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issue: April 2003 APPLIANCE Magazine

European Report
Organizing Innovation

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As innovation is generally recognized as the crucial factor in long-term business success, how do companies organize innovation?

How do you know that your innovation process is functioning properly? And, which factors influence the organization of innovation?

According to Luc Dohan, CTO of Groupe SEB, a European small appliance maker, "Of course, innovation is crucial to our industry. As many of our products are in saturated markets, growth is only achieved through innovations. Without it, you'll end up with commodity products and low prices. Price wars do not help the industry and kill the innovation process."

As for management of innovation, says Mr. Dohan, Groupe SEB measures its innovation process by the rate of new products, as well as the depth and the relevance of its research portfolio.

"We have a 400-person staff in R&D, which is about 1.8 percent of total revenues," he says. "Of these 400, about 80 are involved in research and 320 are in development. Of course, we monitor our patent performance; we file about 50-70 patents a year, and we want this number to increase. To protect these patents, we are really active against counterfeiting, notably in China."

Other, larger companies have different control systems. BSH (Bosch-Siemens HausgerÅ te) is a market leader in Germany and in Europe, and considers itself as an innovation leader.

Innovation is the result of constant investigation on different levels, says Petra Drotbohm, head of the department Coordination and Engineering in Corporate Technology for BSH. "For the short term, we use road maps for brands, products, technology, and design," she says.

"These road maps are designed by the product divisions, and the possible synergies are determined in central departments. Road maps essentially are timeframes, and are widely used in the industry. The design road map however, is quite new for our company. By using the Ansoff-Matrix, where products are divided into old versus new, existing versus new markets, and old versus new customers, we have a good tool for risk- and portfolio-management."

As globalization proceeds in most European countries and the big players consolidate their positions, Spain is still an exception. Market leader Fagor ElectrodomŽsticos is very much focused on its home market and does not belong to a large white goods mother, but is part of a Spanish industrial conglomerate. How does one keep up with developments in a somewhat isolated position?

Rafael Bengoa of Fagor Communications, tells APPLIANCE, "We must maintain our position as an obligatory point of reference on the Spanish market, and stay one step ahead of our competitors. We just implemented Total Quality as a management model within Fagor, and Innovation Management is defined as a key process. Now, all of our business areas write an Innovation Plan, where all innovative projects are outlined." Innovation also has to support export for Fagor. Mr. Bengoa says that Fagor still has much work to do in terms of achieving recognition on the European markets, and innovation is considered a key factor for consolidating and expanding the company's reputation.

This report is filed by Paul Roggema, European correspondent, APPLIANCE magazine.


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