DEVELOPING
AN INNOVATIVE CULTURE IN ARGENTINEAN SME
Leandro
Adolfo Viltard
Pontificia
Universidad Católica Argentina (Buenos Aires). Graduate School of Business,
Facultad de Ciencias Econômicas, Universidad de Palermo, Buenos Aires,
Argentina. Universidad del Pacífico, Ecuador. Universidad Nacional de La Pampa,
Argentina, Universidad Nacional de Luján, Argentina. Universidad Nacional del
Comahue, Argentina
E-mail: lviltard@yahoo.com.ar
Mario
Nicolás Acebo
Universidad
Nacional de La Pampa, Argentina
E-mail: nicoacebo@live.com.ar
Submission: 5/19/2019
Accept: 9/19/2019
ABSTRACT
Innovation has become a game changer in the competitive and social arenas, capable of boosting and maintaining the highest competitive levels. In this sense, the innovative business culture -a particular intangible asset- is shown as a sufficient condition to develop difficult-to-imitate and sustainable competitive advantages, and a key challenge that companies’ executives have today. In addition, SME are scattered all over the planet and represent a fundamental driver for economic growth and social development, especially in Argentina. The hypothesis of this work –which was corroborated- is that if an adequate innovative business culture is developed, it is feasible to promote an innovative performance improvement. As a result, one of the main findings of this study –a follow on of some previous ones- is that an innovative culture provides identity, generates commitment and facilitates control, stimulating innovative performance and proposing competitive advantages. Specifically, the studied Argentinean SME environment has shown some difficulty in order to exploit novel ideas and promote this kind of culture. It has been verified that the managerial role could be improved as it was limited due to different inhibitors that are pointed out in this work, and that novel avenues should be found to benefit more people of our society. The study is exploratory-descriptive, with a qualitative methodology. It is supported with a bibliographical and an empirical analysis.
Keywords: Culture; Innovation; Creativity; Competitive advantage; Competitiveness.
1.
INTRODUCTION
Drucker (2017) states that
disruption and discontinuity are present in our altered society and different
changing forces are impacting on the business landscape, such us the explosion
of new technologies, a change from an international to a world economy, new
pluralistic institutions, and a novel knowledge universe. All these factors are
shaping an unknown future.
In this environment, innovation has
become a fundamental element in order to achieve difficult-to-imitate and
sustainable competitive advantages, for which it appears as one of the key
objectives of business executives.
As this work is a follow on of
previous studies related specifically to Argentinean/Latin American SME[1],
the understanding of the creative and innovation process has been deepened,
highlighting its potential as a differentiator in highly competitive markets as
the current ones.
It is suggested that the corporate
culture -understood as values, beliefs, symbols, rituals, myths and practices
that are shaped in time, and are given in a conscious and unconscious way-
represents a fundamental innovation determinant as it gives meaning and
coherence, guides behaviors, provides identity, generates commitment and
facilitates control.
That is why organizations must
develop an innovative DNA so that everyone can contribute with their knowledge,
increasing motivation and individual commitment. In other words, it is
important to face innovation naturally and as something congenital, designing a
culture model that promotes individual, group and organizational creativity in
a permanent way.
In addition, it is indicated that it
is not enough to focus on resources, processes and measurement of success,
neglecting other stronger determinants of innovative capacity such as cultural
values, behaviors and work climate. These factors are more intangible and
difficult to manage, although they have the greatest power to shape the
innovation culture and create a sustained competitive advantage. In this way,
tangible resources represent a necessary condition, although not enough for
innovation development, so that corporate culture -a particular intangible
asset- has become a preponderant factor in order to generate innovative
potential and difficult-to-imitate competitive advantages.
Moreover, the studies deepen in the
fundamental aspects that characterize an innovative business culture, such as:
· The work environment.
· The communication and information
flow.
· The challenges to be overcome.
· The freedom to take initiatives and
perform in areas of interest, interacting with others and making the most of
the available talents.
· The recognition and appreciation for
the effort, stimulating the challenges and risks.
· The attitude to listen, encourage
and support people to solve specific problems, giving them confidence and
tolerating uncertainty.
· Grant budget and time flexibility
for new ventures.
· Participate in a relaxed atmosphere
that increases people’s work satisfaction levels, facilitating creativity.
Therefore,
the innovation culture is connected with a way of thinking and doing based on
values, convictions and attitudes in order to promote ideas that improve
business performance and efficiency.
In this sense, those works conclude that the characteristic aspects of
innovative cultures are related to adhocracy, external focus, flexibility,
delegation of authority and decision making participation to promote learning
and development, since the hierarchical structure, the internal gaze,
stability, formalization and centralization hinder it.
In connection with the above, this
work finds its fundamental motivation in the opportunities that can be found
from the appropriate corporate innovation development and its impact on the
generation of sustainable competitive advantages.
The hypothesis of this study
suggests that -if an adequate innovative business culture is developed- it is
feasible to promote an innovative performance improvement.
Therefore, the objective of this
paper is to delve into the factors that participate in an innovative business
culture development in order to propose innovative performance improvements in
Argentinean SME.
