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INNOVATION KEY SUCCESS FACTORS
FOR SMEs ACTING ON NICHE MARKETS
Magnus Penker, July 2011
magnus.penker@bearing-consulting.com
White Paper
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
TABLE OF CONTENTS
1. INTRODUCTION TO BEARING 3
2. EXECUTIVE SUMMARY 4
3. RESEARCH OBJECTIVES, PROBLEMS AND SCOPE 5
4. REVIEW OF CURRENT THINKING 6
4.1. Type of innovations 6
4.2. Strategic innovations 8
4.3. Open innovation 9
4.4. Leadership and culture 11
4.5. Strategy, capabilities and key success factors 12
4.6. The innovation process 15
4.7. Market structure and competition 18
4.8. Conclusions 20
5. INVESTIGATION 22
5.1. Objectives, research questions and hypothesis 22
5.2. Investigation design and methodology 22
5.2.1. Research methodology 22
5.2.2. Questionnaire design 23
5.2.3. Sampling strategy 23
5.2.4. Data analysis techniques 23
5.3. Findings and analysis 23
5.3.1. Can innovation lead to competitive advantages? 28
5.3.2. Is there any difference if acting on an oligopolistic market compared with other market structures? 28
5.3.3. Which type of innovations has the most impact on competitive advantages? 29
5.3.4. What are the perceived key success factors when establishing an innovation process in order to gain competitive advantages on an oligopolistic market? 29
5.3.5. Linking innovation personas to KSFs 37
6. CONCLUSIONS AND RECOMMENDATIONS 39
6.1.1. Competitive advantages 39
6.1.2. Differences on oligopolistic markets 40
6.1.3. KSF 40
6.1.4. Organisational aspects 41
6.1.5. Recommendations 41
7. REFERENCE LIST 45
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
1. INTRODUCTION TO BEARING
Bearing Consulting Ltd. (“Bearing”) is a United Kingdom based management consulting company. We
have offices in London, Stockholm, Barcelona, Geneva and Johannesburg and we work with projects
world-wide. Bearing Consulting is a partnership, owned by senior consultants. The business was
established in 2001 and has operated under the Bearing brand name since 2004.
We work in close cooperation with academic research institutions and many international and
regional Innovation Systems. Some of our consultants have an academic career in parallel with their
consulting practice.
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
2. EXECUTIVE SUMMARY
In a world of hyper competition, innovation is imperative to gain competitive advantage. However,
the coin has a flip side, as innovations are often expensive and can be easily imitated by competitors.
In this study, the nature of small and midsize enterprises (SMEs) acting on niche markets with few
players have been investigated and explored, resulting in a set of Key Success Factors (KSF). The four
key research questions answered in this study are: Can innovation lead to competitive advantages?
Which type of innovations has the most impact? Are there any differences acting on a niche market
(with oligopolistic characteristics) compared with other market structures? What are the key success
factors when establishing an innovation process?
The investigated sample of respondents are employed, or work for firms, up to the size of 250
employees distributed all over the world within the verticals of professional services, merchandising,
retail and Technology-Media-Telecommunications (TMT).
One of the key findings is that management system innovation, sales and marketing innovations, and
product innovation confer the strongest competitive advantage. There is also trade aspect to be
taken into consideration, e.g. merchandising and retail generally rank product innovation highest
while professional services and the TMT sector rank process innovation as most important.
Moreover, data analysis confirms that technology driven innovations and management innovations
have the most positive impact on competitive advantage. Sustainability of the competitive advantage
is, however, not possible to judge according to the investigation or the literature review, as previous
research says that innovation can lead to sustainable competitive advantages, while more recent
research indicates that it might be problematic to gain sustainable competitive advantages. It is likely
that static KSF need to be replaced with a more dynamic approach, but this is out of the scope of
this study and part of Bearing Research Program.
It is also surprising that, among respondents, using innovation to keep competitors out was strongly
correlated with being a technology driver but only weakly correlated with the capability of
understanding emerging technologies and trends. This calls for a recommendation to develop
capabilities for exploring and understanding emerging technologies and trends.
Generally speaking, SMEs are strong in the ideation phase and weak in the commercialisation phase,
following the pattern observed in larger corporations. However, the investigated SMEs do not use
outsourcing to strengthen their capabilities, which is also a bit surprising, as this could potentially
increase their ability to move into new areas. This is also one of the recommendations made to SMEs
going forward with radical and technology driven innovations.
The conclusion of the study is that SMEs acting on niche markets benefit from increased profit and/or
keeping their competitors out. Perceived KSFs are partly dependent upon the purpose of innovation;
whether the firm is trying to keep competitors out or if the firm is trying to increase its profit. In
total, there are 21 KSFs, which are all important but different ranked according to the purpose, the
type innovation work, the market structure as well as the trade in which the firms operates. At the
end of the study, five comprehensive recommendations are made together with conclusions and
discussions about the findings.
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
3. RESEARCH OBJECTIVES, PROBLEMS AND SCOPE
The research problem is investigating how innovations can be used to gain competitive advantage,
and the level of analysis is set to analyse on a company level (which is also the entity). The scope
of the investigation is niche market with oligopolistic market structure and SME companies, while the
objective of the investigation is to identify perceived KSFs when establishing an innovation process
to gain competitive advantages through innovations.
The research questions are: Can innovation lead to competitive advantages? If yes, which type of
innovations has most impact on competitive advantages? Moreover, are there any differences if acting
on a niche markets with oligopolistic market structure compared with other market structures?
Finally, what are the KSFs when establishing an innovation process to gain competitive advantages on
a niche market?
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
4. REVIEW OF CURRENT THINKING
According to (Encyclopedia Britannica, Inc., 1974) an innovation is „the introduction of new
technologies, held by some writers to be a primary factor in economic growth which is the core of
my research problem‟. Innovations are driven by opportunities and capabilities. Drucker (1998)
pointed out four areas of opportunities which exist within a company: unexpected occurrences,
incongruities, process needs and industry and market changes. Outside the company, there are three
additional sources of opportunities: demographic changes, changes in perception and new knowledge.
It is also possible to consider the linkage to other organisations as an asset in itself. Tovstiga and
Birchall (2005) argue that firms are nodes in lager networks which create value by transforming
opportunities into businesses by strategic deployment of capabilities. Moreover, they argue that firms
are continuously looking for opportunities within the environment, turning them into a competitive
advantage through transformation innovation, and ultimately gaining profitable growth. To
summarise, innovation can be seen from two perspectives; from the internal perspective of a firm‟s
capabilities, and from the external market perspective where the performance can be measured and
success judged (Tovstiga & Birchall, 2005).
There are three kinds of innovation strategies that most companies apply to; there are need seekers,
market readers and technology drivers. The need seekers look for potential opportunities by
applying superior understanding of the market and rapid go-to-markets, market readers capitalise on
existing trends and understanding of markets, while technology drivers drive for breakthrough
innovations based on new technology (Jaruzelski & Dehoff, 2010).
In current thinking, there are several types of innovations that are discussed, as well as what is called
strategic innovation and innovation of business models. Another trend, known as open innovations,
is where innovations are driven in symbiosis with external parties. Many practitioners, as well as
academics, point out the importance of building the right capabilities, adopting the leadership style as
well as understanding and developing corporate culture to maximise the value of innovation work.
The literature review is divided into sections reflecting these different aspects of innovation
management.
4.1. Type of innovations
„Innovation can be categorised by level of aggregation, from the first level which is improvements on
an individual level, to the second level which is functional level like processes, to the third level which
is the company level and typically concerning the value chain and radical product and service
innovations to the last and the fourth level which is the industry level typically concerning
breakthrough innovations changing the playing field. Another way of categorise innovations is
whether it is aiming at a new market or not as well as the level of aggregation, or scope, which can
be combined as illustrated in Figure 1 (Assink, 2006).‟
„The nature of innovations can be described by the scope of innovations in combination with either a
quantifiable outcome or a non-quantifiable outcome (Tovstiga & Birchall, 2005)‟. Both Tovstiga and
Birchall (2005) and Assink (2006) point out scope, or aggregation level, as one of two characteristics
and the market or the outcome as the other characteristic. Tovstiga and Birchall (2005) point out
quantifiable and operational scope as institutional innovations while Assink (2006) points out
technology, concept or product innovations with existing means on an existing market as incremental
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
innovations. Moreover, Tovstiga and Birchall (2005) call non-quantifiable and strategic scope radical
innovations, while Assink (2006) points out new technology, concept or product innovations on a
new existing market as breakthrough innovations. Also see Figure 1.
Figure 1 Innovation Framework (Source: Assink, 2006)
Kim and Mauborgne (1997, 2005) argue that the conventional approach to staying ahead of
competitors is less successful than making the competitors irrelevant by applying what they call „value
innovation‟, which is also the cornerstone of „blue ocean strategy‟. Kim and Mauborgne (1997) define
conventional logic as the current industry logic companies applying getting competitive advantages as
well as to keep existing customers and expand the customer base through line expansions. Later,
Kim and Mauborgne (2005) renamed conventional logic as „red ocean strategy‟ (Amabile, 1998;
Hamel, 2006).
