CREATIVE APPROACH TO THE INNOVATIONS BASED ON THE PRODUCT BENCHMARKING RESULTS

1.1 Innovations and creativity

Innovation through creativity is an important factor in the success and competitive advantage of organizations (Woodman & Sawyer & Griffin, 1993, in Gumusluoglu & Ilsev, 2009) as well as for a strong economy (Drucker, 1985, in Gumusluoglu & Ilsev, 2009). On the basis of Valgeirsdottir, Onarheim and Gabrielsen (2015), creativity is a critical component that feeds into all stages of innovation and design processes by promoting inspiration, ideation and implementation of ideas, revealing the need for thorough research to support design creativity. As August, Hohl and Platzek (2014) stress, it is undisputed that creativity is a major constituent for the development of innovations. Lee, Florida and Gates (2010) argue that human capital, creativity, and diversity operate jointly in the production of innovation. Innovation itself includes the creativity. According to Godin (2008, in Kotsemin, Abroskin & Dirk, 2013) there are 12 concepts of innovation while one of them is described as human abilities to creative activity and includes innovation as imagination, innovation as ingenuity and innovation as creativity. There are many definitions of creativity and innovation in the literature and these two terms are closely connected. As Mostafa (2005) claims, the concepts of creativity and innovation are often used interchangeably in the literature. Based on the opinions of multiple authors, a widely accepted definition states that creativity is the production of novel and useful ideas, and innovation is the successful implementation of creative ideas within an organization. Thus, creativity is at the individual level, while innovation is at the organizational level (Amabile, 1983, 1998; Amabile & Conti & Coon & Lazenby & Herron 1996; Oldham & Cummings, 1996, in Gumusluoglu & Ilsev, 2009). The connection between creativity and innovation is evident as the creativity (at the individual level) is the base for the innovation (at the organizational level). It is the creative performance of all employees which provides the material for innovation. The basic source of innovation is people – employees and their brains, creativity, thoughts and ideas, hence the creativity of employees usually positively influences organizational innovation.

Osborn´s checklist belongs, together with SCAMPER, to one of the mostly used checklists for concept development. Osborn´s checklist consists of using the groups of questions such as: put to other uses, adapt, modify, magnify, minify, substitute, rearrange and reverse and SCAMPER was derived from Osborn´s checklist and it is the acronym of substitute, combine, adapt, modify, put to other uses, eliminate and rearrange.

1. 
   Benchmarking
   

The main point of benchmarking is to discover the performance of the rivals and to strive for the changes in doing the things by the enterprise. An enterprise should adopt the best practices from the best competitor and exceed the results reached by the competitors. The benchmarking could be the base point for the “imovations” as the creation of something new (innovation) plus the imitation of best practices of the others (imitation). When carrying out the benchmarking, the product attributes (criteria) to be compared are set. The paired comparisons are used to find the attribute (criterion) with the greatest importance. As the average importance (v_i) is inappropriate for using, the real value of each attribute (w_i) is counted to be included in the benchmarking process. The formulas are used as follows:

while: CbD means conversion by deviation and is used to convert the average value of the attribute to the real value of the attribute; k_i means coefficient of importance as it is counted through the paired comparisons; d means deviation and it is calculated as the ratio of the total importance to the sum of coefficients of importance. Next, the benchmarking has to be carried out to search for the best value in each attribute and to find the overall benchmark (product) on the market. The reduced values of importance (a_i), the values of attribute (b_i) and the overall benchmark value (B_j) are used as it is expressed in following formulas:

The procedure of using benchmarking process is the subject of the next section.

171.2 Creative approach to the innovations based on the product benchmarking results

In this section of the article, we carry out benchmarking and present it in form of simple case study. We use a real Slovak company dealing with the plant biomass for the energy purposes. The name of the company has been removed and replaced by the mark „X” due to the company requirements to protect the sensitive information. The vision of the company is to be a market leader in the field of biomass processing and delivering, especially for energy purposes. The strategic aim of the company is to sell the pellet fuels and briquettes in the particular region of Slovakia as well as on the foreign markets in Italy and Austria. The company is planning to expand its activities and to focus on building of boiler houses for the wooden pellets.