The following questions have
permitted guiding the present work:
· What are the factors that favor an
innovative business culture development?
· Do Argentinean SME have elements
that allow them to help/impede their innovative performance?
It is important to make some
clarifications/limitations in order to give a better understanding of this
study:
· The theoretical framework that was
utilized is the one that was judged necessary to support the present study,
although it could be found other authors and publications that may complement
it. Classical authors were consulted as they show an updated perspective on the
studied matters, and prior works of this paper’s authors were included as this
study represents a follow on of what was analyzed before.
· The field work is based on the
objective and hypothesis. The techniques that are used are the ones that were
judged as adequate for this investigation, although other ones could be
perform.
· The conclusions are connected with
the theoretical framework and field work performed.
The prior clarifications/limitations
were not an impediment to reach appropriate conclusions and comply with the
hypothesis and objective of this work.
The study is
exploratory-descriptive, with qualitative methodology. In addition, it is holistic
because it contemplates a wide configuration in which the studied object is
located.
It was performed a bibliographical
and an empirical study. The bibliographical research implied data collection
and the analysis of the information obtained through relevant secondary
sources, mainly international authors and publications. The field work was
composed by interviews to three different specialists and an Argentinean SME
case analysis. This analysis tried to deepen in the cultural characteristics
knowledge that favor the corporate innovative performance.
This research was performed from
Aug., 2018 to May 2019, and was carried out in Buenos Aires, Argentina.
As
a result of this study, it is highlighted that the hypothesis of this work was
corroborated and the objective verified.
2.
INNOVATIVE BUSINESS CULTURE
DEVELOPMENT
As organizational sustainability
requires an innovative business culture development, in this section it will be
studied the importance of the managerial role in this type of cultures, the winning
practices in highly innovative companies and –finally- the 3M case, a global
firm that can show a stream of new products creation over time.
2.1.
The management role and the
innovative culture
Both concepts are closely related
since executives have a preponderant role when generating an innovative culture
and good practices that are applied in highly innovative environments. Thus,
the generation of trusting climates among employees, motivation and incentives
to exploit new ideas -taking errors as an opportunity to learn- are of great
value in order to develop this type of culture.
Alvesson (2013) suggests that the
organizational culture becomes a central issue in the organizational life, even
in those firms where cultural aspects are not explicit. As a result, there
shouldn’t be a distance between the individual and the organization for which
he/she works.
In addition, Alvesson and
Sveningsson (2008) show that:
· There is no complete agreement on
whether organizational culture can be modified in an intentional manner and in
short periods of time as -in general- they are resistant to change and does not
emerge from the group.
· Culture can change by itself and,
also, as a result of deliberate actions, changing an entire society or in lower
levels (for instance, in an organization).
· The cultural change process requires
new goals and should promote a new set of beliefs, values and ideals within the
organization. Also, it is necessary a new management philosophy, through a
leader that transmits cultural values from his/her daily performance.
Moreover, there are certain
processes through which culture is conserved and transmitted. Robbins and Judge
(2015) say that selection of personnel, performance evaluations, rewards, and
training and development, among others, preserve the culture and confer similar
experiences to the members of an organization. In addition, senior managers
have a decisive influence on the organizational culture because -with their
words and actions- they set up rules regarding risks, confer degrees of freedom
to subordinates, and influence clothing and actions to be rewarded, among other
issues that -after- are transmitted throughout the company.
Hence, Domingo (2013) argues that,
to promote innovation, executives play a fundamental role since they have the
duty to encourage innovative initiatives development and manage them within the
objectives, with metrics and people who have a different profile to those who
manage mature businesses. In this way, they create a culture for innovation that
develops successful projects.
Additionally, it must be remarked
that tangible elements do not necessarily confer value to the companies.
Naranjo Valencia et al. (2012) suggest that many firms -despite not having a
large number of tangibles- are considered valuable thanks to the level of
available talent, creativity and reputation. So, their main assets are the
people’s imagination and ideas, with leaders capable of transforming the
company's creative capabilities into high-impact competitive advantages.
On the other hand, Vilá (2010)
suggests that:
· It is not easy to directly influence
the employees’ values and beliefs to modify the culture, although emphasizes
that -through the way in which managers exercise their responsibility and
develop their formal and informal relationships- they demonstrate what they
value and expect from their collaborators.
· The values and beliefs that build
culture result from management accumulation of experiences. In this sense,
Christensen and Shu (2006) indicate that culture includes shared criteria and
procedures, taken as basic assumptions in order to make decisions. In this
sense, innovation refers to a managerial challenge and the implementation of
management systems that involve all organizational levels in a progressive way,
modifying people’s minds.
Finally, Alvesson (2013) indicates
that the organizational culture is closely related to the leadership capacity
of those who run the company, being responsible for defining and implementing
it.
In this section, it has been raised
the existing symbiosis between innovation and the managerial role, and the
difficulty when a change in the organizational culture is observed, especially
if it does not emerge from the group. Thus and as it is not easy to change,
culture behaves as a factor that ensures continuity and certainty in daily
operations.