There are three platforms for value innovations and they are product, service and delivery
platforms.According to Kim and Mauborgne (2005), when applying blue ocean strategy based on
value innovation, there are six principles to follow;
Reconstruct market boundaries
Focus on the big picture
Reach beyond existing demand
Get the strategic sequences right
Overcome key organisational hurdles
Build in execution into strategy
Except for the dimensions of scope and market innovation, these might be categorised within a
typology defined by Trott (2008) and illustrated within Table 1.
Disruptive Technologies
Breakthrough innovations
Incremental innovations
Disruptive business concepts
Existing market New market
New technology/process/concept
Existing technology/process/concept
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Type of Innovation Example
Product Innovation The development of a new or improved product.
Process Innovation The development of a new manufacturing process.
Organisational Innovation A new venture division; a new internal communication system;
introduction of a new accounting procedure
Management Innovation TQM (total quality management) systems; BPR (business
processes re-engineering).
Production Innovation Quality circles; just-in-time (JIT) manufacturing systems; new
production planning software.
Commercial/Marketing
Innovation
New financing arrangements; new sales, Delivery innovations in
sales, market approaches, e.g. direct marketing.
Service Innovation Internet-based financial services.
Table 1 Typology of innovations adopted with explanations and examples (Source: Trott, 2008)
Understanding the typology of innovations will contribute to the investigation when structuring the
data collection and analysing the collected data.
4.2. Strategic innovations
Strategic moves, as Kim and Mauborgne (2005) named it, are managerial actions and decisions that
fundamentally change the business, opening new markets resulting in large leaps in demand.
Moreover, Kim and Mauborgne (2005) argue that strategic moves give the possibility of profitable
growth instead of head-to-head earlier in this section referred as red ocean strategy. Govindarajan
and Trimble (2005) point out that strategic innovations and entrepreneurship are imperative to
success in a globalised world where the economic environment is rapidly changing. Moreover, it is in
the process of strategic innovations that potential customers are explored, delivery of value is
conceptualised and analysed, and the end-to-end value chain explored and redesigned. Strategic
innovations are like experiments, characterised by the fact that they leverage on an organisation
existing capabilities but are not line extensions, are launched before competitors, require at least
some new capability and knowledge, are unprofitable the first period of time and are initially hard to
judge where successful or not. Strategic innovations are driven as projects and use existing business
as a platform, while management innovations are about changing the platform, the principle of the
business. „A management innovation creates long-lasting advantage when it meets one or more of
three conditions: the innovation is based on a novel principle that challenges management orthodoxy;
it is systemic, encompassing a range of processes and methods; and it is a part of an ongoing program
of invention, where progress compounds over time‟ (Hamel, 2006:74).
Management innovation is about management process innovation while other innovation is about
business processes like the supply chain and customer support. Typically managerial work is setting
goals, coordinating the use of resources and activities, acquiring knowledge, identifying and
developing talents, as well as building and nurturing relationship. According to Hamel (2006), the
elements of management innovation are:
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Commitment to a big management problem
Novel principles that illuminate new approaches
A deconstruction of management orthodoxies
Analogies from atypical organizations that redefine what‟s possible
A business model „consists of four interlocking elements that, taken together, create and deliver
value‟ (Johnson et al., 2008 : 52), and is one of several possible management innovations. According
to Teece (2010), new product development should be complemented with a new business model
which defines the go-to-market strategy and the capture-value strategy in order to secure
profitability. Teece (2010) point out two extremes of business models; an integrated business model
in one end and outsourced business model in the other end. The integrated business model suggests
that all activities are done in-house, from design, manufacturing to sales and distributions. The
outsourced model suggest focusing on the core capabilities and outsourcing the rest, one example
mentioned is Dolby (high fidelity noise reduction) which is a pure licensing model where everything is
outsourced.
One of the major reasons why new business models do not generate new growth is that the current
business model is not understood by the management which also make it hard to judge whether to
use existing business model or to reinvent it. Johnson et al (2008) explain that the elements of a
business model are composed of a profit formula, key resources and key processes. The profit
formula is defined to be a revenue model, cost structure, a margin model and resource velocity,
which refers to the inventory turnover and other aspects of how to utilise resources. The key
resources are about what‟s needed to operate while the key processes are about how to operate
and measure.
Strategic innovations leading competitive advantages and profitable growth is one of the aspects to be
considered when investigating the current research questions.
4.3. Open innovation
Open-market innovation is about the free trade of innovations involving external parties within the
innovation process. Innovation exchange, innovation databases, access to venture capital and
innovation agents are driving the open-market innovations that has a positive impact on the own
organisation such as insights what‟s the core business actually is, improved employee retention and
potential better revenues through licensing fees (Rigby & Zook, 2002). Henry Chesbrough, a well-
known champion of open innovation, argues that open innovation can be seen as inside-out or
outside-in. „Outside-in is where companies are using external ideas in its business, and inside-out is
where the companies offer open platforms and technologies to the market. Amazon is an example
where the internal web based systems is offered to be used by customers driving revenue, and LEGO
where they opened up to external parties to develop their new concept of programmable toy robots
called MindStorm™. The key to competitive advantage is to understand the service value web where
the company and the market interact creating value‟ (Chesbrough, 2011). Figure 2 shows the new
service value web as Chesbrough (2011) argues „focus on what is primary value creating and
complement Michel Porter‟s Value Chain‟s week spot, namely the customer interaction part of the
value chain‟.
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 2 A Service Value Web (Source: Chesbrough 2011)
Huston and Sakkab (2006) point out that external parties, or „networks‟, are not guarantees for
earning money. It is more like a system; dependent on how you use it you can bring ideas and
capabilities together – Connect and Develop, which also is the basis and name of Proctor & Gamble‟s
model for innovations‟. Nambisan and Sawhney (2007), on the other hand, argue that ideas and/or
market-ready concepts can very well be bought, which is a kind of outsourcing in itself. When
shopping ideas or market-ready both concept industry factors as well as company factors have to be
taken into consideration. Industry factors that typically need to be taken into consideration are pace
of technological and market change, innovation potential, and costs. Typically, company factors to be
considered are the purpose of the innovation, product capabilities, company size and risk appetite.
One example of outside innovations, where external parties are driving innovations, is Nintendo, a
manufacturer of hardware game consoles which encourages third party businesses to develop and
sell games on their platform (Boudreau & Lakhani, 2009). „From our research, we have identified
three critical issues that managers should take into account when they make the decision [starting
with open innovations]. Specifically, the discussion must look at: (1) the type of innovation, (2) the
motivation of the individual innovating and (3) the nature of the platform business model‟ (Boudreau
and Lakhani, 2009:70).
The motivation of external innovators can be divided into extrinsic and intrinsic motivators, as
explained by Boudreau and Lakhani (2009), where open markets are driven by extrinsic motivators
such as money and need for development while communities are driven by intrinsic motivations such
as identity, fun and intellectual challenges. An example of a community is Linux and an example of
open market is iTunes. There are three kinds of platforms, integrator platforms, product platforms
and two-sided platforms. The integrator platforms are platforms such as iTunes and iPhone where
customers get in contact with innovators through the platform, while product platforms such as
Gore-Tex offer external innovators the possibilities of innovation and selling to customers, and the
two-sided platform is typically affiliate programs where external innovators directly interact with
customers.
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However, there are also concerns such as intellectual properties might be tricky to handle when
people outside the organisation is generating ideas, as well as many companies have difficulties using
the results (Brinkinshaw, Bouquet, & Barsoux, 2011).
Within the investigation, the open innovation market was one of the possibilities to investigate in
order to gain competitive advantages on an oligopolistic market. Moreover, the linkage to the
business model was of interest to the investigation.
4.4. Leadership and culture
Rigby et al. (2009) argue that creative fashion businesses are virtually always lead by a right-brain
individual with imagination in partnership with a left-brain individual with analytical skills. Another
possibility of getting the dynamics is to „assemble small incubation teams to help directors refine their
own ideas‟ (Catmull, 2008). According to Leonard and Straus (1997), the mix of the teams is
important, and ‟if you want an innovative organisation, you need to hire, work with, and promote
people who make you uncomfortable… [y]ou need to understand your own preferences so that you
can complement your weaknesses and exploit your strengths‟ (Leonard & Straus, 1997). According
to Kelly & Littman (2005), there are ten typical personas needed to drive creativity through an
organisation. „The Devil´s Advocate may never go away, but on a good day, the ten personas can
keep him in place‟ (Kelly & Littman, 2005).
The idea behind Kelly and Littman‟s (2005) ten personas is to create a climate and culture stimulating
innovative working, from idea to results. One person might have one or several personas and the
important thing is to make sure all profiles are present within an organisational context to stimulate
and support the innovation processes. The ten personas are divided into learning personas,
organisational personas and building personas. The learning personas are individuals digging for new
sources and knowledge, while the organisational personas are the ones structuring, challenging and
orchestrating the work. The building personas are typically the intellectual architects, the storyteller
and the caregiver as well as the one setting up a proper environment.
