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How to Develop the Innovative Capacity of Companies

2.1. Introduction

In the economic world, it is common to say that a start-up innovates once, when it is born, and that a company innovates as many times as necessary to live, prosper, survive, and to sometimes even be reborn.

Innovation is therefore essential. This goes without saying for a start-up, but for a mature company this implies that it must constantly carry out two activities, which are certainly intertwined, but have different objectives:

• - the first activity is dedicated to its social mission as described in its statutes and which monopolizes most of its resources and time;
• - the second activity is devoted to the function of "re-creation", i.e. innovation. As such, the assets required are the same as those used for start-ups.

Intangible assets, which can vary from one company to another, are a fundamental source of sustainable value creation (Kaplan and Norton 2004).

In organizational terms, the generation of intangible assets is a holistic approach based on three main and complementary pillars (Yitmen 2011):

• - Human capital: "The human capacity of an organization that helps solve business problems" (Bontis 2001). Employees are assets, but they are mobile and cannot be detained by organizations. This category therefore encompasses the efficiency with which an organization uses its human resources (Bontis 2001).
• - Internal or structural capital: includes all the non-human knowledge pools of organizations that "stay in the company when employees go home for the night" (Stewart 1997).
• - Relational capital: includes relationships with partners (customers, suppliers, etc.) outside the company as well as all other relational resources, such as reputation and loyalty (Sveiby 1997).

Entrepreneurship does not suffer from a deficit of new ideas, but rather from the low survival rate of innovative projects throughout the stages described in the staircase. Indeed, only 20-30% of technology companies survive in the long-term (a good example of one that has survived is the French company SUPRA, which was started in 1873).

Whatever the reason for which a need for innovation arises, facing the question "how can companies develop their capacity for innovation?" is to respond to the challenge of converting these ideas into commercial products that sell for a profit.

In Chapter 1, the staircase describes the conversion process, the following of which improves the rate of survival. The answer to the question is to implement, in a timely manner, all of the actions necessary to move from one step to the next along the staircase.

These actions can be broken down into three parts:

• - siphoning queries to produce an idea;
• - having the required skills;
• - having a focused organization.

2.2. Siphoning queries to produce an idea

The first action to undertake, in order to increase the capacity for innovation, is to be able to channel, or siphon, all these requests for innovation towards decision-makers, through routine actions that can give them visibility. We mention a few effective measures: permanent maintenance of R&D notebooks (digital or otherwise), monthly review by management:

• - R&D notebooks;
• - "innovation" requests from the product marketing and product engineering departments.

The objective is to produce an idea, a differentiator, for a start-up or a company that allows one to either maintain and improve its position, or to address new needs and/or new opportunities on the markets in line (or that are at least similar) with the general makeup of the start-up or the company.

2.3. Having the means (skills) required

Generating and selecting ideas is, of course, not enough. The company, whatever its size, must acquire the skills to:

• - technically succeed;
• - protect against dangers;
• - generate routines and procedures.

2.3.1. Technical achievements

Starting from an idea, the company must have the skills to carry out a certain number of actions strictly necessary for it to have a chance to technically lead to an innovation:

• - make a prototype with the means at hand (and keep it inexpensive) for a start-up, and R&D for a company;
• - write technical specifications of the product and define cost objectives (perform a positive beta test), identify corrective actions;
• - carry out corrective actions;
• - write the new modified technical specifications;
• - check the product/service-market fit;
• - enter the first symbolic and then significant orders.

The nature of these skills mainly involves know-how from human resources:

• - for the start-up: the founder, an engineer (if the founder themselves is not an engineer), product marketing;
• - for a mature company: a product manager, product marketing, an R&D manager.

It should be noted that at no time is the sales organization mentioned. In fact, the sales organization is hardly involved in the innovation process, as it can only be effective if it has stable, well-specified products/services available on specified dates and at a precise price. However, it participates indirectly in this process by giving product marketing access to the market through appointments, presentations, advertisements, etc.

2.3.2. Protection against dangers

During the first period of the start-up's existence, founders tend to devote themselves exclusively to the concrete implementation of their ideas. Making the prototype then becomes the main goal of their activities. However, many months (or sometimes years) might pass between the idea being born and the emergence of a number of dangers: for example, alternative solutions, new competitors, unexpected costs, unfavorable regulations. It becomes urgent to build the following two defenses as much as possible:

1. 1) An increase in the protection against competition (Soleau envelope, model, brand, patent, etc.), as reported in the literature (e.g. Halt et al. 2017). Start-ups need to think about trademarks, patents, designs, copyrights, intellectual property, labeling and marketing issues and, of course, nowadays, domain names. Failure to protect and enforce one's intellectual property can sometimes result in a decision to not proceed with the development process. However, beyond this "defensive" aspect, intellectual property can be seen as a real lever to create and pursue market opportunities in existing or new markets (Conley et al. 2013). It should also be noted that intellectual property will be valued when potential fundraising emerges. Subject to the availability of the necessary financial means, this protection can also be obtained through constant leadership. These protections call for the following HR: R&D, product marketing, founder or manager, risk manager, and lawyer. As these last two roles are not full-time (at least in the start-up phase), they can be partly filled by other people or outsourced. For example, at the very beginning, the company may call upon a specialized lawyer/intellectual property attorney, or the risk management role can be performed by the founder, and then by another person (e.g. a quality manager).
2. 2) Managing risks: the company and its ecosystem evolve in environments where risks of all kinds exist. Managing risks means being aware of them in order to avoid and anticipate them (see section 1.3.2).

2.3.3. Generating routines and procedures

Routines and procedures are systematic actions, and rules, whose purpose is to ensure that the company is not subject to chance or, at best, the random talents of a few. Here are the main routines and procedures that must be established:

• - monitoring the competition (permanent);
• - monitoring product/service-market fit (permanent);
• - R&D procedures: how to generate and siphon ideas, solutions, etc. (permanent);
• - having technological surveillance (permanent);
• - working with the ecosystem to have more intelligence, information and solutions (permanent).

Implementing routines, procedures, etc. requires a willingness on the part of the founder (or the GM) to impose them, and on the part of product marketing, R&D and the production manager to execute them.

2.4. Having an appropriate organization

2.4.1. Prerequisites

Regardless of the category the start-up belongs to, an innovation process cannot take place without coordination, decision-making and an organization chart, however simple it may be. This organization must be such that at no time can there be a pause on the priority: innovation.

An example of a common dangerous situation in a start-up is that the major product marketing role that needs to be performed by a professional is sometimes either under the orders of the sales director or combined with the roles of the founder or GM. This type of organizational structure does not reflect the priority that must be given to innovation. In most cases, it is strongly recommended that the person in this role reports directly to...