In addition, it was emphasized that
minor changes or others that are much more significant and on a social scale
can be achieved. Thus, a cultural change implies the establishment of new
beliefs and ideals, based on certain values and philosophy transmitted in the
daily work through management practices.
To make cultural transmission, some
processes have been suggested as necessary, such as personnel selection,
performance evaluation, rewards, training and development.
In this context, the leader -with
his/her actions and sayings- establishes certain shared values, norms and
procedures that -accumulated over time- are transmitted to the entire company.
Thus and through initiatives, talent management, and specific management
systems it is possible to influence innovation development, generating creative
and innovative capacities that lead to superior competitive advantages.
Therefore, it is concluded that the leader represents a fundamental factor to
create, manage and even destroy organizational culture.
In the next Figure 1, it is shown a
summary of what it was said in this section:
Figure 1: The managerial role and
the innovative culture
Source: Own
2.2.
Management practices in highly innovative
companies
Vilá
(2011) highlights a series of good practices that are adopted by senior
companies’ managers with a great innovative capacity while exercising their
leadership. He warns that its practical application in each particular
organization is not direct and notes that the lessons learned shed light on how
to make more coherent and predictable senior executives’ actions in front of
their collaborators, while intending to develop an innovative culture.
In
this sense, the author highlights the following practices of this type of
managers:
2.2.1. They impel to pursue a challenge, an
ideal or a dream that makes sense
These leaders seek to generate an
impact with very ambitious initiatives and clear guidance in order to overcome
challenges that have a clear sense for employees. These challenges suppose tangible objectives that attract
everybody’s attention that -in many occasions- are a more effective innovation
driver than extrinsic motivators, such as remuneration.
Mention is made of leaders such as
Steve Jobs, co-founder of Apple with Stephen Wozniak, who was always interested
in doing things that would change and make progress in the world, or Akio
Morita and Masaru Ibuka, founders of Sony, who -by 1952- were looking for a
strong enough challenge for their product development engineers, which led to
the subsequent launch of products such as the Trinitron TV and the Walkman.
Also, it is highlighted the case of Ratan Tata, who had the dream of providing
-to all the citizens of India- an affordable and safe means of family
transport, which led him to propose -to Tata Motors’ engineers- the a priori
impossible challenge of developing a $ 2,500 car, known as Tata Nano.
2.2.2. They seek new ways of acting towards
the ideal
These executives show a clear will
to explore new ways of acting, accepting unconventional thoughts and solutions,
even if they are not facing pressing problems.
As an example, it is mentioned James
Dyson -founder of Dyson Ltd., a British technology company- which has
progressively moved away from the day-to-day business management, spending the
last decade trying to create the perfect innovation environment. In this way,
Dyson spends most of his time among the creative staff -not just the engineers-
encouraging them to be creative and proposing everyone to take the hard way
instead of the obvious.
Another case is Ikea, a Swedish
company dedicated to furniture and objects for home decoration manufacture and
sale. Its managers encourage employees to seek new and better ways of doing
things in every work aspect, despite being the undisputed world leader in their
field.
The author argues that in highly
innovative organizations -regardless the industrial sector, size or if they are
in the process of change or not- it is encourage:
· Exploration,
accepting/tolerating certain degrees of uncertainty and well intentioned
errors.
· Openness to the outside, accepting the ideas and initiatives that come from the outside, and
not just the ones that appear from the interior. Companies such as Amazon, Nike
and Federal Express develop strategic alliances, and companies -such as Procter
& Gamble and Ideo- put great energy into programs such as "Connect
& Develop" and "Deep Dive", respectively.
· Active observation to identify business opportunities. As an example, indicates that
General Electric has implemented an opportunity evaluation process with the
"Imagination Breakthrough" program, focused on high-growth business
proposals development.
· Flexible posture, open-mindedness and proactive search with humility. Thus, at Starbucks,
managers ask their collaborators to confront a client's complaint, recognizing
the opportunity to strengthen relationship and not putting distance with them.
· Feedback is seen as valuable. For example, at Pixar Animation managers
treat their employees as equals, receiving all kinds of comments about their
work and encouraging the whole team to participate and give their opinion about
others’ work.
2.2.3. React positively to adversity and
give impetus to the organization
Innovating suggests an established
order transformation, being necessary to confront with unforeseen events. Thus,
the way in which managers react to adversities represents a sample for
employees about their values and preferences and -as such- has a great
influence on company innovative culture.
As a summary of what is stated in
this aspect, it is suggested that these companies’ executives have the
following characteristics:
· They are persistent and show their support for initiatives, even in the face of disappointing
first results. In this regard, the case of Akiro Morita and Masaru Ibuka stands
out -despite the warning of their accountants about what they considered an
excessive allocation of resources to new developments, which even put at risk
the economic Sony viability in its early years- they responded saying: "be
a little more patient and we will make a fortune".
· The expression “it is not possible” does not exist, but –in front of the recurrence of
failed results- such an expression is replaced by “we do not know how to do it”.
·
Innovation
requires persistence. That is why Ikea's motto "Never Say Never"
sums up his positive stubbornness, perseverance and determination to achieve
goals without giving up. This position is not exempt from limits and principles
that balance and make ideas viable.
