Innovation for Industrial SMEs
As a new design driven innovation approach gathers momentum across the world, it means that industrial SMEs are now better equipped than ever to deliver excellent performance. We asked seasoned expert Duha Awayes, Head of Business Advisory Services, Protiviti Oman, to set the scene…
In recent years, the GCC nations have placed a strong focus encouraging SMEs to pay close attention in driving industrial innovation. We also witnessed a surge in the support provided at national levels for SMEs and entrepreneurs to adopt their ideas and foster an interest in industrial innovation. Nevertheless, the majority of businesses springing to live in the region are still concentrated around the services and trade industries, while original ideas in general, and in the industrial and manufacturing fields in specific are exceptionally scarce. This is an untapped opportunity for SMEs to serve the industrial sector which pleads for any form of innovation to produce products that are cheaper, safer, environmentally friendly and scalable.
The Production in the Innovation Economy Commission of MIT conducted a research which revealed that advanced manufacturing SMEs play a key role in the economy’s ability to innovate and grow because manufacturers play an essential role in developing new products, processes and services across a wide range of industries. The study also stressed on the need for a more intentional and systematic approach towards developing SME capabilities in the industrial sector.
The reluctance of entrepreneurs to venture into the manufacturing field is not attributed to the difficulties involved in setting up such establishments, nor is it attributed to the large initial capital investment required as it may appear at a first glance, because the GCC entrepreneurial support ecosystem realises the importance of this sector and provides the needed hand holding and financing for unique manufacturing ideas. A great example is Abdullah Al Badi; a thriving young inventor with an engineering background from Oman designed and patented this new breed of digital meters that also protects electrical networks. Abdullah then established “Anwar al Majed United Company” which provides a range of services such as building electrical sub-stations, laying out electrical networks and installing electronic meters. This is just one example to showcase that an agreement was in place where he was offered the technical, logistics and administrative support by Shumookh Investment and Services which is partly owned by Oman’s Public Establishment for Industrial Estates and Omani pension funds. PEIE’s subsidiary; the National Business Center incubated the company to enable it to successfully setup the factory which will operate in electrical networks areas. There are other examples that exist across the region and the sponsorship and promotion of unique manufacturing ideas is not the major issue as there are platforms and incubators that offer promising entrepreneurs the support, guidance, training and access to markets with fully equipped office space.
The scarcity of new manufacturing ventures has its deep rooted causes in the absence of innovation and original ideas but it is not caused by the lack of creativity in the entrepreneurs, because they are generally not short of ideas and they certainly do not pull ideas out of thin air. The absence of industrial innovation is hugely attributed to the unawareness of most SMEs to adopt a design-driven innovation approach which is also common amongst big organisation. The failure in this area is due to not capitalising on the design process as a tool for innovation.
Design is generally perceived as the process of crafting a product of certain qualities but this has transformed into a multi-disciplinary strategic process that is inherently innovative. As such, “Design” or “Design-Thinking” is now recognised as a technique of thinking not just at the design stage but instead, it is throughout the product lifecycle which leads to enhanced results, profit margins and consumer experience rather than the traditional context that refers only to product design.
The power of the “Designed-Driven Innovation” process, a term coined by Roberto Verganti, the Professor of Leadership and Innovation, originates from the results produced when this process is applied, because design-driven innovations do not have their origins in market needs. Instead, they identify and create new markets which do not necessarily introduce new technology but rather introduce a new meaning and experience like Apple’s ipod that changed our understanding in the meaning of listening to music. Although the market did not ask for it and probably did not know that they need it, but once it was introduced, the market embraced and loved it. Entrepreneurs need a reminder that they can enter the industrial world without getting into products that require sophisticated manufacturing facilities. Instead, they need to use the design driven innovation approach by appreciating the emotional attachment consumers place on products and introduce complimentary devices. To clarify, a remarkable example is the selfie stick or the wireless headphones for mobile phones.
When we think of industrial innovations; there are two key angles to consider. The first is in the form of a breakthrough, or a disruptive change where a new product gradually replaces an old product like LCD TVs. The second angle is in the form of an upgrade or a modification in a product feature as a response to consumer pain points or needs. Having said that, in today’s dynamic and highly competitive markets, the industrial SMEs need to be proactive and forward thinking to sustain and succeed and this can be achieved by harnessing their abilities to master innovation beyond tweaking features or function enhancements. In particular, they need to raise their awareness and truly understand the emotional ties consumers develop and place on products they purchase, and because the two innovation methods does not necessarily lend themselves to assisting innovators to understand these ties; the design-driven innovation approach is the way to go with the demanding consumers of this century who are constantly seeking to tryout better alternatives for personalised experiences.
In design-thinking and design techniques; SMEs are encouraged to employ these techniques across the value chain from the design stage of the consumer perception to the industrial and engineering design of the functional manufacturing equipment, which provides an unconventional framework to introduce innovative products that consumers may not have asked for, but they would enthusiastically buy into it if the end product delivers an enriching and enhanced experience.
Cleary, innovation is a key driver of competitive advantage for any business and this no different for industrial SMEs. Entrepreneurs must develop a strong interest in identifying new and sustainable sources of growth or disruption and this requires innovative effort to view things holistically and systematically rather than being confined to the research and development or design teams. Furthermore, the mindset has to be there to develop the ability to continuously process and transform knowledge and ideas into new manufacturing processes, services, systems and products is the fundamental success factor for any business. The promising news is that successful innovations are hardly ever accidental.
Entrepreneurs who are diligent and passionate in pursuing unexploited opportunities will be leaders in developing new market needs not just in their country or region but even at a global level.