People, team composition and leadership are all important components as well as the process of
running the creative work. Breakthrough thinking is about orchestrating the brainstorming process
asking the right questions and not just let people brainstorm without any guidance. Generally
speaking, people are not very efficient when running unstructured and abstract discussions without
clear goals or at slicing data in all kinds of ways. Instead exploring unexpected success, looking at
other trades with similar challenges and boundaries as well as examine binding constraints are more
effective ways of orchestrating the creative processes (Coyne, Clifford, & Dye, 2007).
Moreover, people need to be motivated and encouraged. The motivation is both intrinsic and
extrinsic, however just extrinsic motivation is not enough, and if not complemented with intrinsic
motivation, it can actually destroy the creativity as people might feel controlled. The intrinsic
motivation is the strongest mean and gives the work meaning. It can be achieved by assigning the
proper assignments to the right people, give freedom, allocate resources and encouraging work
(Amabile, 1998).
A well-known innovative practitioner, Steve Jobs, has developed seven principles for breakthrough
thinking and success. Gallo (2011) has documented Steve Job‟s seven principles in his book;
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
‟Principle 1: Do What You Love‟ (Gallo, 2011:13)
‟Principle 2: Put a Dent in the Universe‟ (Gallo, 2011:43)
‟Principle 3: Kick-Start Your Brain‟ (Gallo, 2011:79)
‟Principle 4: Sell Dreams, Not Products‟(Gallo, 2011:103)
‟Principle 5: Say No to 1,000 things‟ (Gallo, 2011:135)
‟Principle 6: Create Insanely Great Experience‟ (Gallo, 2011:173)
‟Principle 7: Master the Message‟ (Gallo, 2011:197)
A key part of the problem is that different kind of innovation problems call for different kind of
solutions. Just a few different styles of strategy innovation seem to solve innovation problems in the
most successful firms (Loewe, Williamson, & Wood, 2001). The five styles are given metaphoric
names and are:
The Cauldron: An entrepreneurial style where the business model is frequently challenged.
The Spiral Staircase: A style where you climb upwards without losing the over-all goal.
The Fertile Field: A style where the organisation tries to use existing capabilities and resources in
a new way.
The PacMan: A style where you invent, outsource and finance start-ups.
The Explorer: A style where you explore possibilities and invest time and money in them without
demanding short-term profit.
Govindarajan & Trimble (2005) have pointed out the importance of letting strategic innovations
become new ventures where they borrow resources from the corporation (mother company) but
are not influenced by past success or ideas about do and don‟ts. Ventures might be spin-offs,
strategic experiments or innovations with business models and all have in common that they are
strategic innovations driven as separate ventures founded, financed and deployed with resources
(staff, systems, structures, culture) by the corporation but are autonomic and eventually lead by
external hired management. (Govindarajan & Trimble, 2005).
According to Day (2007), innovations can be structured and managed within a portfolio to handle
risk and revenue. „By managing potential revenue and risk within a portfolio of innovation projects,
better return can be reached over time‟ (Day, 2007).
According to reviewed literature, it seems as though leadership, culture, how to put together teams
in combination with risk and portfolio management of innovation process as well as potential and
controlled spin-off of strategic innovation projects are fundamental to success. Insights gained in this
part of the literature review can be used to structure the data collection within the investigation in
order to understand and explore how innovation work can be, and is, structured in terms of
leadership style, culture, team composition, portfolio and risk management as well as how creativity
is stimulated.
4.5. Strategy, capabilities and key success factors
According to Jaruzelski and Dehoff (2010), most of the world‟s 1000 innovation top spenders follow
one of following three innovation strategies:
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Need seekers, companies actively working with their end-customers understanding how to develop
and offer superior value to the market.
Market readers, watching and analyzing market trends and capitalise on proven trends.
Technology drivers, using new technologies to solve problems, sometimes not articulated. Can be
both disruptive as well as improvements.
Organisations need to renew themselves and today‟s business environment is especially demanding
and is characterised by rapid changes in demand, technology and competition. Innovation is driven by
technology competence as well as customer competence such as customer insights, distribution
channels, communication and brand as well as reputation management (Danneels, 2002). The ability
to learn about customers and new technology is a critical capability in today‟s competitive landscape.
A capability „represents a distinctive and superior way of allocating, coordinating, and deploying
resources‟ (Amit and Schoemaker, 1993; Schreyogg and Kliesch-Eberl, 2007, cited by Flynn, Wu, and
Melnyk, 2010:247). Moreover, capabilities are firm-specific, emerge step-by-step, are tacit, dependent
upon the decision maker and are empirically validated over time (Flynn, Wu, & Melnyk, 2010).
Tovstiga and Birchall (2005) argue that successful innovation is strongly linked to capabilities to gain
knowledge, learn and change. According to Tovstiga & Birchall (2005:266), „the firm‟s capabilities are
the internal competitive activities with which the firm intend to fulfil and deliver on the key success
factors [which are related to the industry]‟. However, smaller firms tend to outsource their core
organizational competencies, while medium-sized firms tend to outsource non-core activities (Haq &
Sen, 2011).
Driving for disruptive innovation is related to external factors as well as internal factors and certain
capabilities. Assink (2006:219) states that disruptive innovation capabilities are ‟the internal driving
energy to generate and explore radical new ideas and concepts, to experiment with solutions for
potential opportunity patterns detected in the market´s white space and to develop them into
marketable and effective innovations, leveraging internal and external resources and competencies‟.
Moreover, Assink (2006) has identified five clusters of key inhibitors of those disruption capabilities:
Adoption barriers, meaning many successful enterprises losing their innovation edge only
working with improvements and not disruptive innovations and out-of-the-box thinking.
Mindset barriers, meaning many firms have problems to unlearn.
Risk barriers, typical not-invented-here syndrome and focus on old experience and
knowledge that were relevant and true in the past.
Nascent barriers, lack of motivating people being innovative and creative when the
company grows.
Infrastructural barriers, at first there is challenges with standards and after launch
challenges with conservatisms on the market.
As earlier stated, Jaruzelski & Dehoff (2010) pointed out three kinds of innovation strategies, of
which the technology drivers were the disruptive one. All three strategies are shown in Figure 3,
which also show how Jaruzelski & Dehoff (2010) link critical categories of capability to the three
different strategies where disruptive technology driver‟s success is especially linked to the capability
of understanding emerging technologies and trends as well as product life-cycle management.
According to this literature review, it seems that different strategies call for different capabilities and
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
that these capabilities are linked to the fulfilment of key success factors in the trade. Technology
driven strategies call for a culture of motivation, unlearning, challenging, opportunism, high focus on
product-life cycle and infrastructural issues as well as being able to allocate, coordinate and deploying
resources (Tovstiga and Birchall, 2005; Assink, 2006; Flynn et al., 2010; Jaruzelski and Dehoff, 2010).
Figure 3 Critical and Specific Capabilities by Strategy (Source: Jaruzelski & Dehoff, 2010)
The concept of KSFs can be used in several ways and one of these ways is „as a description of the
major skills and resources required to be successful in a given market‟ (Grunert & Ellegaard,
1992:Executive Summary). KSFs can be divided into perceived and actual key success factors. The
perceived KSFs are measured with interviews and actual KSFs by collecting objective or semi-
objective data that shows correlation between cost and perceived value. There are several sources
of KSFs, which can be identified within the industry, the competitive strategy and the company‟s
position. If a KSF matches a firm‟s strength, i.e. one of its capabilities, this will cause a positive impact
on the performance of the firm within the market place. However, to be successful the company
must be able to be used within a cost effective way, otherwise it will just be a slack (Grunert &
Ellegaard, 1992).
Tovstiga and Birchall (2005) state that „examples of key success factors include the ability to:
Deliver superior value through products and services
Carry out competitive manufacturing and commercial process reviews
Attract superior talents, employees with critical expertise and skills
Grow the business through competitive pricing and marketing image
Establish and maintain a long-term relationship with satisfied customers…‟
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INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Moreover, Tovstiga and Birchall (2005) also point out that not all capabilities are always fully
exploited and might have a strong or a week impact on the performance of the firm.
Jaruzelski and Dehoff (2010) point out that innovative companies are coherent with the capabilities
shown in Table 2 are in general more differentiated and have higher margin (EBITDA) as well as
higher market capitalisation relative to their competitors.
Category Capability
Ideation
Supplier and distributor engagement in ideation process
Independent competitive insights from the marketplace
Open innovation/capturing ideas at any point in the process
Detailed understanding of emerging technologies and trends
Deep consumer and customer insights and analytics
Project selection
Strategic disruption decision making and transition plan
Technical risk assessment/management
Rigorous decision making around portfolio trade-offs
Project resource requirement forecasting and planning
Ongoing assessment of market potential
Product
development
Reverse engineering
Supplier–partner engagement in product development
Design for specific goals
Product platform management
Engagement with customers to prove real-world feasibility
Commercialisation
Diverse user group management
Production ramp-up
Regulatory/government relationship management
Global, enterprise-wide product launch
Product life-cycle management
Pilot-user selection/controlled rollouts
Table 2 The Most Important Innovation Capabilities (Source: Jaruzelski & Dehoff, 2010)
Within the investigation the concept of KSFs, capabilities and strategies, Jaruzelski and Dehoff‟s
(2010) framework of the most important capabilities for innovation can be used to structure data
collections as well as serving as a tool for analysing the collected data.