·
They have
great confidence in themselves and in the entrepreneurial work of
their employees.
·
They are
willing to leave their comfort zone to make innovation
possible, even when the changes affect them on a personal level and their own
quality of life. In this way, they are considered one more of the group and are
subject to the same rules as the rest. For example, it is reported that when
Sony decided to be present and know the particularities of the most advanced
consumer electronics market, Akio Morita moved -together with his family- to
live in New York, demonstrating his personal commitment to company objectives.
·
They have a plan and
they are firm in what they understand that their job is not a speed race,
but a marathon: they play hard every day and have a sustained ability to
change. In this regard, highlights the words of Jeffrey Immelt, CEO of GE who
considered that one of the main things he learned from his predecessor, Jack
Welch, was that his work was not just connected with speed, but with marathons’
perseverance.
As a summary of this section, there
were highlighted a series of good practices adopted by high innovative
performance firm’s executives, no matter the geographical region, the industry
or the size of the company, such as:
·
Impel to follow challenges, ideals or dreams that make
sense and represent a great motivation for those who persecute them.
·
Propose unconventional modes of action towards the
posed dream or ideal, spending as much time as possible with creative people. In
this way: a) look for new opportunities with open-mindedness and encourage
everybody active observation; b) wait for change proposals in each one's work;
c) accept risks, uncertainties and errors; d) look for ideas inside and outside
the firm; and e) take positive or negative feedback as something valuable.
·
React to adversity by showing their values and
preferences’ scale; leave their comfort zone; are positive and persistent; have
determination and teamwork management; are confident in themselves and on
others; have a plan, standing firm.
·
Keep positive behavior in front of adversity and
unforeseen events, giving impetus to the organization. They are based on
principles, support, confidence in everybody’s work, and have willingness to
leave their comfort areas. Also, they have the conviction that everything is
possible, and -in addition- that work must be hard and every day.
2.2.4. An example of innovative culture: 3M
The 3M website (3M, 2018) indicates
that this global innovation company never stops inventing. Over the years, its
objective has been to improve the daily lives of millions of people around the
world, proposing -for example- that driving at night is easier, that buildings
are safer and that electronic devices are lighter, consume less energy and have
less environmental impact. It is even argued that 3M helped the man reach the
moon for the first time.
According to I + C Consultores
(2018), several very successful 3M products have emerged from special
situations, although it has not been the result of chance, as follows:
· The post-it -block of papers with
glue -used to make annotations- arose from the idea of an
employee who had difficulty keeping the pointers he had in the chants of the
church’s choir. Upon discovering -in the company- a glue that had worked badly
and was about to be discarded, he invented the post-it that -then- the
secretaries would start using, until finally it was launched to the market.
· The masking tape, which had its
origin in an employee´s idea who -when going to the workshop in
search of his vehicle- observed the difficulties that the operators were going
through when trying to paint the cars in half. It was there that the idea of
this product emerged, currently used by the entire paint
industry.
· The emery cloth (or sandpaper)
emerged some years before, when 3M exploited mineral deposits and a person
tried to remove the metals’ oxide with small stone stuck in a paper.
· It is said that -these and other
inventions, although they seem to have arisen through chance- in reality they
have a much deeper foundation: 3M allows staff to take their ideas to the
company. That is why 3M executives encourage research to the point of
considering it a key factor for business development.
Moreover, Gunther (2010) also
highlights 3M as one of the best examples of companies that follows a process
and has an innovative incentive in its culture. Among the practices carried out
by 3M, the author remarks:
· 15% of the time: Long before Google granted its engineers one day a week to develop
their own ideas, 3M allowed its researchers to do the same with 15% of their
time.
·
The annual
"Genesis Grant": The company's scientists can benefit from a
prize of 100,000 dollars to follow up on projects for which the conventional
people of the firm would not bet anything.
·
Whoever has
the idea can lead the project: In 3M it is assumed that whoever has the idea
is the one who will place the greatest emphasis on its defense, looking for
every option to make it successful. In that sense, it is not about passing the
idea to a research department and not being able to participate in its
development, but the contrary. Even if the idea is not successful, it implies a
greater people’s commitment to continue deepening on it.
·
Throw
branches and then prune: To be open to ideas has been a 3M classic.
Although many of them remain not implemented, it is possible that -as a result
of that process- many more innovative ideas will also be successful. It is
understood that innovation is a play of ideas’ quantity.
·
The 25%
billing rule: In each 3M business unit, at least 25% of billing
must come from products developed in the last 4 years. In this way, the company
seeks to maintain a considerable innovation pace, although it is possible that
-in some of its business units- the current innovation speed is even higher.
Finally, it is worth mentioning
that, according to data published on its website (3M, 2018), 3M celebrates
curiosity, passion and purpose based on sustainable policies. As a result and
at the end of 2017, its revenues amounted 31.7 billion dollars worldwide,
operating in more than 70 countries and having 91,000 employees.
