2Tactics.dk.

  • http://www.agilityinnovation.com Paul Hobcraft

    Frode,
    I like how you rightly question the consultants role. Picking up on your statement “consultants are not perceived as contributing value to companies’ innovation processes, then perhaps their role should be clarified or even redefined”
    I’ve been campaigning for this change. We have far to many niche innovation consultants, who by the very nature of their specific speciaisation actually compound the inability of allowing innovation to flow. Each consultant brings his or her own unique process to the client, then leave so yet another piece of a broken value chain remains detatched.

    Consultants in general are paying this price of decreasing total demand due to not offering a more holistic view and set of solutions to innovation activity.

    Also, with open innovation, business model innovation the consultant is increasingly becoming a peripheral bit player as they do not possess the inside knowledge and increasingly why not go to the actual source of this ‘open’ knowledge- the other supplier, research institute and cut out this middle player that adds cost and often additional complexity.

    Where consultants in innovation need to reflect is where they can add value and equally important where they do contribute a clearly defined return. The pooling of ideas is far easier to diseminate within the organization than in the past, there is a greater openness to experiement so it leaves the traditional consultant increasingly vunerable.

    We need to stich together a different set of value propositions around social networking, relationships, resolving complexity issues, relating activity to strategic context and aligning innovation to corporate need. You touch on the need for explicit not implied knowledge and I do believe the innovation consultant that does not know his subject deeply will have this tougher time to engage and contribute to innovation, as it becomes increasingly complex to manage.

    As you say self-perception within many consultants of being master of the subject of innovation is changing from simplistic models and niche products and services into something that needs to be more robust in contribution and this means a broader set of expertise that meets the complexity within innovation that an organizations seeks out but consultants cannot provide.

  • http://www.pinkcat.dk Steen Koldsø

    Good article Frode, thanks

    I agree that many companies in Denmark have huge difficulties in making structure in their innovation process and few are ready to involve all employees or even customers and cooperation partners etc.

    I will like to mention Orchidea Innovation Tools too. I represent Orchidea in Denmark and Sweden. Our experience is that, in Denmark there is about 10-15 companies who have taken up structured idea and innovation management recently, using 5-6 different suppliers: Imagnatic, Hype, I-novate, Millionbrains and Orchidea and few try to build their own in Share Point istead of buying a professional IM system.

    By comparison Orchidea alone have about 30 fortune 100 companies in Finland! and large customers in Denmark and Sweden too.

    Our colleuge Steffen Lindegaard had the same views recently on open innovation that it is mostly US and Germany who are in the lead currently, and China and India will take this up, then they will come fast…

  • http://www.nos.co michael faelling soerensen

    @Steen; Browsing our increasing client list here@ Nosco, I have to say that you´re all wrong on the assumption that only 10-15 companys have taken up structured idea & innovation management!….multiply it by 10 then you will be more on the right track;-)

    @Frode & Paul – true to pick on the consultants, and the plethora of innovation methods they bring to market, only to confuse potential customers…I`ve written a – almost unbiased;-) – piece on this here; http://bit.ly/aSGSJl

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