4.6. The innovation process
Managing innovation work is related to uncertainty and, according to Trott (2008), there can be
uncertainty within the process or the outcome or a combination, which is illustrated in Figure 4.
Application engineering is a typical innovative product development managed by a well-defined
16
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
process, while development engineering is more unstructured but with a well-defined goal. The
exploratory research are also referred to as blue sky as it is up in the clouds working with new
technologies not fully understood with a fuzzy goal or idea what to achieve (Trott, 2008).
Figure 4 Pearson's uncertainty map (source: Pearson, 1991 cited by Trott, 2008)
There is a lack of a general innovation process, covering all aspects of innovation management.
However, New-Product-Development Processes are most common and the general steps are:
Idea generation; initial screening and preliminary assessment
Definition; market analysis and preliminary financial analysis, decision on business case
Development
Post-review
Validation; including in-house-tests and pre-commercialisation decision
Commercialisation
Post-implementation review
Projects typically have a sponsor and en executive team that make decisions about each tollgate.
Often projects are organised in portfolios, which are managed to create maximum impact at a
defined level of risk (Tovstiga & Birchall, 2005).
Another view on innovation management, rather than a traditional process approach, is Sawhney,
Wolcott and Arroniz‟s (2006) innovation radar, shown in Figure 5, which is a 360-degree tool to map
and benchmark innovation work. The innovation radar is a way of analysing, in a holistic way, the
outcome of innovation work in terms of customer value as well as a benchmark against other actors
on the market. Moreover, it is way of getting the whole picture not missing any relevant aspect of
what to innovate gaining customer value (Sawhney, Wolcott, & Arroniz, 2006).
Applicationsengineering
Exploratoryresearch
Combining market opportunities with
technical capabilities
Developmentengineering
Uncertainty about process
Uncertainty about output
HighLow
High
Low
17
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 5 The Innovation Radar (Source: Sawhney, Wolcott, & Arroniz, 2006)
The value of innovation, generated within an innovation process, can be measured by applying Key
Performance Indicators (KPI) as shown in Table 3. The KPIs are divided into three groups, idea
generation, conversion and diffusion of the innovation (Hansen & Birkinshaw, 2007).
01234567
Offerings (What)
Platform
Solutions
Customers (Who)
Customer Experiance
Value Capture
Process (How)
Organization
Supply Chain
Presence (Where)
Networking
Brand Case 1
Case 2
18
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Idea Generation Conversion Diffusion
In-House Cross-
Pollination
External Selection Development Speed
Key
Quest
ions
Do
people in
our unit
create
good
ideas on
their
own?
Do we
create
good ideas
by working
across the
company?
Do we
secure
enough
good ideas
from
outside the
firm?
Are we
good at
screening
and
funding
new
ideas?
Are we good
at turning
ideas into
viable
products,
businesses,
and best
practices?
Are we good at
diffusing
development
ideas across the
company?
Key
Perf
orm
ance
Indic
ator
Number
of high-
quality
ideas
generated
within a
unit.
Number of
high-quality
ideas
generated
across
units.
Number of
high-quality
ideas
generated
from
outside the
firm.
Percentag
e of ideas
generated
that end
up being
selected
and
funded.
Percentage of
funded ideas
that lead to
revenues;
number of
months to first
sale.
Percentage of
penetration in
desired
markets,
channels,
customer
groups; number
of month to full
diffusion.
Table 3 Innovation Management KPI (Source: Hansen & Birkinshaw, 2007)
The generic process steps „The stage gate process at Agilent‟ (Tovstiga & Birchall, 2005), the
„Innovation Radar‟ (Sawhney, Wolcott, & Arroniz, 2006) as well as Hansen & Birkinshaw‟s (2007)
KPIs are all usable tools when discussing KSF and looking at how to measure and manage them.
4.7. Market structure and competition
Thirty years ago, Michael Porter introduced his framework „Five Forces‟ (Porter, Competetive
Strategy: Techniques for Analyzing Industries and Competision, 1980) and the concept that
competition is made up of five forces. The five forces are entry of new competitors, threats of
substitutes, barging power of buyers, barging power of suppliers and rivalry among the existing
competitors (Porter, Competetive Strategy: Techniques for Analyzing Industries and Competision,
1980). According to Porter (1990, 1996), competitive advantage is gained by pressure and challenge
and sustainable competitive advantage is gained based on something distinctive and different within a
company, and not just excellence in operation and cost-cutting, which will always converge within the
industry.
The market today is global and hypercompetitive, no competitive advantages is sustainable and all
competitive advantage erodes. Companies must actively aim to disrupt their own as well as their
19
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
competitors competitive advantages in order to cope with the hyper competitive market, and for
that a new 7S model has been developed; to be used to identify own strengths and weaknesses as
well as analysing the industry and the competitors (D'Aveni, 1995). Figure 6 shows D'Aveni‟s (1995)
7S‟s model.
Figure 6 The new 7S’s model (Source: D'Aveni, 1995)
However oligopolistic market structure has an inherited dualistic nature, it provides you with a
competitive advantage but competitors will imitate and you need to innovate over and over again;
leading to less growth than in a market with more competition and/or larger population (Shrieves,
1978; Le, 2008).
When it comes to innovation of business models, they are possible to imitate as they become known
to the market when launched. When launching a new business model one should always calculate
what competitors‟ moves will be; which can be either reduced price or new business models
(Casadesus-Masanell & Zhu, 2010).
In the work of D‟Aveni et al. (2010), they point out that in a world of hyper competition sustainable
competitive advantages might not exist anymore or at least not over time and as one single
competitive advantage. They comment that temporary competitive advantages are increasing in
importance and perceived sustainable competitive advantages are decreasing in importance as the
market becomes more complex and it gets increasingly easier to imitate and/or disrupt earlier
previous competitive advantages. They suggest using chaos theory models, as well as the theory of
complex systems, to deal with the new situation at the same time as they open for the possibility that
temporary competitive advantages might just be a special case of Porter‟s five forces, where low
barriers and low entries are combined with high power of suppliers and buyers leading to an hyper
20
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
competitive industry rivalry with many and short competitive advantages. Their conclusion is that
firms must build their ability to search for and adopt temporary competitive advantages being able to
handle multi-strategies to gain and keep market share.
When answering the research questions and designing the data collection method, it is of relevance
to take the market structure and its complications into consideration.
4.8. Conclusions
According to Tovstiga and Birchall (2005), innovation is used to differentiate firms based on its
capabilities to gain a competitive advantage on the market, and the perspective of innovation can
either be internal factors as the capabilities or external factors as whether an innovation, based on
the supply and the demand, will succeed or not. In the literature review, it is clear that innovations
can be incremental and disruptive, and that there are several kind of possible innovation strategies
such as need seekers who look for potential opportunities by applying superior understanding of the
market and rapid go-to-markets, market readers who capitalise on existing trends and understanding
of markets, and technology drivers who drive for breakthrough innovations based on new technology
(Jaruzelski & Dehoff, 2010). Internally, possible capitalisation of capabilities, according to, for example,
Kelly and Littman (2005), Coyne (2007), and Loewe et al. (2001), seems to be dependent upon
leadership style as well as personalities of the people and the organisation. Moreover, each strategy,
according to Jaruzelski and Dehoff (2010) call different capabilities to success. The capabilities for
success, or KSFs, can also be divided into actual and perceived key success factors (Grunert and
Ellegaard, 1992). Actual KSFs are the ones that by certainty lead to expected results, while the
perceived ones are expected to lead to certain results There are also, according to the literature
review, several kinds of innovation possibilities - according to Trott (2008), there are eight kinds of
innovations.
According to the literature review, it seems clear that innovation might provide competitive
advantages but, according to researchers such as Le (2008) and Shrieves (1978), it is a dualistic
relationship between innovation and oligopolistic market structures, it provides you with a
competitive advantage but competitors will imitate and you need to innovate over and over again;
leading to less growth than in a market with more competition and/or larger population.
In the investigation, the literature review will provide the foundation for designing the data collection,
as well as academic and practitioners thinking, to compare and contrast the key finds against.
The data collection will be based on the findings in the literature review and structured around three
key questions; Why, What and How as shown in Figure 7, based upon the work of Jaruzelski and
Dehoff (2010), Trott (2008), Kelly and Littman (2005) and Loewe et al (2001).
21
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 7 Why, What and How to innovate, based upon the work of Jaruzelski and Dehoff (2010), Trott (2008), Kelly and Littman (2005) and Loewe et al (2001).
Wh
y Company Strategy
•Incremental/ Disruptive
•Need seekers
•Market readers
•Technology drivers
Wh
at Product Innovation
Process Innovation
Organisational Innovation
Management Innovation
Production Innovation
Commercial/Marketing Innovation
Service Innovation
Ho
w Style
•Cauldron
•Spirale
•Fertile
•PacMan
•Explorer
People
•10 Faces of Innovation
Capability
•Ideation
•Project selection
•Product development
•Commercialisation
22
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
5. INVESTIGATION
5.1. Objectives, research questions and hypothesis
In order to fulfil the objective of the investigation, the following research questions shall be
answered:
Can innovation lead to competitive advantages?