As a conclusion of this section, it
is pointed out that there are organizations -as 3M- that are highly focused on
innovation. Its highest goal -almost a dream- promotes helping millions of
people around the world to save energy and negatively impact on the environment
as little as possible. The innovations derive from a systematic work[2]
so that all members of the organization propose ideas and are implemented, such
as the post-it, the masking tape and the emery cloth (or sandpaper).
Some of the outstanding practices
towards innovation of this company are connected with granting individual time
to develop their own ideas, producing as many ideas as possible; offer
important prizes to encourage everyone to commit; give the project’s leadership
to those who have the idea; and -in order to maintain the innovative pace-
impose the rule that a minimum of 25% of revenues should come from products
that have been developed in the last four years.
Throughout this section, it has been
intended to offer greater understanding on the innovative business culture
development, which is based on an active managerial role, a special focus on
the processes that transmit and preserve culture, and -also- on some successful
practices that are utilized by innovative companies.
In the following Figure 2, there are
exposed the fundamental concepts of this Section:
Figure 2: Innovative culture
development
Source: Own
3.
FIELD WORK
Based on the previous theoretical
study, an empirical analysis has been carried out in order to obtain data that
would allow knowing -in more detail- the innovation status in Argentinean SME
and the innovative potential of their cultures.
There were done three interviews
with key experts –which had sufficient knowledge about Argentinean SME‘culture
and their approach to innovation- and a case analysis on the firm Amuyen
Rectificaciones S.A.
3.1 Interviews with
key experts
In order to deepen the studied
subject and in the period Dec., 2018-Feb., 2019, interviews were conducted with
different specialists. In the following paragraphs, are shown the main elements
that arouse from those meetings.
3.1.1. Interview with Osvaldo L. Dadone: A
vision towards an innovative environment
President in Campo Aval SGR, Board
of Directors Member in Lartirigoyen y Cía. S.A., and President of Patagonia Pet
S.A.
Thanks to his activity in different
companies and institutions, the interviewee has been able to understand and
interact with a large number of SME in Argentina, from which he raised the
following concepts in the interview held in his office on 12/18/2018:
· Argentina had a lack of an adequate
business microclimate which offered the necessary conditions for innovative SME
development. That is why it was not observed a great ideas’ development that
resulted in many more innovations.
· Argentinean SME are developed
–mainly- alongside large companies. Thus, it seemed somewhat difficult that an
entrepreneur could create an innovative product or service that would solve
larger company´s needs. As a result, there was no large companies’ demand to
stimulate an innovative solutions’ creation.
· There were certain innovative
practices in large national and international companies’ branches, although
these characteristics responded to a corporate culture that encompassed the
entire company and did not come from initiatives borne in each particular
geographical reality.
· Secondary and university education
offered in many provinces did not show a thematic diversity that facilitated
innovation, except for a few exceptions in certain faculties. This situation
could be a cause of the scarce innovative development seen in many of the
Argentinean provinces.
· Many people found inconveniences
while taking some risk and bet on a venture that proposed a novel idea. The
great presence of the State as an employer has accustomed most of them to
maintain a fixed and stable job, allowing a certain quality of life without a
motivation to leave their attractive comfort zone in order to bet on a greater
risk activity.
· Building innovative companies
required a minimum structure, a certain organizational level, and a mental
openness to be able to take advantage of the ideas and from external advice.
A large majority of the SME
executives met by Osvaldo were not focus beyond of what was happening in their
own business, and did not listen to their own employees’ ideas. Therefore, they
did not show support for internal initiatives and openness to the outside
world.
· These firms had some favorable
aspects, such as flexibility and informality in the workplace, but many did not
have innovative cultures. It seemed very far the widespread adoption of –for
example- “home office” labor practice as -in the provinces- there was no need
to work from home to avoid displacement in large and busy cities.
· Error was not tolerated or accepted
as an opportunity to learn, but instead it was decided to highlight and
reproach it with the mistaken intention that it would not be repeated.
· The State should participate in the
construction of a microclimate that generates opportunities for entrepreneurs.
In this sense and in addition to the SME financial and management assistance,
it was necessary to generate a larger economic agents’ development that may
demand the goods and services that the SME could offer.
3.1.2. Interview with Jorge O. Romo: a
focus on the company
He worked as an advisor of numerous
SME and had +20 years as business consultant experience. Also, he had +35 years
teaching in diverse universities. The interview was held in his office on
01/09/2019.
The main elements that the
interviewee has suggested regarding Argentine SME are summarized below:
· It was not observed an innovative
culture due to the lack of professionalization. At all levels, there was a
shortage of qualified people with knowledge on most of business management
aspects, including innovation.
· In most cases, the ownership of a
company became from inheritance, the division of a family firm or by creating
it from a series of technical and practical knowledge. In this way, owners
arrived at SME management from a "know-how" focus and not from a
"know how to manage" focus, so -in general- those who ran SME had a
more technical than an administrative profile.
· Only approximately 10% of SME were
driven by people between 40 and 50 years old, with some type of university
education. The remaining 90% were older people clinging to obsolete management
practices, without university training who managed firm’s activities based on
their intuition, and adapting to various environmental situations. So, they
maintained a more reactive than proactive behavior.
