Serious Innovation in Portuguese Companies

By Pedro do Carmo Costa

Fortunately for Portugal, innovation is accepted by most of the country’s companies as something beneficial and necessary. What today seems obvious and unarguable, only a few years ago was seen as a cost to be avoided and a distraction from the main focus of corporations.

But there are barriers still to be broken down in the mission to bring innovation to companies and organisations. In Strategos’ vision, there are two obvious barriers, and one deeper obstacle.

One of the obvious challenges has to do with the actual interpretation of what business innovation is and who it is for. Some Portuguese companies still cling to the narrow view that innovation is necessarily technological. Nothing could be more limiting if we bear in mind that the technological aspect is one more of the forms of creating benefits for consumers. Innovation in the business model, the more comprehensive definition, is the lever to new or existing concepts to deliver new benefits to consumers (for instance, the Via Verde automatic toll gates on motorways, providing convenience), as well as delivering these benefits to new markets (for example pre-paid mobile phones, a service taken up by many who were previously excluded) and devliering the same benefits in a totally new way (for example, Banco 7, which provides banking services in a radically different form).

The second challenge has to do with the authority to innovate. Who can and who should innovate? Because of the actual definition of innovation – technological vs. business model – it is commonly accepted that innovation comes from the research and development department, or else from senior management, as they are paid to think about these things. In other words, an employee, except for a researcher or top manager, is only meant to perform as planned. It is no surprise that one of the slogans devised by the magazine Ideias & Negócios for potential innovators is “hand in your notice, now” – because anyone who innovates has to be independent. Nothing could be more wrong. There is huge potential for innovation in organisations, located in each individual, which can be levered out. Gary Hamel, in his classic article in the HBR, Bringing Silicon Valley Inside, challenges organisations to internalise the ecosystem of Silicon Valley, in other words to created within companies a market for ideas, talent and capital. Ideas being constantly generated by everyone, talent and skills being applied to the best ideas and capital being invested in the most promising concepts.

Finally, the most subtly challenge for our society – our inability to deal with risk, combined with the non-acceptance of failure. It is known and accepted, amongst venture capital companies, that for each successful business, you need to invest seriously in four or five opportunities, and you need to start out by making an initial selection from between one hundred and two hundred business ideas. However, next door, in the companies, the arithmetic seems to be “I want an idea and this idea has to work”. Nothing more illusory that expecting that great business will emerge from a few options. To innovate in companies, in other words, is in fact creating options for the future. In addition to creating these options, the challenge is to guarantee that they flow in the innovation pipeline in the least costly form. This all involves experimentation as a form of accelerating learning.

Great progress has been made in the language and dissemination of the concepts of innovation in the Portuguese business community. But there are still serious battles to be fought, with deep roots in our culture and business orthodoxies.