Which type of innovations has the most impact on competitive advantages?
What are the perceived KSFs when establishing an innovation process in order to gain
competitive advantages on an oligopolistic market?
Are there any differences when acting on a niche market with oligopolistic characteristics
compared with other market structures?
Based on the literature review, the hypothesis is that innovation can lead to competitive advantages if
the leadership, strategy, culture, processes and capabilities are in place (Quelin, 2000; Loewe et al.,
2001; Danneels, 2002; Govindarajan andTrimble, 2005; Kelly and Littman, 2005; Tovstiga and Birchall,
2005; Day, 2007; Rigby et al., 2009; Flynn et al., 2010). However, there are different reasons to
innovate, which can be need seekers, market readers and technology drivers (Jaruzelski & Dehoff,
2010).
Regarding the second research question, about what type of innovations that have most impact on
competitive advantage, the literature review supports the hypothesis that strategic innovations, such
as disruptive technologies, management innovations or new business models, are most likely to
provide sustainable competitive advantages (Kim and Mauborgne, 1997; Govindarajan and Trimble,
2005; Hamel, 2006), which will be explored within the investigation.
Based on the literature review, the hypothesis is that the capabilities for success, stated within
Jaruzelski and Dehoff (2010) and shown in Table 2, is general KSFs also valid for oligopolistic markets
as several of the top performances, acting on an oligopolistic market (e.g. Google, Apple, Toyota and
Intel).
5.2. Investigation design and methodology
5.2.1. Research methodology
The research is deductive where the hypothesis, gained from the literature review, is tested and then
linked back to research questions. The research objective is descriptive; it is about understanding and
discussing the impact of the perceived KSFs when establishing an innovation process in order to gain
competitive advantages on niche markets with oligopolistic market structure. The research design is
fixed and quantitative, based on primary data. Primary data collection methods are divided into
surveys as well as observations, whereas surveys can be self-completion surveys or interview-based
surveys (Hair, Money, Page, & Samouel, 2007). The data collection method that will be used is self-
completion via an internet-based questionnaire.
In the investigation, secondary data also will be used for compare and contrast. The source of the
secondary data will the listed capabilities from Jaruzelski and Dehoff (2010), shown in Table 2.
23
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
5.2.2. Questionnaire design
In order to be able to answer the research questions fulfilling the research objective, the
questionnaire has been divided into five sections covering company data, why innovate, what to
innovate, how to innovate and results.
5.2.3. Sampling strategy
In this study, purposive sampling, also called judgmental sampling, is used as sampling method as a
very specific kind of organisations, the unit of interest, will be analysed, i.e. niche SMEs acting on an
oligopolistic market where innovation is used as a part of their corporate strategy.
5.2.4. Data analysis techniques
The data was collected in a database where all data is coded. No editing is required as all questions
are mandatory and no questionnaires will be closed without being complete. Moreover, the
questionnaires was tested on a sample before final data collection.
The secondary data from the study with Jaruzelski and Dehoff (2010) is used to discuss and enrich
the generalisability of the collected data in the survey.
A limitation with the research design is that actual KSFs are not investigated, and another limitation is
that the survey does not measure how the firms perceive their actual KSFs. Instead, the survey is
focused on perceived important KSFs within the organisations investigated.
5.3. Findings and analysis
The investigated sample of respondent is employed or work for firms up to the size of 250
employees. The distribution of employees is shown in Figure 8, and as
Figure 10 shows, 83% are operating on the European market. The three major trade segments
among the respondents are professional services (37%), merchandising and retail (34%) and
Technology-Media-Telecommunications (TMT).
Africa3%
Asia3%
Europe83%
North America9%
South America2%
Geographical market
24
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 8 Number of Employees of the respondents
Figure 9 Trade of respondents
1 - 10 Empl.31%
11 - 50 Empl.40%
51 - 250 Empl.29%
Number of Employees
Venture Capital2%
TMT (Technology-Media-
Telecommunications )21%
Professional Services, e.g. education,
training, consulting
37%
Merchandising and retail
34%
Helthcare2%
Industry, e.g. manufacturing
and raw material4%
Trade
25
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 10 Geographical market of the respondents
The reason for innovating is mostly linked to perceived needs and possible improvements, as can be
seen in Figure 11, however as also shown, radical changes is an important reason to innovate. The
respondents, in general, seem to seek needs and market opportunities prior being driven by new
technologies. There is no significant difference between the different trades in which the respondents
operate.
Figure 11 Why innovate
Africa3%
Asia3%
Europe83%
North America9%
South America2%
Geographical market
-
1,00
2,00
3,00
4,00
5,00
6,00
7,00
All respondents, average
TMT, average
Professional Services average
Merchandising and retail, average
26
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
On average, the respondents innovate their processes, sales and marketing at most and their product
systems at least. However, as Figure 12 shows, the spread of product innovation is rather high.
Merchandising and retail innovate products prior to other innovations while professional servise
score lowest on this category.
Figure 12 What to innovate
The innovation style of the respondents is, according to Loewe et al.‟s (2001) typology, The
Cauldron, The Spiral Staircase and The Fertile Field, while no respondent‟s organisation is a PacMan
or Explorer (shown inFigure 13). The major innovation style is The Cauldron, which is an
entrepreneurial style where the business model is frequently challenged (Loewe, Williamson, &
Wood, 2001).
In Figure 14, innovation style is distributed upon the questions about whether the competitor is
imitating or whether the respondent‟s organisation is imitating, as well as whether the respondents
believe innovation leads to better profit and/or keeping the competitors out of their market. The
entrepreneurial innovators, the Cauldrons, are most convinced that they keep the competitors out
by innovations, while The Spiral Staircase innovators,a style where you climb upwards without losing
the over-all goal (Loewe, Williamson, & Wood, 2001), are most convinced that they get better profit
from applying from innovation and that they are imitated by their competitors. The Fertile Field
innovators, a style where the organisation tries to use existing capabilities and resources in a new
way (Loewe, Williamson, & Wood, 2001), are imitating their competitors most among the
respondents. The Fertile Field respondents are also convinced that innovation leads to higher profit
and helps slightly to keep the competitors out. However, The PacMan style, a style where you invent
and outsource and finance start-ups. (Loewe, Williamson, & Wood, 2001), is not represented by any
of the respondents which is contra indicatory to Haq and Sen‟s (2011) belief that smaller firms tend
to outsource their core organizational competencies, as 71% is of the respondent‟s organisations are
small firms with less than 51 employees. No conclusions can be made, and further research is
needed. Neither is the The Explorer, a style where you explore possibilities and invest time and
money in them without demanding short-term profit, represented. One possible explanation for this
-
1,00
2,00
3,00
4,00
5,00
6,00
All respondents, average
TMT, average
Professional Services average
Merchandising and retail, average
27
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
could be the fact that the sample is SME companies, which normally have smaller budgets than larger
companies.
Also interesting to notice is that, in Figure 14, more respondents state that they are imitated than
imitating, which might be the perceived reality but questionable.
Figure 13 Innovation style, based on Loewe et al. (2001) typology, from left to right; The Cauldron, The Spiral Staircase, The Fertile Field , The PacMan, and The Explorer.
Figure 14 Innovation style distributed on competition aspects
0
5
10
15
20
25
30
Entrepreneurial where the
business model is frequently challenged
You clime upwards without losing the over-all
goal, always innovate to do things better
Tries to use existing
capabilities and resources in a
new way
We invent and outsource it
We explore possibilities
investing time and money
without demanding short-
term profit
Innovation Style
0
1
2
3
4
5
6
7
Our competitors are imitating
our innovations
We are imitating our competitors innovations
We keep our competitors out by our innovation
work
We believe we do get
better profit from driving innovation
work
Entrepreneurial where the business model is frequently challenged
You clime upwards without losing the over-all goal, always innovate to do things better
Tries to use existing capabilities and resources in a new way
28
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
5.3.1. Can innovation lead to competitive advantages?
Based on the literature review, the hypothesis is that innovation can lead to competitive advantages.
On a 7 point Likert scale, the respondents state that they somewhat (5.85 in mean and 6.0 in
median) agree that they get better profit by driving innovation work and slightly agree (5.02 in mean
and 5.0 in median) that they keep the competitors out by working with innovation. The results are
shown in Table 4, and the standard deviation is small (1.45 and 1.35) with a mean and median which
are close to each other, meaning that this is the general opinion without large deviations. Based on
the literature study as well as the data analysis, the conclusion can be drawn that SMEs‟ action on an
oligopolistic market can gain competitive advantages by applying innovation thinking and acting
resulting in better profit or keeping the competitors out.
We keep our competitors
out by our innovation
work
1-7
(7=Strongly
Agree)
We believe we do get
better profit from driving
innovation work
1-7 (7=Strongly
Agree)
Mean 5,02 Mean 5,85
Median 5,00 Median 6,00
Standard Deviation 1,45 Standard Deviation 1,34
Table 4 Competitive advantage of innovation
5.3.2. Is there any difference if acting on an oligopolistic market compared with other market
structures?