The aim of case study is to carry out product benchmarking in order to assess the product attributes (criteria) and to make the innovations by using the Osborn´s checklist as the creative improvement technique. We compare the product of the company „X” – pellets of the level A1, marked as product 1 – „P1”, with the best competitors on the market, marked as product 2 – „P2”, product 3 – „P3” and product 4 – „P4”. We don´t use the names of the rival products or the brands as we removed the name of the selected company and it would be unfair to compare one unknown product with three clearly marked ones. The attributes we have chosen are as follows: price (€/tonne), heating value (MJ/kg), moisture (%), ash content (%), chemical additives (points – yes/no) and delivery price (euros). As all the products were without chemical additives, we chose not to take them into consideration. For the attributes evaluation we have chosen the information publicly available on internet, as well as our own experiences, measurement and interviews with the responsible persons from the company. Based on the previously mentioned, we summarize the real values of the attributes (Tab. 1).

Tab. 1: Real values of the attributes

Nr.	Product marking	Price (€/tonne)	Heating value (MJ/kg)	Moisture (%)	Ash content (%)	Delivery price (€)
1.	P1	198	18,5	7,5	0,40	10,00
2.	P2	40	18	8,0	0,70	15,00
3.	P3	220,5	19,5	4,5	0,30	20,00
4.	P4	240	18,5	8,1	0,28	15,00

Source: Own processing.

In order to keep the objectivity, we performed the paired comparisons based on opinions of three customers and regardless the products at the same time. The particular scoring matrices were summarized and the placings was made. Counting the particular scoring matrices coefficients (k_i), we found out that the purchasing price of the pellets is the attribute with the greater importance. The placings is following: purchasing price of the pellets, heating value, delivery price, moisture and ash content. After we had executed the paired comparisons, we set the real importance of the attributes and carried out the benchmarking itself. As the average performance of the attributes would be inappropriate for using in benchmarking, we must have converted it to the real importance by means of deviation (conversion by deviation - CbD). We counted the real importance of attributes (w_i) by combining the average performance (Øv_i) with the sum of the conversion by deviation, as it is shown in the table (Tab. 2).

Tab. 2: Setting the real importance of the attributes

Nr.	Attribute	Øvi	ki	CbD	wi
1.	Purchasing price	20	10	13,32	33,32
2.	Heating value	20	6	0	20
3.	Delivery price	20	6	0	20
4.	Moisture	20	5	-3,33	16,67
5.	Ash content	20	3	-9,99	10,01
	In total	100	30	0	100

Source: Own processing.

In the process of benchmarking itself, we used the real values of the products´ attributes and search for the best value in each attribute (and consequently an overall benchmark on the market – in the limited conditions). We carry out the process of benchmarking by using the best value method, as it is shown in the Tab. 3.

Tab. 3: Product benchmarking by using the best value method

Nr.	Attribute	Unit	Trend	w	P1	P2	P3	P4
1.	Purchasing price	€/tonne	-	33,32	x = 198 a = 1 b = 33,3	x = 240 a = 0,83 b = 27,7	x = 220,5 a = 0,90 b = 29,9	x = 240 a = 0,83 b = 27,7
2.	Heating value	MJ/kg	+	20	x = 18,5 a = 0,95 b = 19,0	x = 18,0 a = 0,92 b = 18,4	x = 19,5 a = 1 b = 20,0	x = 18,5 a = 0,95 b = 19,0
3.	Delivery price	€	-	20	x = 10 a = 1 b = 20,0	x = 15 a = 0,67 b = 13,4	x = 20 a = 0,5 b = 10,0	x = 15 a = 0,67 b = 13,4
4.	Moisture	%	-	16,67	x = 7,5 a = 0,6 b = 10,0	x = 8 a = 0,56 b = 9,3	x = 4,5 a = 1 b = 16,7	x = 8,1 a = 0,56 b = 9,3
5.	Ash content	%	-	10,01	x = 0,40 a = 0,7 b = 7,0	x = 0,70 a = 0,4 b = 4,0	x = 0,30 a = 0,93 b = 9,3	x = 0,28 a = 1 b = 10,0
	In total			100	∑b = 89,3	∑b = 72,8	∑b = 85,9	∑b = 79,4
	Placings				1.	4.	2.	3.

Source: Own processing.

