How Greek Small and Medium Entreprises can successfully manage their Innovation portfolio
The crisis context has been recorded to have affected the number of SMEs in the Greek economy, the number of people employed as well as the volume of the output produced. Although not all SMEs have been equally impacted by the crisis, which has been identified to affect certain sectors more than others, and although research is not exhaustive in that end, employment relations and patterns, firm’s age, and innovation practices in relation to employees’ learning curve seem to have a positive correlation with the successful survival and resilience of the firm. A positive sign is that the percentage of innovative businesses in Greece continues to grow with an overall 6.7% increase, reaching the level of 57.7% for the three year period, between 2014 and 2016. These findings have been recorded by the National Documentation Center, and they refer to a sample of 11.000 SMEs employing more than 10 people.
While past studies and research confirm that the main barrier of innovation for SMEs is mainly the lack of financial resources, this is the crude reality for Greek SMEs operating in adversity, and being financially struggled on a daily basis. Additionally to financial bottlenecks, other barriers identified are skill shortages limited internal know-how to manage the innovation process effectively and efficiently, missing market know-how, as well as bureaucratic hurdles and lack of intellectual property rights.
Apart from the last two factors, which are more procedure oriented, the issue of tacit and external knowledge in managing the innovation process is of critical importance, and it is related to the innovative character and nature of the business. It seems that firms are mainly pursuing innovation at three levels of ambition: enhancements to core offerings, pursuit of adjacent opportunities, and ventures into transformational territory. Companies use a ratio of 70-20-10 to allocate their resources to core, adjacent and transformational innovations respectively although, the bill pays in reverse order, that is 70% of the return on investment comes from the transformation innovations, 20% from the adjacent and 10% from the core. Transformational innovations may be partly adjacent innovations are the ones that require dedicated R&D, and they demand considerable energy and resources. Moreover, the innovation portfolio of a firm is also based on its stage in the Market Life Cycle, on the industry it belongs to, and finally and most importantly on its strategic priorities.
During the past years, Greek businesses and entrepreneurs endorse innovation as a key strategy that will allow them to survive or even escape the economic crisis. That is verified through the increase in improved products offerings by 8% in 2016, when compared to 2014, new and improved business processes by 10%, and 8% increase in collaborations that promote innovation. It seems though that the emphasis should be placed on transformation, and that the innovation portfolio that will pay off in the long-run, and which will offer a sustainable advantage to the businesses, should be focusing on the promotion of novel products and services that will transform and challenge the status quo of the market.