Based on the literature review, the hypothesis is that innovation not necessarily will provide higher
growth on an oligopolistic marker rather keeping the competitor in place (Shrieves, 1978; Le, 2008).
By studying the correlation between whether the respondents believed they kept the competitors
out and the kind of innovation they applied (improvements or radical) and the reason for that (need,
market, new technology) the hypothesis can be tested. Table 5 show the results and, as seen, there is
a fairly strong correlation between keeping competitors out and radical innovations as well as
whether the respondents were need seekers or technology drivers, but not market readers. It also
seems logical that market readers do not keep competitors out rather imitating them. The
conclusion, based on the literature study as well as the data analysis, is that SMEs acting on
oligopolistic markets apply for radical innovations and are need seekers or technology drivers,
keeping their competitors out through their innovation work.
Improvements Radical
Need
seekers
Market
readers
Technology
drivers
We keep our competitors out
by our innovation work 0,26 0,37 0,39 0,05 0,39
Table 5 Oligopolistic characteristics
29
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
5.3.3. Which type of innovations has the most impact on competitive advantages?
The hypothesis is that strategic innovations, such as disruptive technologies, management innovations
or new business models are most likely to provide sustainable competitive advantages (Kim and
Mauborgne, 1997; Govindarajan and Trimble, 2005; Hamel, 2006). In Table 6, the correlation is
shown between the type of innovation and the results of it (keeping competitors out and/or getting
better profit). The strongest correlations are between product innovation and keeping the
competitors out, and between process innovations and getting better profit. In Table 5, it is also
shown a rather strong correlation between radical and technology driven innovations and keeping
competitors out. Management systems and sell and marketing innovations also have a correlation
with keeping competitors out, even if the correlation is strongest to the product innovations. The
data analysis confirm the hypothesis that technology driven innovations and management innovations
has a positive impact on the competitive advantage, however it is not possible to verify whether it is
temporarily or sustainable.
Pro
ducts
Pro
cesse
s
Organ
isation
Man
agem
ent
system
s
Pro
ductio
n
Sell an
d
mark
etin
g
Custo
mer
Service
We keep our competitors
out by our innovation work 0,26 0,10 0,03 0,21 0,04 0,19 0,11
We believe we do get better
profit from driving
innovation work 0,17 0,28 0,12 0,12 0,08 0,13 0,15
Table 6 Different type of innovation
5.3.4. What are the perceived key success factors when establishing an innovation process in order
to gain competitive advantages on an oligopolistic market?
Based on the literature review the hypothesis is that capabilities for success, stated within Jaruzelski
and Dehoff (2010) and shown in Table 2, is general KSFs also valid within oligopolistic markets. The
data collected is compared and contrasted with the secondary data from the study of Jaruzelski and
Dehoff (2010). The secondary data is based upon a survey with large corporations while this study is
concerned with SMEs, which must be taken into consideration.
The data is collected through the questions 5.1 to 5.21, and are all on a 5 point Likert scale (same
scale as used in the secondary data. The standard deviation is low, no question has more than 1.18 in
standard deviation. The data is categorised as in the study of Jaruzelski and Dehoff (2010); Ideation,
Project Selection, Product Development and Commercialization, which also fits the innovation
process of Tovstiga and Birchall (2005).
30
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 15 Importance of KFS within the Ideation Phase of The Innovation process.
The ideation phase is the highest ranked phase among the respondents, with an average of 3.98
compared with the other phases with an average between 3.22 and 3.65. In the secondary data, the
average in all four phases is more or less equal (between 2,02 and 2,04) meaning that each phase is
considered as to be of equal importance, while among the studied SMEs the ideation phase is
considered as the most important phase. As can be seen within Figure 15, the largest deviation
between SMEs‟ and the secondary data is that SMEs consider it to be much more important with
supplier and distributor engagement within the ideation process. A possible explanation might be lack
of internal resources, compared with the large corporations, leading to an external engagement with
suppliers and distributors. The conclusion is that all five KSFs, shown in Figure 15, are important and
considered as KSFs to SMEs and the ideation phase in itself is considered most important of all
phases to the SMEs. The involvement of suppliers and distributors are more important to the SMEs
than to larger corporations, which are named G1000 after Global 1000 within the study of Jaruzelski
and Dehoff (2010).
The most important KSF within the project selection is, according to both to primary and secondary
data, the ongoing assessment of the market potential while rigorous decision making around portfolio trade-
offs are not considered as important or unimportant among the SMEs. Noteworthy is also that the
strategic disruptive decision-making and transition plan is considered remarkably less important to the
larger corporations than to the SMEs. The project selection data is shown in Figure 16. The
conclusion is that ongoing assessment of the market potential, project resource requirement forecasting and
planning, technical and risk assessment/management and strategic disruptive decision-making and transition
plan are the KSFs for the SMEs in this study.
- 1,00 2,00 3,00 4,00 5,00
Supplier and distributor engagement in the ideation
creation process
Independent competitive insights from the
marketplace
Open innovation/capturing ideas at any point in the
process
Detailed understanding of emerging technologies and
trends
Deep consumer and customer insights and
analytics
Ideation
Merchandising and retail, average
Professional Services average
TMT, average
All respondents, average
G1000, average
31
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 16 Importance of KFS within the Project Selection Phase of The Innovation process.
Regarding product development, both SME respondents as well as the large corporations investigated
within the study by Jaruzelski and Dehoff (2010), point out reverse engineering as the least important
capability. The most important, in regards to both SMEs and large corporations, is the engagement
with customers to prove real-world feasibility. Product platform management, design for specific goals and
supplier-partner engagement in product development. Moreover, there is a difference between
merchandising and retail compared with professional services regarding design for specific goals where
the merchandising and retail considering it somewhat important while professional services regarding
it neither important nor unimportant. The data is shown in Figure 17. The conclusion is that KSFs for
product development is engagement with customers to prove real-world feasibility to both SMEs and large
corporations while Product platform management, design for specific goals and supplier-partner engagement
in product development are all considered as slightly important to SMEs and not KSFs.
- 1,00 2,00 3,00 4,00 5,00
Strategic disruption decision making and
transition plan
Technical risk assessment/management
Rigorous decision making around portfolio trade-offs
Project resource requirement forecasting
and planning
Ongoing assessment of market potential
Project Selection
Merchandising and retail, average
Professional Services average
TMT, average
All respondents, average
G1000, average
32
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 17 Importance of KFS within the Product Development Phase of The Innovation process.
The commercialisation phase has most variation among the trade investigated as can be seen in
Figure 18. Four capabilities out of six are considered as important and they are pilot-user
selection/controlled rollouts, product life-cycle management, product ramp-up and diverse user group
management. Both SMEs and the large corporations consider pilot-user selection/controlled rollouts as
the most important capability within the commercialisation phase. Noteworthy is that there is a large
gap between the studied respondents and the secondary data regarding the capability of the product
ramp-up and diverse user group management. The data is shown in Figure 18. The conclusion is that
pilot-user selection/controlled rollouts, product life-cycle management, product ramp-up and diverse user
group management are KSFs for the SMEs. Moreover, the SMEs have a significant higher perceived
importunateness regarding the product ramp-up and diverse user group management than the
corporations within the secondary data, which might be explained by the characteristics of an
oligopolistic market, where user group management and production ramp-up might be a way of dealing
with the risks of being copied by the competitors.
- 1,00 2,00 3,00 4,00 5,00
Reverse engineering
Supplier–partner engagement in product …
Design for specific goals
Product platform management
Engagement with customers to prove real-…
Product Development
Merchandising and retail, average
Professional Services average
TMT, average
All respondents, average
G1000, average
33
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 18 Importance of KFS within the Commercialization Phase of The Innovation process.
Comparing the top five KSFs within the study of Jaruzelski and Dehoff (2010) and the respondents of
this study give the result shown in Table 7. Interestingly, three out of five are the same and the other
two differ. Product platform management and pilot-user selection/controlled rollouts are not on the top
five within the investigated respondent, but among the corporations investigated within the global
study of large corporations by Jaruzelski and Dehoff (2010). It might be explained by the focus of
each group; where the large companies might be more systematic while the SMEs might be more
opportunistic, having detailed understanding of emerging technologies and trends and open
innovation/capturing ideas at any point in the process on their top list. It has already been discussed that
companies acting on oligopolistic markets are more likely to apply innovations to keep their
competitors out, which is also in line with a more opportunistic approach rather than systematic and
planned way of working.
- 1,00 2,00 3,00 4,00
Diverse user group management
Production ramp-up
Regulatory/government relationship management
Global, enterprise-wide product launch
Product life-cycle management
Pilot-user selection/controlled …
Commercialisation
Merchandising and retail, average
Professional Services average
TMT, average
All respondents, average
G1000, average
34
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Global 1000 Respondents
Ongoing assessment of market potential Ongoing assessment of market potential
Deep consumer and customer insights and
analytics
Deep consumer and customer insights and
analytics
Engagement with customers to prove real-
world feasibility
Engagement with customers to prove real-
world feasibility
Product platform management Detailed understanding of emerging
technologies and trends
Pilot-user selection/controlled rollouts Open innovation/capturing ideas at any point
in the process
Table 7 Comparing the top five ranked (average) KSF within the study of Jaruzelski and Dehoff (2010) with the studied respondents.
