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The IT Innovation Gap in SMEs Robert B. Mellor BSc, MBA, PhD, DSc. Faculty of Computing, Information Systems & Mathematics. Encouraging innovation is important.

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The it innovation gap in smes robert b mellor bsc mba phd dsc l.jpg

The IT Innovation Gap in SMEsRobert B. MellorBSc, MBA, PhD, DSc

Faculty of Computing, Information Systems & Mathematics


Encouraging innovation is important l.jpg
Encouraging innovation is important

Most SMEs do not have formal IP/IPR (patents etc) and may not be "creative", so growth is powered by "small" innovations – especially in IT.


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Rogersversus Moore

Rogers (Diffusion of innovators. Free Press, 1962) says innovations diffuse in a population with the help of "Change Agents".

Moore (Inside the tornado. Harper Business, 1995) points to the "Innovation Chasm" in product acceptance.



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DVD players

iPods(?)

Palm pilots

Data mining

Home cinema

Sky+ boxes

Electric cars

Organisational web sites

Nanotechnology

VCRs

Enthusiasts

Visionaries

Pragmatists

Conservatives

Laggards

Innovators

Early adopters

Early

majority

Late

majority

Traditionalists


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These 2 theories are a useful jumping-off point, but:

  • We are dealing here with IT-innovation & systems (not consumables/consumer packaged goods) and

  • Not with a homogenous population (DoI assumes people and ideas can interact in a random Brownian manner, but inside companies free space is lacking due to e.g. departmental barriers).


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2 sets of research data

  • Survey of how survivors (successes) adopt & use IT

  • Survey of success and failure of innovations in the use of Internet


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1. Survey of how survivors (successes) adopt & use IT

  • 2006

  • 400 SMEs from SE England

  • Telephone survey plus 50 interviews

  • Samples from; transport, food & aerospace

  • Included IT & Internet branch as “control”


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1. Survey of how survivors (successes) adopt & use IT

Transport: Mandatory compliance with haulage legislation (mileage etc) and tracking of goods, palettes, etc.

Food: Mandatory compliance with food legislation e.g. tracking of ingredients (fuzzy).

Aerospace: Obligatory documentation e.g. maintenance

manuals etc.

IT & Internet: “Control” where IT is part of the “core competencies” gives a convenient baseline


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2. Survey of success and failure of innovations in the use of Internet

  • 1997-2003

  • 40 SMEs in the EU

  • Concentrated on 3 case companies having complete data sets (in-depth study)

  • Cases from; education, personal services & tourism

  • Included 3 “control” case studies


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IT is important for SMEs of Internet

  • >85% say “had good value”

  • ~80% have their own web site

  • >70% say IT is essential for maintaining profitability


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How SMEs use IT of Internet

  • Document management

  • Communication (VPN)

  • 50% of SMEs use IT for HRM if employee number >10


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Internet as a sales channel of Internet

  • 40% report that Internet does not contribute (directly) to sales

  • 15% report that Internet contributes 5% to sales

  • 25% report that Internet contributes 25% to sales

  • 1% report that Internet contributes >25% to sales




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Altogether >30% of IT installations are carried out in a DIY manner by self-taught IT staff. <15% used any evaluation methods.

No support from the “official” IT industry, nor by educational lobbies (“e-skills” etc), nor Business Link, etc.

“…Government-funded advice has scant use…”


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For those SMEs where IT is manner by self-taught IT staff. not part of core competencies, IT directors think that:

“…the major difficulty is locating an immediate answer to the precise technical questions that will unlock the next stage of development, from someone who understands the business needs …”


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“… stories of great persistence and ingenuity which had achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “

“… deployment (of IT) typically depends upon a single individual with vision who takes full responsibility for IT initiatives …”

“… the most challenging aspect of implementation (was) overcoming resistance to change …”


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For those SMEs where IT is achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “not part of core competencies, IT directors think that good implementation advice includes:

“… (do) not try to force any new technology down peoples throats but … do some active waiting … look for a problem to which your technology is a good solution …”

“ … (don’t) underestimate the X factor, you can be clever, you can have such a good idea, you can be very good at business, but if the people don’t like you, you are never going to make it …”


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For those SMEs where IT is achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “not part of core competencies, non-IT directors typically resist starting new IT projects because:

  • Cost; not entirely sure how much

  • Trust; the IT dept may be building it for the sake of building it

  • Trust; the IT dept cannot check if what the consultants/suppliers say is correct.

  • Risk; can’t afford the disruption if it goes off the rails.


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Some quotes from non-IT directors achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “

“… I expect the water from a tap to be clean, so I don’t expect to have to pay a lot of money for a filter…” (director commenting on lack of anti-virus SW on his connection to his ISP).

“…Internet is an icon on my desktop; I double click and it opens, what’s the big deal? Why should Internet cost me so much?” (director wanting a web-site built).


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  • IT-innovators feel alone and lack external support. achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “

  • Non-IT directors “speak a different language”.

  • The major issues are “trust” and “believability”.


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Consensus Group: A-I Theory: achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “Kirton (Adaption-Innovation in the context of diversity and change. Routledge, 2003).


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In “successes” achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “

Trust and/or understanding of the (technical) issues is present.

The IT individual is (even perhaps nominally and isolated) part of the consensus group.


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Trickle-Down (in A-I Theory): achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “Simmel, G. (1904). Fashion. International Quarterly, 10, 130-150.


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In “failures” achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “

Understanding of the (technical) issues is not present. Trust is lacking (especially if explaining with a foreign accent)

Communication has broken down because the IT innovator is not part of the consensus group.


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The Innovation Gap achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “


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Trickle-Down (in A-I Theory): achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “Simmel, G. (1904). Fashion. International Quarterly, 10, 130-150.

Rebound


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Trickle-Down achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “ Rebound

Persistent innovators can go directly to Director level, however:

  • “Change Agents” are easily transformed into “Resistance Agents”

  • Management may well mutate the idea into a “consensus group” project & exclude the original innovator, moving into extremely dangerous territory!


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Trickle-Down achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “ Rebound

D D

M M

CA CA

Innovator Innovator


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WARNING achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “

  • In companies in mature markets, TD Rebound was evident at size 120 employees, and may already occur in companies even as small as 50 employees.

  • BUT - Trickle-Down barriers are much less apparent in firms working in immature markets.


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“Innovation achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “ Nuclei” 1

Multi-specialists, e.g. an engineer with an MBA, or a chemist with a MSc in IT, are responsible for around 40 times more innovations (mostly incremental innovations), than people with a single specialization.


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“Innovation achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “ Nuclei” 2

Highly educated foreigners/ex-pats in the correct environment, may be responsible for between 60 and 80 times more innovations (mostly incremental innovations), than native people with a single specialization, or around twice that of a multi-skilled native.

They are often multi-skilled + have endured the Darwinist rigours of internationalism and thus are indeed fire-hardened expert and creative problem solvers.


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Common achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “sense for IT people

  • Break large projects into smaller projects

  • Harvest “low-hanging-fruit” success to boost trust.

  • Network with people in similar positions in other firms.

  • Try to identify sources of cheap training, advice or support


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Common achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “sense for everyone

  • Be open for multi-skilled/second career/ex-pats etc

  • Secretive or biased persons should not be allowed positions as “information gatekeepers”.

  • Remember TD-Rebound can start in small (50+) firms, so an impartial leader must eliminate problems before they become big problems.

  • Involve all parties in projects from the very beginning

  • Open communication is an explicit responsibility for everyone – esp. in firms in mature markets.


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Thank you for inviting me achieved stable and workable systems, sometimes in the face of owners who were reluctant to invest… “

Questions?


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