· Before setting up their company, SME
entrepreneurs did not made market studies that allowed focusing the business
properly. In addition, they were adaptive, imitating what other companies did.
· There was a certain entrepreneurial
attitude, although not a capacity for competitive innovations.
· Innovation generated fear and
resistance, and there wasn’t a culture that led to taking risks in the search
of opportunities.
· Those firms did not have an adequate
advice that would allow making a competitive leap based on innovation.
· As culture educators, leaders were
predominantly authoritarian, far from democratic and participatory, a
characteristic that -in many cases- was inherited from parents. This was
evident while seeing the scarce delegation of tasks that existed due to the
lack of confidence in the employees’ ability to carry out their duties.
· Unions were responsible of a
training lack, since there were labor agreements that did not allow people to
be rewarded for the effort made, for learning or for being trained. It was only
rewarded the quantity of years spent in the work, not the intelligence or
ability. In some cases this situation operated as an obstacle to their changes’
adaptation that occurred inside and outside the company.
· There was some fear on the future
competition of the ones who worked in the company, since there were numerous
cases of entrepreneurs that had trained people and when they felt prepared
decided to open their own business.
Jorge understood that, in order to
avoid this inconvenience, it was necessary to train people and allow them to
express their points of view, but always maintaining -in the entrepreneur´s
hands- the planning and control of the company's activities. Key aspects as the
business objective, the long-term plan, the banks’ relationship, and the main
suppliers and customers’ management should not be delegated.
However, it was important to train
people as true specialists in their tasks in such a way that they are able to
organize and direct their work in the most efficient way and that they can
contribute -from his specialty- with ideas and proposals that would allow being
increasingly competitive.
· From the State, the necessary
conditions had not been generated so that firm’s executives would assume more
risks. Additionally, there was a lack of State advice that would permit better
learning on how to invest money, train people, innovate and compete, among
other important issues.
3.1.3. Interview with Verónica Rebechi: a
sight on people
She had a degree in Human Resources
and Public and Institutional Relations, and with an extensive experience in
major companies’ human resources management. Director of VR Humana Consultants,
dedicated to provide personalized company services on talent selection and
recruitment, training, organizational development, and institutional
communication, had the opportunity to work for many SME.
The interview was conducted on
02/09/2019 in her offices, raising the following fundamental points regarding
Argentinean SME:
· These firms remained behind in terms
of creativity and innovation, as well as in most aspects related to business
management and development, although -in companies closely linked to the
production and marketing business of agricultural products- it was possible to
observe certain development intention. It was different the case of some
provinces’ service companies which were relegated in this regard.
· The companies that settled in some
provinces -coming from large cities such as Buenos Aires and Córdoba, or
directly from other countries- had a much more modern conception on creativity
and innovation internal development.
· The Argentine provinces were very
dependent on State work, so that entrepreneurship and private activity, in
general, were postponed. Thus, many people did not embark on independent
projects due to the fear that is generated when leaving a permanent and secure
job, in which no greater risks were assumed.
· There was a different vision between
the elderly and younger people who were managing SME, since the latter used to
have much more innovative business proposals, based on a greater degree of
professional training and intentions to innovate.
· The younger managers tried to select
people who, like them -in addition to certain specific knowledge required by
the job to be done- should have a profile that showed a certain intention to
generate and contribute with new ideas, demonstrating flexibility and rapid
adaptation to changes. In general, they looked for young people with some
professional training and who had an entrepreneurial attitude.
· Companies still managed by a
previous generation, focused their searches on people who have many years of
experience and who have remained -for a long time- in the same company.
· Many firms were not prone to
training activities since they do not conceive them as an investment, but as an
expense. The few training activities that were carried out were focused on
specific technical skills training.
· Innovation and leadership were also
impacted by the lack of training and development of senior and middle
management. Although there were leaders who had an innate ability to lead, she
indicated that -in most cases- there were great difficulties on people
management. The employee who remained in charge of a group of people came to
occupy that position because of the years spent in the company, his/her
technical knowledge or by having some minimum training.
In few cases, the leaders were
chosen because of their management ability. That is why there were generated
enormous difficulties with –for example- the feedback to employees, the
transmission of ideas, the resolution of conflicts, the orientation towards the
objectives, the evaluation of performance and rewards.
Unfortunately, the attention of
senior managers was only captured in front of major problems.
· Mistakes were not taken as learning
opportunities or included in discovery processes that would allow new knowledge
development. In addition, errors were not analyzed because the intention was
not to damage the employees’ personal relationship.
· In a large majority of SME, there
was still some rigidity in terms of hours and work schedules, so it was very
difficult to think about the implementation of work practices such as
"teleworking" and "home office". In any case, the same
happened in almost all companies in the country, with a few exceptions of large
cities such as Buenos Aires and Córdoba.
· Although all what was said, there
were mentioned positive aspects for innovation development as the lack of
hierarchical structures and work procedures’ formalization, as well as the non-limitation
of communication channels. Thus, new ideas had the possibility to quickly reach
the high SME’ levels and obtain the necessary support for their implementation.