Figure 19 shows the correlation between the respondents stating they are driving innovation to keep
their competitors out and the twenty-one capabilities, listed in the study of Jaruzelski and Dehoff
(2010). The five most correlated capabilities within Figure 19 is not equal any of the top-5 KSFs
within Table 7, just as it is not the case in Figure 20 where the capabilities are correlated with the
respondents stating they are getting better profit from innovation work. The correlation between
capabilities and the results of the innovation give that the KSF for innovations are dependent upon
whether the respondent innovates to keep their competitors out or perceive that they get better
profit. Among the respondents stating that they are using innovation to keep their competitors out
the top-3 capabilities considered as KSFs, and are
1. Pilot-user selection/controlled rollouts
2. Ongoing assessment of market potential
3. Rigorous decision making around portfolio trade-offs
Among the respondents stating that they get better profit from applying innovation the top-3
capabilities can be considered as the KSFs, and are
1. Rigorous decision making around portfolio trade-offs
2. Ongoing assessment of market potential
3. Supplier and distributor engagement in ideation process
35
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 19 Correlation between innovation capabilities and respondents stating they are keeping their competitors out by innovation work
-0,25-0,2-0,15-0,1-0,05 0 0,05 0,1 0,15 0,2 0,25 0,3
Global, enterprise-wide product launchIndependent competitive insights from the …
Detailed understanding of emerging …Diverse user group management
Regulatory/government relationship …Product life-cycle management
Reverse engineeringSupplier and distributor engagement in the …
Supplier–partner engagement in product …Project resource requirement forecasting …
Open innovation/capturing ideas at any …Production ramp-up
Strategic disruption decision making and …Deep consumer and customer insights and …
Design for specific goalsTechnical risk assessment/management
Engagement with customers to prove real-…Product platform management
Rigorous decision making around portfolio …Ongoing assessment of market potential
Pilot-user selection/controlled rollouts
36
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Figure 20 Correlation between innovation capabilities and respondents stating they getting better profit by their innovation work
The conclusion is that all capabilities within the study of Jaruzelski and Dehoff (2010) are considered
to be important to the respondents of this study, i.e. SMEs action on an oligopolistic market, and the
ideation phase is considered as the most important phase. Overall, the most important KSFs,
according to the respondents within this study, are:
1. Ongoing assessment of market potential
2. Deep consumer and customer insights and analytics
3. Engagement with customers to prove real-world feasibility
4. Detailed understanding of emerging technologies and trends
5. Open innovation/capturing ideas at any point in the process
The first three are the same as within the global study of the top 1000 innovators by Jaruzelski and
Dehoff (2010). The respondents stating that they are using innovation to keep their competitors out
has a strong correlation to the top 5 KSFs within the study of Jaruzelski and Dehoff (2010), but a
negative correlation to detailed understanding of emerging technologies and trends which is in the
respondents general top-5 list. It is a bit surprising that respondents answering that they are using
innovation keeping competitors out having a strong correlation to being technology drivers but a
week correlation to the capability of understanding emerging technologies and trends.
The respondents stating that they get better profit from innovation has a strong correlation to all the
top 5 within the study of Jaruzelski and Dehoff (2010) but a negative correlation to open
innovation/capturing ideas at any point in the process which is in the respondents general top-5 list.
-0,2 -0,1 0 0,1 0,2 0,3 0,4 0,5 0,6
Strategic disruption decision making and …
Detailed understanding of emerging …Open innovation/capturing ideas at any …
Global, enterprise-wide product launchTechnical risk assessment/management
Deep consumer and customer insights and …
Independent competitive insights from the …
Supplier and distributor engagement in the …
Production ramp-up
Engagement with customers to prove real-…
Design for specific goalsDiverse user group management
Reverse engineering
Product life-cycle management
Pilot-user selection/controlled rolloutsProduct platform management
Regulatory/government relationship …Project resource requirement forecasting …
Ongoing assessment of market potential
Supplier–partner engagement in product …
Rigorous decision making around portfolio …
37
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Noteworthy is that all three first phases of Jaruzelski and Dehoff (2010) study, which are ideation,
project selection, and product development, are on the respondents top 5 list but no capabilities
from the commercialisation phase. In the study of Jaruzelski and Dehoff (2010), the respondent states
that they are significantly less performing within the commercialisation phase which also might be the
same among the respondents within this study.
5.3.5. Linking innovation personas to KSFs
According to the literature review the ten personas need to be present within an organisation to
secure innovation efficiency (Kelly & Littman, 2005), however it does not correlate with the data
analysis shown within Figure 21, where it is clear that only three out of ten personas are present in
more that 50% of the cases and three personas only present within 25% of the cases. Interesting to
notice is that the four less represented personas are all what Kelly and Littman (2005) state as
building personas and important to develop and commercialise innovations. However, the
organisational personas (Hurdlers, Collaborators, Directors according to Kelly and Littman, 2005)
are all among top 4.
Figure 21 Personas within the investigated SMEs.
0%
10%
20%
30%
40%
50%
60%
70%
38
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Supplier
and
distributor
engagement
in the idea
creation
process
Independent
competitive
insights from
the
marketplace
Open
innovation/
capturing ideas
at any point in
the process
Detailed
understanding
of emerging
technologies
and trends
Deep
consumer
and
customer
insights
and
analytics
Anthropologists ( 0,10 ) ( 0,10 ) 0,03 0,13 ( 0,05 )
Experimenters 0,16 0,18 0,11 0,26 0,13
Cross-
pollinators 0,25 0,28 0,21 0,04 0,12
Table 8 Correlation between learning personas and capabilities within the Ideation Process.
The learning personas are central to gain new knowledge and understandings in a world of changes
(Kelly and Littman, 2005) and it is, due to this, interesting to explore in context of the ideation phase
which is considered, according to the respondents, to be the most important phase including all five
capabilities. The correlation between the learning personas and the capabilities within the Ideation
phase is shown in Table 8, and it is clear that there is no significant positive correlation between
stating having anthropologists and stating the importance of the five KSFs within the ideation phase.
There is only one significant (=>0.25) correlation between the experimenters and the ideation KSF
and that is the detailed understanding of emerging technologies and trends, while cross pollinators are
both above 50% and only two positive correlation whereof two are =>0.25.
39
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
6. CONCLUSIONS AND RECOMMENDATIONS
The respondents, in general, seek needs and market opportunities prior being driven by new
technologies. There is no significant difference between the different trades in which the respondents
operate. On average, the respondents put most effort into innovating their processes and sales and
marketing while they put least effort into innovating their production systems. However,
merchandising and retail mostly focus on product innovations while the professional service firms
score lowest on product innovation.
The innovation style of the respondents is, according to Loewe et al. (2001) typology, The Cauldron,
The Spiral Staircase and The Fertile Field, while no respondent‟s organisation is a PacMan or
Explorer. The major innovation style is The Cauldron, which is an entrepreneurial style where the
business model is frequently challenged (Loewe, Williamson, & Wood, 2001). Furthermore, the
entrepreneurial innovators, the Cauldrons, is most sure that they keep the competitors out by
innovations while The Spiral Staircase, a style where you climb upwards without losing the over-all
goal (Loewe, Williamson, & Wood, 2001), is most convinced that they get better profit from applying
for innovations. The Spiral Staircase, which are systematic in their way of working, also state that
they are imitated by their competitors.
The Fertile Field, a style where the organisation tries to use existing capabilities and resources in a
new way (Loewe, Williamson, & Wood, 2001), stating that they are imitating their competitors which
is a logical conclusion, as they are reusing existing resources but in a new way. The Fertile Field
respondents are also convinced that innovation lead to higher profit and slightly keep the
competitors out.
The PacMan, a style where you invent and outsource and finance start-ups (Loewe, Williamson, &
Wood, 2001), is not represented by any of the respondents which is contra indicatory to Haq and
Sen‟s (2011) belief that smaller firms tend to outsource their core organizational competencies, as
71% of the respondents organisations are small firms with less than 51 employees. No conclusions
can be made, and further research is needed. Neither is The Explorer, a style where you explore
possibilities and invest time and money in them without demanding short-term profit (Loewe,
Williamson, & Wood, 2001), represented. One possible explanation could the fact that the sample
of respondents are SME companies, which normally have smaller budgets than large companies.
6.1.1. Competitive advantages
The research question whether innovation can lead to competitive advantages can be answered
based on the literature study as well as the data analysis, showing that SMEs action on an oligopolistic
market can gain competitive advantages by applying for innovation thinking and acting resulting in
better profit and/or keeping the competitors out.
There are some interesting findings. Management systems, sell/marketing innovations as well as
product innovations have the strongest correlation to keeping competitors out. The trade is an
aspect to take into consideration; e.g. merchandising and retail rank product innovation as most
important while professional services and the TMT sector rank process innovation as the most
important.