As implied from the table 3, the final placings of products on the market is following: P1, P3, P4 and P2. Even though the product P1 (the product of the company „X”) was placed as a leader on the market, there is still a lot of options to innovate it. The main attribute for innovation of “our” product P1 should be heating value and moisture. The result of the innovation should be an improved product (its main characteristics and technical specifications) as well as an improved production process (the increase in the efficiency, the improvement of quality and the delivery systems). The company „X” should be focused on the product innovation in order to build and maintain the market share, to increase the profitability and to ensure its competitiveness on the market. The moisture of the sawdust used for the pellets production should be reduced. This simple innovation could be performed as a small organizational change – by adjustment of technological procedure for sawdust desiccation. One of the options could be an increase in the amount of production machines as well as an increase in the amount of employees. The company should reassess the quality of wood for the pellets production. In order to increase the heating value, the sawdust from hard wood would be the best appropriate (instead of that one made from the soft wood). A new suppliers´ survey should be made, so the new opportunities of wood supplies (of better quality) can be found. The company has its own wood desiccators, therefore it´s almost inexpensive to ensure the increasing wood/sawdust moisture before the process of the compressing.

The creative ability is the precondition for the innovations. In order to improve the creative abilities of the employees, company can use the Osborn´s checklist as the creative improvement technique. This can be carried out as the brainstorming session or at the end of the brainstorming exercise in order to increase the flow of ideas. It is the form of vertical thinking, as the person builds on the ideas already generated, i.e. chooses the idea and asks the questions from Osborn´s checklist. The questions are arranged in the groups: adaptation, modification, magnification, minimization, substitution, rearrangement and reversion, combination. Based on the benchmarking results, we try to show the options for innovations of the product (pellets) and use the Osborn´s checklist to improve the product´s attributes. Using the questions from „adaptation”, the company can cooperate with the research and development centres in order to adapt the proportion of wooden chips (better proportion of hard wood and soft wood). This could cause the decrease of the cost and the maintenance of the product quality features at the same time. Answering the questions from „modification”, the company can improve the location of the biomass storehouse, which is placed below the shelter now. The biomass absorbs the moisture which implies increased cost and desiccation time in the production process. Building the appropriate and covered storehouse would help increase the efficiency of the production process itself. The modification should be focused on the production staff training in order to eliminate the downtimes caused by improper handling of the production line. This should be concerning the motivation system in order to increase the quality of work conditions. Making use of „magnification”, company should invest in the efficient and powerful production equipment. This can increase the sales and amount of customers. It would be appropriate to realize a market research regarding the heating machines – ovens for wooden chips for the households. According to available information, we assume that many households have no heating machines – ovens for burning the pellets or briquettes. Widening (magnifying) the range of products by adding new heating machines – ovens can improve the market position of the company. In the case of „minimization” of the product, we don´t expect any changes in the production process as it would be inappropriate. There is no possibility to minimize (eliminate) the products parts or the amount of the parts. Company can reduce/minimize the production time. Many problems arise by inappropriate training of the employees, which consequently causes temporary shutdowns of the production machines. An appropriate system of trainings and courses would lead to increasing the downtimes caused by production line shutdowns. When answering the questions from “substitution”, company decided to start using the renewable energy resources. Renewable energy resources are not the competitors of the conventional ones as the cost for starting the operations is high, influenced by increased investments. The most promising and advantageous in that field is a biomass, which has been already used by a company as a tool of increasing the efficiency of the production process. From this reason, we don´t recommend to search for any substitutes in that field. There is, at the same time, no assumption that some components will be replaced by others, just the usage of the most quality wooden chips. In the production process itself, there is minimal amount of the elements and so there is no possibility to replace them by the other elements. Answering the other questions („rearrangement” and „combination”) from Osborn´s checklist is pointless as the production line for pellets has its own arrangement which cannot be changed and the actual production line has been in the operation since 2015 so there is no intention to change or combine it.

