ImProve: Innovation Management in High-Growth SMEs from the Knowledge-intensive Services

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In a setting of a global economic crisis the search for opportunities to move out of the downturn as quickly as possible is essential. The most promising opportunities are of course those that have a strong lever either because they address as many companies as possible or as many employees as possible, or because they promise a growth potential that will have a positive impact on other areas in the European economies.

In search of these opportunities this study wants to contribute insights on the growth opportunities coming from innovative, high-growth companies in the Knowledge-intensive Service sector (KIS). This sector has demonstrated its potential as growth engine for Europe in the past. It provides for about 70% of the GDP in Europe and offers jobs to 70% of the employees in Europe1. Innovation is perceived as a powerful driver for sustainable growth. In the KIS sector innovation requires specific management capabilities compared to the manufacturing industries. These Innovation Management capabilities are essential to tap into the growth potential of the KIS sector and drive Europe out of the downturn.

The results from our research based on the IMP³rove database2 (www.improve-innovation.eu), prove that the KIS companies – especially the Growth Champions in this sector have the potential to setting the pace for growth in Europe. It is encouraging the KIS sectors serving as Europe’s engine for growth and new jobs if they are dedicated towards innovation. Indeed, investing in innovation is a smart move. It drives firm performance and profitable growth.

Investing in service innovations pays off. But what are the secrets of successful Innovation Management in KIS? KIS companies should take the risk and invest in more breakthrough rather than just incremental innovations. If they move quickly and don’t get stuck in long-term development projects, they can change the rules of the game. Leaders in the KIS sector nourish intensive co-development partnerships and systematically manage their innovation projects driven by clear targets for time, val-ue and quality. Passion complements this discipline. Successful KIS companies foster an open culture with which they maintain their competitiveness on a sustainable basis.

However, our research also shows that even KIS companies leave opportunities unexploited. They have not yet tapped into internationalization as an innovation strategy. Here KIS companies can learn from the Growth Champions in other industry sectors, where export helped to compensate the down-turn in the domestic markets. On average, KIS firms can even further improve their proficiency in Innovation Management. Discipline and even more systematic Innovation Management help to turn creative potential into financial value, especially in the fuzzy front-end. When searching for new ideas, KIS firms could even better listen to the “voice-of-the-customer”.

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