40
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Moreover, data analysis confirms the hypothesis that technology driven innovations and management
innovations have the most positive impact on the competitive advantage, which also answers the
research question about which innovation has the most impact on the competitive advantages. The
sustainability of the competitive advantage is, however, not possible to judge according to the
investigation and neither according to the literature review, as previous research says it can lead to
sustainable competitive advantages but more recent research indicates that it might be problematic
to gain sustainable competitive advantages and that firms must get ready for handling temporary
competitive advantages as well as multi-strategies.
However, it is a bit surprising that using innovation to keep competitors out is strongly correlated
with technology drivers and, at the same time, only weakly correlated with the capability of
understanding emerging technologies and trends.
6.1.2. Differences on oligopolistic markets
The conclusion, based on the literature study as well as the data analysis, is that SMEs acting on
oligopolistic markets, applying for radical innovations, are need seekers or technology drivers trying
keeping their competitors out through innovation work.
However, increased profit is also a reason to work with innovations on oligopolistic markets, even if
the most significant reason is keeping the competitors out by applying radical innovation.
The research question whether there is a difference acting on an oligopolistic market can be
answered with that the firms are applying for innovation mostly to keep their competitors out by
seeking needs and/or applying new technologies doing radical innovations.
It is also worth mentioning that it is a fine line between oligopolistic and monopolistic competition
and the conclusions in this study might very well apply on monopolistic markets and companies with
niche strategies.
6.1.3. KSF
Perceived KSFs when establishing an innovation process in order to gain competitive advantages
through innovations is partly dependent upon whether the firm is trying to keep competitors out or
trying to increase its profit. However, there are also a common sub set of KSFs in common for both
purposes. To answer the research question about the perceived KSFs when establishing an
innovation process in order to gain competitive advantages on an oligopolistic market, the answerer
has been divided into a general list with KSFs and two purpose-dependent lists linked to whether the
objective mainly is keeping competitors out or is it is increasing the profit.
Among the respondents stating that they are using innovation to keep their competitors out the top-
3 KSF are:
1. Pilot-user selection/controlled rollouts
2. Ongoing assessment of market potential
3. Rigorous decision making around portfolio trade-offs
41
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Among the respondents stating that they get better profit from applying innovation the top-3 are;
1. Rigorous decision making around portfolio trade-offs
2. Ongoing assessment of market potential
3. Supplier and distributor engagement in ideation process
All capabilities within the study of Jaruzelski and Dehoff (2010) are considered as important to the
respondents of this study, i.e. SMEs action on an oligopolistic market, but certain capabilities are
considered as more important than other is. The ideation phase (or category), which consists of
1. Supplier and distributor engagement in ideation process
2. Independent competitive insights from the marketplace
3. Open innovation/capturing ideas at any point in the process
4. Detailed understanding of emerging technologies and trends
5. Deep consumer and customer insights and analytics
is considered as the most important phase (in average).
However, the most important overall KSFs according to the respondents within this study, are:
1. Ongoing assessment of market potential
2. Deep consumer and customer insights and analytics
3. Engagement with customers to prove real-world feasibility
4. Detailed understanding of emerging technologies and trends
5. Open innovation/capturing ideas at any point in the process
Noteworthy is that none of the top KSFs found are within the commercialisation phase and it is likely
that the firms might lack of related competencies needed within this phase.
6.1.4. Organisational aspects
According to Kelly and Littman (2005), when establishing an innovation process in order to gain
competitive advantages through innovations, there are needs of the right personas within the firm.
Interesting to notice is that the four less represented personas in the survey are all what Kelly and
Littman (2005) state as building personas and important to develop and commercialise innovations,
which is the same pattern as within the study of Jaruzelski and Dehoff (2010). This will also be linked
to the recommendation part of this study.
Moreover, the correlation between the learning personas and the capabilities within the Ideation
phase clearly shows that there is no significant positive correlation between stating having
anthropologists and stating the importance of the five KSFs within the ideation phase.
6.1.5. Recommendations
During the study of identifying perceived KSFs when establishing an innovation process a number of
conclusions and observations has been made. These conclusions and observations form the
foundation for recommendations and are divided into five parts and structured around the purposes,
the process, the organisation, the leadership and how to measure the actions.
42
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
#1 Decide the purpose of your innovation work
The 21 capabilities and potential KSFs identified and described within the work of Jaruzelski and
Dehoff (2010) have differing importance dependent upon the purpose of driving innovation work. On
an oligopolistic market, it is often about keeping competitors out and/or increasing the profit, and
there is a difference on which KSFs to focus on, as well as what innovation style and model to apply.
Generally, the following KSFs are considered as most important regarding to this study of SMEs
acting on oligopolistic markets;
1. Ongoing assessment of market potential
2. Deep consumer and customer insights and analytics
3. Engagement with customers to prove real-world feasibility
4. Detailed understanding of emerging technologies and trends
5. Open innovation/capturing ideas at any point in the process
The recommendation is to ensure that the above KSFs are implemented in combination with the
specific and purpose-dependent KSF.
If the purpose is to keeping the competitors out, the below KSFs are recommended to implement
and secure;
Rigorous decision making around portfolio trade-offs
Pilot-user selection/controlled rollouts
And, if the purpose is to increase the profit implement and secure the below KSF;
Rigorous decision making around portfolio trade-offs
Supplier and distributor engagement in ideation process
When driving the innovation process, keeping competitors out it is also recommended to use new
technology as well as radical innovations, preferable not just in the area of product development but
also management innovations including the business model, management systems, business and
production processes as well as sell and marketing innovations.
When driving for increased profit, improvements and well-defined market need are more preferable
and recommended too.
#2 Focus all innovation phases
Within the study of Jaruzelski and Dehoff (2010), the categories (ideation, project selection, project
development, and commercialisation) can be mapped to the processes described within the literature
study, and can be considered as the major phases of an innovation process. The last phase, the
commercialisation phase, is considered least important according to the respondents. Noteworthy is
that within the study of Jaruzelski and Dehoff (2010), the commercialisation phase was significantly
less performed compared to the other phases within the study and a conclusion is that firms
generally has a lack of commercialisation capabilities, even if considered as important.
The recommendation is to secure all phases (ideation, project selection, project development, and
commercialisation) and related capabilities in order to successfully implement innovation work,
however with a differing significance depending upon the purpose of the innovation work.
43
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
#3 Make sure you have the right personas
According to Kelly and Littman (2005), there are ten personas, categorised into three categories,
which need to be present in order to drive innovation work in an efficient way. The study shows that
the respondents are lacking of anthropologists as well as the personas needed to build – the building
personas (the experience architect, the set designer, the caregiver, and the storyteller). It is
recommended to secure that the organisation has covered the ten personas in order to secure
efficiency.
#4 Evaluate and adopt the leadership style
It is recommended to evaluate the innovation leadership style according to Loewe et al. (2001)
typology; The Cauldron, The Spiral Staircase. The Fertile Field, The PacMan and The Explorer as it
among the respondents were clear that only the three first styles were represented. The PacMan, a
style where you invent and outsource and finance start-ups (Loewe, Williamson, & Wood, 2001),
was not represented but is recommended to evaluate for SMEs that might not have the capabilities
to launch a new invention but still would benefit from it.
Neither was The Explorer, style where you explore possibilities and invest time and money in them
without demanding short-term profit (Loewe, Williamson, & Wood, 2001), represented and is
recommended to partly apply for those firms going for radical and technology driven inventions
where the outcome might not always be possible to predict but the impact huge when succeeded.
#5 Link your KPIs to the innovation Process
To measure, and secure, the value created within the innovation process the use of KPIs is
recommended. The recommended KPIs are based upon the work of Hansen and Birkinshaw (2007)
and the three categories of KPIs; idea generation, conversion and diffusion of innovation (see Table
3) mapped to the categories (here considered as phases of the innovation process) of capabilities
within the work of Jaruzelski and Dehoff (2010).
Table 9, based on the work of Hansen & Birkinshaw (2007) and Jaruzelski and Dehoff (2010), show
the recommended KPIs to measure and secure the value created within the innovation process.
44
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
Idea Generation Conversion Diffusion
Internal
Ideation
Cross-
Pollination
ideation
Open
Ideation
Project
Selection
Project
Development
Commercialisati
on
Key
Quest
ions
Do we
create
good
ideas by
our own?
Do we
create
good ideas
by working
across the
company?
Do we get
enough
good ideas
from the
outside?
Are we
good at
screening
and
funding
new
ideas?
Are we good
at turning
ideas into
viable
products,
businesses,
and best
practices?
Are we good at
launching
innovations?
Key
Perf
orm
ance
Indic
ator
Number
of high-
quality
ideas
generated
within a
unit.
Number of
high-quality
ideas
generated
across
units.
Number of
high-quality
ideas
generated
from
outside the
firm.
Percentag
e of ideas
generated
that end
up being
selected
and
funded.
a) Percentage
of funded
ideas that lead
to revenues
b) Number of
months to first
sale.
a) Percentage of
penetration in
desired
markets,
channels,
customer
groups
b) Average
profit margin
on new
innovation last
year
Table 9 Recommended KPIs adopted from Hansen & Birkinshaw (2007) mapped to the categories of Jaruzelski and Dehoff (2010)
45
INNOVATION KSFs FOR SMEs ACTING ON NICHE MARKETS
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´
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