3.2.
Case analysis – Amuyen
Rectificaciones S.A.
With the study of this family SME, it is
intended to learn about the cultural characteristics and the innovation
processes applied in a firm that -for almost 30 years- was dedicated to the
car, truck and agricultural machinery engines repair and conditioning.
The data that is shown comes from
the in-depth interviews with company employees and workers. Also, it is
supported with the official information shown in their website[3],
and that of associated companies.
3.2.1. History
The company repaired 1,000 engines
per year and employed 40 people, approximately. Its founder, Armando Urbano,
shared the management role with his sons Sebastián and Fernando, who -over
time- had added more services and business units. They had a laboratory
-equipped with last generation machinery for turbo conditioning- and offered a
specialized repair service for an agricultural machinery brand (CLAAS).
They based their distinctive value
proposition on service quality, technological evolution and adequately trained
human capital. That is why brands like Mercedes Benz and MTU Internacional/MWM
appointed them as the authorized engines’ repair workshop with factory
warranty.
3.2.2. Innovation at Amuyen
Cutting-edge technology has been the
innovation basis at Amuyen. It allowed to reach a quality differentiation and
to show that they could always find the latest in the market, with security and
confidence.
At those days and in their area,
there was an oversupply of services since many former employees were working in
their own homes, increasing competition and lowering the quality of what was
offered. In this way, Amuyen's strategy was focused on having advanced technology
machinery at the same level of what was used in the central countries.
With time and constant investment in
technology, they modified the internal processes’ structure and hired a Process
Coordinator, responsible for translating -in manuals and guidelines- procedures
and ways of working that unconsciously they had adopted and made them more
efficient. Until then, the work processes were only based on employees’ memory
and experience.
Marcelo Bocero, the Process
Coordinator, highlighted that the new technology was implemented first and,
after using it, they designed and defined each process based on the experience
acquired. In this way, they captured the opportunities that the market offered
and -after- they acted quickly to propose the most innovative products to their
customers.
He indicated that the fundamental
processes were implemented in the first years, freeing everyone to create and
contribute ideas and knowledge. This openness to the best ideas shaped company
identity, both in a technical and in a human way. Nowadays, there were not as
many proposals as before, although the firm had not fallen into an absolute
rigidity.
Over the years, other areas were
addressed to help in company differentiation, like safety, hygiene and quality
service. Although cost reduction and efficiency initiatives were implemented,
the firm rested on the prestige obtained previously, however, it was recognized
that they maintained a constant innovation intention, both in services and in
their operational and management processes.
3.2.3. Mercedes Benz and CLAAS official
technical service: The star business unit
According to the official CLAAS web
site[4]
-a German multinational firm devoted to agricultural machinery manufacturing-
Amuyen had become a key player for their clients throughout Argentina. Their
history of service-oriented professionalism and their work philosophy based on
commitment and respect, led them to strengthen ties with major brands such as
CLAAS[5]
and Mercedes Benz.
CLAAS proposed a fast and efficient
technical service in the country, so they signed an agreement with Amuyen,
which provided the official technical service of the Mercedes Benz engines that
these machines used. In this way, Amuyen became the exclusive service provider
in the country for this international company and -occasionally- carried out
some work in Uruguay and Paraguay.
CLAAS primary objective was that
machines should be repaired in the field where they were working or changed
their engines within 36 hours of failure, and –additionally- carry out
preventive maintenance, in winter, to be able to anticipate faults in high
working times.
Sebastián Urbano, Amuyen Director,
recognized that both Mercedes Benz and CLAAS had high and reliable technology
and –additionally- simple and cost-effective products worldwide. In addition,
he indicated that CLASS provided complementary services related to agricultural
machinery, and that they provided information and training to Amuyen, which
allow giving high service quality to their customers.
3.2.4. Amuyen culture
Through conversations with different
factory workers, arouse diverse issues related to Amuyen business culture,
summarized below:
· As the rectification of an engine
involved a sequence of activities that took place in different workshop areas,
an adequate coordination of tasks was required so as not to hinder the
necessary subsequent work.
· It was highlighted the Process
Coordinator ability to listen and take into account each one’s experiences,
allowing an improvement on the activity schedule. This did not happen with the
current Workshop Head, a recently hired person and with little experience. The
more mature workers didn’t’ ask him anything and, very often, they didn’t
follow his instructions.
· The work climate was pleasant and
relaxed, and much more in the absence of the owners.
· The time table was followed although
there was some time flexibility regarding personal matters.
· Training was important and, within
their industrial sector, was one of the firms that invested more in talent
development.
· The company had certain difficulties
in retaining qualified personnel, since -in their industrial sector and in the
company, in particular- the salary level was not so high and, in addition,
there was a high personnel demand with skills and technical knowledge.
In addition, some experienced
employees pointed out that staff turnover had generated some loss in clients’
confidence, who previously felt secure in dealing with the same people for many
years and always obtaining a high quality service. For this reason, the
customers were in front of new people, whose abilities were unknown for them,
causing some concern about the quality of the work done.
