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IMP³rove –

The importance of InnovationManagement for Gazelles

Tallinn, April 27, 2007



210/04.2007/26344d

Agenda

Innovation Management as a growth driver

IMP³rove as new approach to generate more Gazelles



310/04.2007/26344d

Best Practice Innovation Management capabilities ofInnovation Leaders prove the growth potential ofinnovation

Source: A.T. Kearney Best Innovator Competition 2003-2006

Longer term innovation strategy as anintegral part of the business strategy basedon deeper "Customer Intelligence"

Broader scope of responsibility along theproduct lifecycle process (e.g. develop-ment project start until "time-to-profit")

More efficient use of internal & external innovation networks

More systematic idea management resulting in a higher transfer rate (# starteddevelopment project / # successful product orimplemented process)

Applying more efficiently most recent IT

technologies as enablers for "speed" and"quality"

Success of European Innovation Leaders

EBIT as % of revenue

AveragePerformers EuropeanLeaders

Significantlyhigher growth

rate thancompetition

+~4%

>10%

Cross-industry averages

Best Practice Capabilities built by Innovation Leaders

Innovation Management as growth driver



410/04.2007/26344d

1) Successful product innovation projects defined as projects that result in commercialized products;successful process innovation projects defined as projects that result in implemented process improvements

Source: A.T. Kearney

Value impact from Innovation Management improvementsis achieved mainly through four different value levers

Efficiency, Speed, and Continuous ImprovementPortfolio Management

Increased developmentefficiency to minimize unitcost while assuring required

quality levels

Acceleratedproduct ramp-up tominimize time-to-

profit

Effective Continuous Improvements(processes / product extension) to increase

customer value perception

Spendingon stopped

projects

Spendingon successful

projects1)

1

TLaunchT0 TProfit

Time-to- Market

Time-to-Profit

Cumulative

profit

2

3

4

TimeIdea

Levers to Realize Impact through Innovation Management

Increased innovation spendingeffectiveness by

better innovation strategy and funnelmanagement

Innovation Management as growth driver


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IMP³rove as new approach togenerate more Gazelles



approach

Benchmarking Consulting Follow-up

IMP³rove Consulting Process

Inno-vation

strategy

Innovationorganizationand culture

Product/process

development

Enabler, e.g. Human Resource Management,Knowledge Management, Project and Program

Management, Controlling and IT

Ideamanage-

ment

Launch/continuous

improve-ment

Innovation life

cycle management

IMC listingand ranking

Benchmarkdatabase

Online self-assessment

Library

Toolbox

Trainings

Case studies

KPIs

IMP³rove is the initiative of the EC to IMP rove I nnovationM anagement P erformance with sustainable IMP act forSMEs

Financial actors

Intermediaries

and Consultancies

Policy makers

SMEs

SME= Small and medium sized enterprise; IMC= Innovation Management Consultancy; KPI= Key Performance IndicatorSource: IMP³rove, 2007

IMP³rove as new approach



Currently the IMP³rove approach is tested with 1,500 SMEsand numerous consultants throughout Europe

Company sizes in focus

• 5-20 employees

• 21-100 employees

• 101-250 employees

• >250 employeesIncluding innovative, youngcompanies

Industry sectors in focus

• Bio-technology, chemicals andpharmaceuticals

• ICT, electrics, optics

• Machinery, equipment (plantconstruction)

• Space and aeronautics,automotive

• Knowledge intensive services

• Textile

• Food, beverages

SME = Small and medium sized enterprise; ICT = Information and Communication TechnologiesSource: IMP³rove 2007

Countries in focus 28 countries:

All member states and Switzerland




SME= Small and medium sized enterpriseSource: IMP³rove, 2007

IMP³rove offers profound benchmarking and support indeveloping innovation management capabilities


Dynamic benchmarking always

reflecting actual competitive situation

Individual definition of benchmarkingclass according to:

• Size

• Industry sector• Region

Holistic approach to InnovationManagement showing the gaps to bestpractice

Consulting workshops where roadmapfor improving the InnovationManagement performance is discussed

Strong focus on business impact of the

improvement measures

15% Growth Champions

Sample in data base for benchmarking

Basis for calculation of average

• Growth in revenue

• Growth in profit

(operational margin)• Increase in number of

employees



IMP³rove can educate SMEs to take a holistic view onInnovation Management

Source: IMP3rove, 2007, results from Pretest; sample 90 across 5 countries


5,63

4,56

4,19

3,8

3,44

0,00

1,00

2,00

3,00

4,00

5,00

6,00

208

11883

61 58

855

204

249

128

52

0

100

200

300

400

500

600

700

800

900

Producttechno-logies

& design

Serviceofferings

Process&

techno-logies

Organi-zationalaspects

Businessmodels

Productinnovations

Serviceinnovations

Processinnovations

Organi-zational

innovations

Businessmodel

innovations

Innovation strategy: Focus on selected areas Started radical innovations Started incremental innovations

Number of projects initiated by sample within last 4 yearsFocus of Innovation Strategy within sample

Preliminary results



IMP³rove Growth Champions base their success on a welldeveloped innovation strategy

Source: IMP3rove, 2007, results from Pretest; sample 90 across 5 countries

Strategic focus of Growth Champions vs. average

44%

61%

26%

43%

35%

75%

35%

55%Systematic analysisof search areas

Setting objectives forinnovation management

Using innovation strategy asguidance for improving

products, processes, services

Taking the innovationstrategy as basis for

organizational changes

Growth Champions Average

Preliminary results




SMEs in Eastern Europe analyze more thoroughly thesocio-political trends than the average to direct theirinnovation management

Based on a Lickert scale from 1(not important) to 7 (very important)Source: IMP3rove, 2007, results from Pretest; sample 90 across 5 countries

Analysis of cultural and political trends as basis for the innovation strategy

3,3

3,0

5,4

2,2Western European

SMEs

Eastern EuropeanSMEs

Growth Champions

Growth Champions

Average

Average

Growth Champions Average

Preliminary results




SMEs are reluctant to build on external networks – onlycustomers are considered in the innovation processes

Based on a Lickert scale from 1 (not important) to 7(very important)Source: IMP3rove, 2007, results from Pretest; sample 90 across 5 countries

Involving external partners in the innovation processes

2,4

1,8

1,5

3,6

2,8

1,7

2,3

5,0

Customers

Suppliers

Clusters

Universities

Growth Champions

Average

Preliminary results

2,6

1,9

1,8

3,7

2,9

2,0

2,3

3,8

1,6

1,9

1,4

4,1

1,3

1,8

2,2

4,8

Conception phase Development phase Launch phase




IMP³rove shows, where even Growth Champions still needsupport from policy makers

Source: IMP3rove, 2007, results from Pretest

High bureaucracy is a major barrier even for

Growth ChampionsPercent of Growth Champions observing high

bureaucracy when searching for financing

Example: Financing

Knowledge of funding options

Percent of Growth Champions not knowingthe financing option

Mezzanine

funding46,7 %

Grants33,0%

Publicguaran-

tees20,0%

Bank loans6,7%

Public subsidies for R&D6,7%

Public subsidiesfor R&D47,7%

Bank loans33,0%

Grants20,0%

Venture Capital6,7%

Preliminary results




1410/04.2007/26344d

www.improve-innovation.eu

Eva Diedrichs

A.T. Kearney GmbH

Kaistraße 16 a

40221 Duesseldorf

E-mail: [email protected]

Mobile: +49 175 2659 266

Phone: +49 211 1377 2266

Fax: +49 175 13 2659 266

Invitation to all:

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