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Innovation: a critical strategy for Quebec manufacturers and exporters

02 August 2016 by National Bank
Manufacturiers et exportateurs du Québec : innover est crucial

As access to international markets continue to grow, Quebec manufacturers and exporters hoping to make their mark have little choice but to innovate. Here is an overview of why innovation is critical to success—and how to get started.

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Quebec’s productivity, measured by gross domestic product (GDP) per hour worked stood at $44.60 in 2014, according to Statistics Canada. The Canadian average was $50.10. For Quebec, the figure represented a rise of 2.3 percent over the previous year, slightly below the national average of 2.5 percent.

“We don’t have a great score,” says Marie-Christine Ferland, vice-president of innovative manufacturing at Manufacturiers et Exportateurs du Québec (MEQ). Productivity is rising more slowly in Quebec than elsewhere in Canada, while other countries are experiencing much more rapid growth. In the last 10 years, for instance, the rates have increased by 53 percent in the United States, by 91 percent in South Korea, but by only 11 percent in Canada.

In Ferland’s view, the heart of the problem is a lack of innovation. “Innovation is what enables productivity growth in businesses,” she explains. “The goal of innovation is to become more competitive and it is the single most important strategy for manufacturers.”

Laurent Simon, a professor at the school of entrepreneurship and innovation at HEC Montréal, one of Canada’s leading business universities, expands on this point: “Innovation is essential, critical, vital. No organization can survive today without innovating.”

Quebec manufacturers and exporters have “a great deal of work to do,” in this area, he suggests. And the work is absolutely necessary, he emphasizes. “With the opening of new markets, business success will come less and less from meeting cost and productivity challenges, and more and more from differentiation in the market, which can only be fostered by innovation.”

Innovation: much more than inventions

The word innovation often conjures up images of someone tinkering in their garage, but the reality is more complex and involves much more than inventing new products. The Organisation for Economic Co-operation and Development (OECD) describes four types of innovation: product, process, commercialization and organization. All parts of a business must participate.

To be innovative, a business needn’t reinvent itself on all four fronts simultaneously. Laurent Simon emphasizes that each person must internalize innovation and be inspired by its overarching goal. “Like organizations, individuals must ask themselves how they can be innovative. What do we aspire to, what abilities and resources do we have that can be linked in original ways?”

Take the time

Innovation requires dedicated time. All components of an organization, as well as those of the competition, must be examined and analyzed. Scans of markets and client expectations must be completed. This work must then inform decisions about the organization’s direction and the resources needed to reach it. “Innovation must be part of a larger strategic plan,” indicates Denis Marchand, director of Défi Innovation Estrie, an innovation accelerator in Quebec’s Eastern Townships.

Marchand recognizes that time is in short supply for many business owners—particularly those who run small and medium-sized enterprises (SMEs), a group that includes the vast majority of Quebec companies. Consumed by day-to-day operations, many entrepreneurs fail to plan for the long term. “I often find,” explains Marchand, “that the entrepreneurs I work with have never even considered crucial questions such as: Why do you run a business? Where do you want to be in five or ten years? These are important considerations for even the smallest of businesses.”

Innovation: a state of mind

A major component of strategic planning is the mindset it creates. “The plan is rarely implemented as it was originally conceived,” says Denis Marchand. “But the planning process predisposes us—and our organization—to react quickly to potential threats and to seize any and all business opportunities.”

For Laurent Simon, remaining open to new ideas is the key to innovation. “It’s important that business owners listen closely to their clients and suppliers, and understand their reactions and suggestions,” he declares. “They have to follow what’s happening in the markets where they’re active, without losing sight of the ones they hope to conquer someday.”

Part of remaining open is flexibility. “The mission of a business should evolve,” states Laurent Simon. “It has to be put to the test in every new market and be subjected to a review and reassessment so that the business maintains its focus and uniqueness. It’s healthy to regularly ask about the value a business strives to create and about the needs of the marketplace.”

Innovation never ends; it is a journey without a destination, confirms Marie-Christine Ferland. “To innovate, we have to constantly improve our businesses and ourselves; we can never be satisfied with the status quo.”

The vice-president adds that groups such as MEQ have a role to play in teaching entrepreneurs about the innovation imperative. “Some business owners don’t see the need to change the way they operate,” she says. “They ask themselves, ‘If it ain’t broke, why fix it?’ That might be true over the short term, but how long will it last? Will the business remain competitive? These are the questions that have to be asked. And the absolute best time to consider these questions is when things are going well.”

Teamwork

Engagement and collaboration are other essential ingredients in successful innovation. Laurent Simon appreciates the importance of involving employees directly in innovation projects. “Employees are often closest to processes, tools and clients,” he points out. “We should feel comfortable engaging them in a discussion about a strategic issue and then asking them to come up with potential solutions.”

For him, the role of senior management is not to find specific answers to questions raised by particular issues, but to identify potential strategies and to ensure that the organization has the resources it needs to determine which plans and actions should be tested and implemented.

Internal communication is also vital. “Good communication mobilizes and inspires people,” emphasizes Denis Marchand. “You have to explain to employees where the business is headed and how it’s going to get there. You have to congratulate them for their accomplishments and let them know when things are going well. Businesses are all about people, not machines or processes.”

Ask for help

Innovation is a competency like any other,” adds Laurent Simon. “It doesn’t fall from the sky. It has to be learned.” Managers have much to gain from studying innovation—or from working with specialists to develop and implement a customized process that will instill a spirit of innovation in their organization.

Simon hopes that more innovation resources will be made available to Quebec-based entrepreneurs. He points to the City of Montréal’s Parcours Innovation, along with the National Research Council Canada’s Industrial Research Assistance Program and HEC Montréal’s Mosaic program, which he co-directs. “We need more services like these,” he affirms.

For Denis Marchand, the challenge lies more with the multiplicity of programs and resources offered. “Both the federal and provincial governments provide financial assistance to small and medium-sized businesses to support innovation,” he explains, “but making the most of these programs and resources is not easy. Most entrepreneurs aren’t familiar with the programs and organizations that administer them.”

Savvy businesses would do well to tap into these innovation centres or into their industry associations to learn how best to take advantage of available services and support.

Innovation: an action plan

  • Book time regularly to explore and learn more about innovation.
  • Ask yourself about the future goals of your company: where do you want to be in five years? How will you get there?
  • Work with an organization or a consultant to develop a strategic plan.
  • Ensure that your management team completes training in innovation.
  • Invite employees to propose ideas that support the company’s mission, values and goals.
  • Observe how clients use your products and services; ask them about their needs and their perceptions of your products and services.
  • Learn more about your competition.
  • Build relationships with other entrepreneurs to learn about their innovative methods.
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