What SMEs can Expect from Value-Creating Innovation Management Consulting

Owners and managers of small and medium sized companies (SMEs) are reluctant to hire consultants and even more so when it comes to innovation management consulting. And they often have good reasons to do so. They don’t see an appropriate value for the money and time they invest on innovation management consulting - especially since the quality and range of such services varies dramatically.

Consultants that support SMEs in writing proposals for publicly funded programs advertise their services as innovation management consultants. So do those who support SMEs in leveraging their creative potential or provide support in internationalisation. Therefore, the first questions for the SME owner or manager are: Do I really need an innovation management consultant? Do I want external help, and if so who is the right one for my company in light of the weaknesses I see?

Need for better innovation management

Today every SME can assess its innovation management performance with just a few mouse clicks on the IMP³rove web-site. A comprehensive benchmarking shows the strengths and weaknesses of the company’s own innovation management performance – and most likely the need for better innovation management.

Figure 1: IMP³rove Benchmarking  results (example);
Source: IMP³rove – European Innovation Management Academy; www.improve-innovation.eu

If a company achieves a consolidated benchmark view as shown in the example above, there seem to be some areas where it still can improve its innovation management performance compared to the growth champions¹ and the average of the respective peer group selected. However, the key question is: “Does that company really want to improve and therefore change its established way of working?”

Readiness to change

Some SMEs might say that these benchmarking results are just fine, especially when they reached these results by comparing their innovation management performance with several hundred companies in their industry. Others might say that they definitely need to catch up with the growth champions as they would like to (re-)gain competitiveness. The growth champions in this sample also have room for improvement. They didn’t reach the maximum scores yet. This indicates that the own company can further develop its innovation management capabilities and focus more on innovation results.

The level of ambition of the SME’s management and the change readiness of the organisation are essential for the success of any innovation management improvement project – irrespective of whether there will be support from an external innovation management consultant or not. The owner or manager of the SME needs to make a sober assessment: is this is the right time and the right topic to introduce to the organisation? He needs to develop the case for change that convinces the team to embrace new ways of thinking, new processes and procedures, new performance indicators and new ways of collaboration internally and externally. In the example shown in figure 1 the heads of management might ask themselves where to start in order to improve the innovation results. Will there be more potential in improving the innovation life-cycle processes or should the company focus first on strengthening the innovation culture and organisation. The detailed benchmarks presented in the IMP³rove Assessment report will provide further insights as basis for decision.

Management also needs to decide whether there are sufficient resources and management capacity available to drive the change for better innovation management performance right now. Often, the organization is already occupied with other projects, such as quality improvement or affected by the economic crisis coupled with down-sizing.

Selecting the innovation management consultant you can trust

When taking on the challenge to improve the company’s innovation management performance with external support the first step is to review the potential consultants’ profile following a set of criteria, such as:

  • Experience in innovation management consulting that covers at least the areas of innovation management that need to be improved as first priority
  • Focus on value-creation for theclient company
  • Having a systematic innovation management consulting process.

More important is the level of experience in the dimension of innovation management that needs to be addressed and the ability to put the identified issues into strategic perspective.

A consultant’s level of experience in innovation management consulting can be evaluated by the number of innovation management projects he/she has executed already in companies similar to the own one. However, the number of innovation management projects might be only a first indicator. More important is the level of experience in the dimension of innovation management that needs to be addressed and the ability to put the identified issues into strategic perspective. Taking our example from above, the company might have an issue with its innovation life-cycle process where they lose time and money. However, the root-cause might be in the innovation culture and organisation. Most experienced staff members are assigned to the innovation projects. At the same time, they are also called for support if there is a problem with key customers thus causing a delay in the innovation process.

Experienced innovation management consultants will focus their recommendations and measures for implementation on strong impact on the company’s business performance.  They will be able to provide their clients with a compelling rationale for the priorities they suggest rather than just concentrate on what they know best and sell only that to all their clients. SME managers can challenge the innovation management consultants’ approach by asking how the suggested recommendation improves their business performance. If, for example, an innovation management consultant suggests a creativity workshop, the SME manager may ask the consultant based on which criteria will the most creative ideas then be selected. The answer should include the consistency with the company’s strategic focus, the idea’s market potential as well as its consistency with the company’s (core) capabilities and its innovation project portfolio. The same approach should be applied if the consultant offers support in applying for public funding of an innovation project. There should be a clear rationale behind how this project will improve the business performance of the SME. Furthermore, this project should be manageable by the company. It should build on the company’s capabilities and contribute to the company’s strategic goals. If there is no common understanding in the SME about what those strategic goals are, the risk is rather high that the innovation project might not generate the business impact as expected by the SME management and/or the funding authority.

Coming to the third criteria, trust increases when the innovation management consultant has a transparent consulting process that he/she follows. This process should have at least following phases and each of the phases should generate a clear result:

  • Gain common understanding of the SME’s challenge or problem resulting in clear insights of the problem and its root-causes
  • Develop the solution to address the challenge or problem in the most effective manner resulting in a plan with clear deliverables for high business impact, timelines and responsibilities. This plan should take into account the company’s size, ability to drive such projects and urgency to change
  • Support the implementation of the solution resulting in the defined business impact.

While this process seems rather obvious, experienced innovation management consultants will take an analytic approach to verify whether the challenge or problem the SME’s management identified is the most urgent one. Often there are underlying root-causes. Still, if they are addressed with the right measures the business impact might be even higher than just curing the symptoms. In one example a SME producing high-end equipment to measure gas pollution wanted to expand their market by offering less expensive equipment to other customer segments. As it turned out, this idea of the SME’s management was not well received by the engineers in that company. Taking pride in their profession as engineers, they didn’t want to develop “this cheap stuff”. It was not a lack of engineering capability but a question of culture in that organisation. Being the premium providers in their market, the engineers had many good reasons why they would not be able to develop the equipment for the other customer segment. Here the consulting focus needed to be on the development of an open innovation culture rather than on the innovation process itself. Acknowledgement of business success rather than of the most sophisticated engineering solution had to be embedded throughout the organisation.  This requires that the consultant is able to mobilize and motivate the team, and that he/she speaks the “language” of the SME.

A clear roadmap shows the position of the SME (i.e. where in the consulting process the company currently is) and which of the commonly agreed deliverables have been achieved. This helps maintain transparency and, consequently, trust.

Hence, SMEs manager should keep in mind: The innovation management consultant is neither a wizard nor the substitute of the company’s management. In addition, do not expect the next innovation when you hire the innovation management consultant to develop your innovation strategy.

By Eva Diedrichs

Questions to ask when selecting an innovation management consultant:

  • How does the identified area to be improved affect our overall business performance?
  • What is the expected business impact of the consultant’s recommendations?
  • How does the consultant ensure transparency on the consulting process?
  • How does the consultant ensure the knowledge transfer to the SME staff?
  • Why should we work on issues such as innovation strategy, innovation culture and organisation, innovation life-cycle processes, enabling factors if we are an SME and not one of the large companies?

 

About the author

Eva Diedrichs is senior consultant at A.T. Kearney and project manager of IMP³rove and of the launch of the IMP³rove – European Innovation Management Academy (non for profit).

Photo: Business Meeting from Shutterstock.com


[1] Growth champions are defined as the average of the 10 per cent companies in the benchmarking sample that achieved the highest rate of income growth, of growth in operating margin, of growth of number of employees and  highest contribution of organic growth

 

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