· The cost reduction initiatives led
to implement mass factories practices such as Toyota’s, although much of the
work they did was artisanal, not comparable with this type of company. They
insisted that the engines, although with the same malfunction, may present
particular characteristics, implying -in many cases- a certain degree of
experimentation. That is why they emphasized that it was difficult to
assimilate both production methods.
· The company owners had little
feedback with employees, and some comments were only made on mistakes.
Successful results were practically not commented.
· In front of errors, they tried to
find the culprit and –then- they looked for solutions. On errors or mistakes,
there was not a learning process implemented.
In addition and being a family
business run by its owners, in many cases the problems transcended the work
plane and personally affected those that were involved.
In the next Figure 3, it is shown a
Summary of the most relevant elements of this case analysis:
|
Figure 3:
Case analysis - Summary |
|
Source:
Own |
Based on what was stated in the
in-depth interviews carried out in this field study, it can be seen that
Argentinean SME did not have a favorable culture towards innovation, mainly due
to:
· The limited
presence of large companies that demanded innovative solutions from SME.
· Priority on
stability and job security, strengthened by a huge State presence as employer.
· An
entrepreneurial attitude motivated by the need to survive on their own, and not
the intention to create and develop novel ideas.
· The errors
and failures were not seen as learning sources.
· The lack of
middle and upper management training.
· The advanced
age executives’ predominance and their little openness to new proposals.
· There wasn’t
an academic offer -private and state- focused on innovation.
Moreover and out from the case study
analyzed, it was observed that the market differentiation came from an
innovative services’ offer, based on adding cutting-edge technology, and on
partnerships with large and well-known companies.
Likewise, there were innovative
performance enablers, such as flexible processes coordination and planning;
considerable investment in training and pleasant working climate.
On the other hand, certain obstacles
that hindered innovation were verified, such as difficulties in retaining
trained personnel, low error tolerance, leaders’ feedback deficiencies and lack
of openness towards employees’ initiatives.
In this way, the field work has
allowed to verify the innovation lag that the Argentinean SME had,
independently of the industrial sector to which they belonged or their
particular realities. In the analyzed firm, some more advanced factors were
observed in this aspect, although it cannot be considered a highly innovative
company.
4.
CONCLUSION
Culture
-an intangible resource, built by values, beliefs, symbols, rituals, myths and
practices- gives meaning and shapes people’s behavior. It provides identity,
commitment and control; stimulates innovative performance and proposes
difficult-to-imitate competitive advantages.
The innovative culture –adhocratic,
externally oriented and flexible- presupposes the creation of values,
convictions and attitudes that lead to organizational excellence development.
In these types of contexts, it is verified the search for new opportunities and
challenges; distended environments; freedom and trust; acceptance of risks and
uncertainties; extensive communication and feedback; recognition systems and
adequate rewards, among others.
According to what was analyzed, the
Argentinean SME -except, certain aspects such as time flexibility, easy access
to managers and informality- showed some difficulty in order to promote
innovative cultures; basically, in aspects like:
· Reactive, adaptive and imitative
attitude that moves them away from producing competitive innovations.
· Processes focused on the search of
new ideas and opportunities[6].
· Right delegation in decision making.
· Leadership, based on an
authoritarian style.
· Support to collaborators’
initiatives.
· Possibility of learning from errors
and mistakes to develop greater knowledge.
In Argentinean SME, it has been
verified that the managerial role -oriented to generate a trust climate,
motivation, follow-up, rewards, feedback and incentives towards the search for
new ideas- could be improved due to different inhibitors that were noted in
this work.
5.
PROPOSAL
Developing an innovation culture
implies raising awareness about its need and support. It refers to focusing on
present and future organizational competitive advantages. In this regard,
leaders should take into account the following elements:
· Process:
Establish a process to manage innovation, with appropriate steps and filters.
· Equipment and resources: a) Conform appropriate teams; and b) allocate physical space, time and
adequate resources for each project development, spreading the positive
employees’ contributions.
· Focus on the outside in order to be open to change and have the necessary flexibility.
· Problems
should be addressed as challenges to be overcome.
· Experimentation and errors: While searching the new, allow experimentation and tolerate failures
and errors when they arise. Mitigate the critical reaction to new ideas and use
mistakes as a learning process, promoting knowledge exchange even with other companies.
· Challenge and train employees permanently so that they contribute to products and processes
improvement. Involve the State in this type of activities.
· Awards:
recognize the most outstanding ideas and projects, and those who take risks and
seek new alternatives, regardless of results.
Innovation
has become a game changer in the competitive and social arenas. That is why the
innovative culture –a particular intangible asset- is one of the most difficult
challenges that companies’ executives have today. It helps to achieve
difficult-to-imitate and sustainable competitive advantages, proposing a
high-to-reach quantum leap on present management and performance activities.
SME
are scattered all over the planet and represent a fundamental driver for economic
growth and social development. To be a laggard in the innovation race implies
to accept that humanity -as a whole- will be relegated to decreasing life’s
quality levels. It is required to deal with this issue in newer ways, and
administrators, entrepreneurs and business executives -in general- should find
novel avenues to benefit more people of our society.
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