Innovation management in machine and plant engineering

Product and service innovations: analyzing the status at SMEs

Few terms have dominated sociopolitical and economic discussion more in recent years than “innovation.” It is clear that innovations play a decisive role in empowering companies to secure competitiveness and develop their sites in high-wage locations. But even with the right management support, there is no guarantee that an innovation will culminate in success, although the likelihood of success is significantly higher. People in business and the academic and scientific arena are thus highly interested in working out what makes an innovation successful. Small and medium-sized machine and plant engineering companies in particular are considered innovative, and of importance, although it is dangerous to see all SMEs as the same. Distinctions have to be made between different types of companies. As part of their graduate research projects at Steinbeis University Berlin, Holger Schaaf and Christoph Thome are looking at a variety of issues, including industry-specific success factors in product and service innovation management at SMEs.

The aim of Christoph Thome’s research project is to identify the components and success factors of product innovation management and develop a kind of framework for them. A large number of companies were contacted using a standard online questionnaire. The survey resulted in 130 valid sets of data which included narrative as well as structured findings.

It was interesting to discover how the companies in the survey described the focus of their product innovation processes. The majority of respondents (42.3%) said that their company primarily concentrates on tweaks to existing products. In second place came the 30.8% of companies that primarily focus on developing products new to the company. Only 15.4% of respondents stated that their companies are developing products that are new to the market (i.e. which do not yet exist).

Christoph Thome also looked at whether companies’ innovation approach is more push or pull. In response, 49.2% of respondents said their company pursues a “pull” strategy – so product innovations generally stem from the customer. This compares to the 39.2% of product innovations where the impetus comes from the company itself.

Extracts from the narrative comments highlighted on the one hand the fact that SMEs in this sector of industry focus on small innovations, and act less as a greenhouse for market innovations. On the other, the majority of these companies also express their innovation potential through the customer, although their own creativity is by no means inferior. Thome concludes from these findings that SMEs are driven by customers and that because of this, the majority of innovations are of an incremental nature. These aspects, as well as the key components and success factors of product innovation management, are outlined in detail in his research project.

When used to underpin products, services present companies with a good opportunity to stand back from markets dominated by price competition and convey an image to the client of a provider of premium quality solutions. But it is a major challenge to innovate with services, especially for small and medium-sized enterprises. This is especially true for services that are not directly linked to the core product – i.e. customer support services. Especially in more conservative industries, such as machine and plant engineering, there is a tendency for people to focus more on material issues. Services aimed at supporting the customer are thus separate from the core business and become marginalized. Yet it is precisely these types of services that are particularly well suited to differentiating a company from its competitors, as they are difficult to copy. They also address the full requirements of clients. One of the aims of the research project being carried out by Holger Schaaf is to gauge the status of customer support services offered by companies. SMEs involved in machine and plant engineering were surveyed about their service portfolio using an online questionnaire. The survey resulted in valid data from 120 companies.

The first set of questions looked at services relating to consulting, information and training. Schaaf’s survey was particularly interested in services that are actually offered. Nearly all companies currently offer technical support 99.2%). Feasibility studies were the second most common service offered by the companies in the survey, at 63.9%, followed in third place by commercial advice given to clients, at 46.2%. Seminars and speeches gained a very similar score to costbenefit analyses, at 41.2% and 40.3% respectively. Market research, contract research and support with research and development featured among the least offered services at the moment. Some services are aimed at supporting companies by improving the way businesses work together, especially on-call services (81.1%) and project management (64.2%). Operating agreements and hotline services are only offered by a small number of the companies surveyed. The third area of services relates to enhancing business relationships. At 70.3%, the top-ranking services in this category are warranties. The narrative comments showed that the majority of companies do offer services to support customers, but many SMEs still maintain a traditional focus on material aspects. Holger Schaaf concludes this because when it comes to quantitative measurements of success, like sales, profits or margins, no direct link can be made to innovating through customer support services.

Holger Schaaf has thus taken it on himself to prompt SMEs to perceive premium value services as precisely that and not just view them as an add-on to the core product.

Both graduate students at Steinbeis University Berlin are currently finishing their research projects and, based on their findings, will be making specific recommendations for use in business.

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