172.Conclusion

The company striving for success must take into consideration that the best condition for the competitiveness is the preparedness to respond promptly to any change on the market. One of the options in order to achieve the results and improve the market position is benchmarking. According to the theory and based on the previous results from benchmarking and using the Osborn´s checklist, we can recommend the innovations as follows. A company „X” should be focused on decreasing the material costs – reassessing the suppliers of the materials needed in the production process, eliminating the downtimes connected with the production line shutdowns, orientation on the social development in the company – e.g. building the appropriate motivational system, training and education of employees as well as their support in this field, increasing the range of the products – the heating machines (ovens), building the appropriate storehouse, building the relationships between the company and the partners (research and development centres, departments etc.). This is the way to meet or exceed the customers´ requirements, satisfy them, to catch up with the competitors and succeed.

173.References

August, H., Hohl, E. K., & Platzek, B. (2014). Creativity Traits and Innovation Beliefs: Implications for Companies and Universities. In The XXV ISPIM Conference – Innovation for Sustainable Economy & Society (pp. 1-23). Manchester, United Kingdom: The International Society for Professional Innovation Management (ISPIM).

Curpan, A., Niculescu-Aron, G. I., & Manea, L. (2008). Benchmarking, a New Fashion in the Strategic Management? Analele Universitatii Oradea, 3, 1-6. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1293764

Churski, P., & Dominiak, J. (2014). The Impact of Innovations on Growth and Stagnation Regions in Poland. European Planning Studies, 22(6), 1143-1164. http://dx.doi.org/10.1080/09654313.2013.767494

Damanpour, F., & Wischnevsky, J. D. (2006). Research on innovation in organizations: Distinguishing innovation-generating from innovation-adopting organizations. Journal of Engineering and Technology Management, (23), 269-291.

Elexa, Ľ. (2012). Inovatívne odvetvia a inovatívne podniky vo svete. In Inovácie - súčasť formovania znalostnej ekonomiky v Slovenskej republike (2. časť): Zborník príspevkov z riešenia výskumného projektu VEGA 1/0654/11 (pp. 65-85). Banská Bystrica: Ekonomická fakulta, Univerzita Mateja Bela.

Gumusluoglu, L., & İlsev, A. (2009). Transformational Leadership, Creativity, and Organizational Innovation. Journal of Business Research, 62, 461-473. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1068181

Jackson, N. (2001). Benchmarking in UK HE: An overview. Quality Assurance in Education, 9(4), 218-235. Retrieved from http://search.proquest.com/docview/213732635?accountid=17223

Klement, L., & Klementová, V. (2015). Financovanie inovácií ako faktora konkurencieschopnosti malých a stredných podnikov na Slovensku. In Konkurence : Sborník příspěvků ze 7. ročníku mezinárodní vědecké konference. Jihlava, Česká republika: Vysoká škola polytechnická.

Kotsemir, M. N., Abroskin, A., & Meissner, D. (2013). Innovation Concepts and Typology – An Evolutionary Discussion. Higher School of Economics Research Paper No. WP BRP 05/STI/2013. Retrieved February 20, 2013, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2221299##

Lee, S. Y., Florida, R., & Gates, G. (2010). Innovation, human capital, and creativity.International Review of Public Administration, 14(3), 13-24.

Mostafa, M. (2005). Factors affecting organisational creativity and innovativeness in Egyptian business organisations: An empirical investigation. Business And Economics--Management, 24(1/2), 7-33.

Özçelik,, E., & Tayma, E. (2004). Does innovativeness matter for international competitiveness in developing countries? The case of Turkish manufacturing industries. Research Policy, 33(3), 409-424.

Valgeirsdottir, D., Onarheim, B., & Gabrielsen, G. (2015). Product creativity assessment of innovations: Considering the creative process. International Journal of Design Creativity and Innovation, 3(2), 95-106. http://dx.doi.org/10.1080/21650349.2014.954626
Contact

Marcela Kovaľová

The Faculty of Economics, The Matej Bel University in Banská Bystrica

Tajovského 10, 975 90 Banská Bystrica

marcela.kovalova@umb.sk
Bc. Zuzana Nogová

Turčianska Library in Martin

Divadelná 4619/5, 036 01 Martin

zuzana.nogova29@gmail.com

Directory: wp-content -> uploads -> 2015
2015 -> Police Militarization
2015 -> 2015 ihbb championships: hs history Bowl Round 4 – Prelims First Quarter
2015 -> Wrtp/big step · 3841 W. Wisconsin Ave., Milwaukee, wi 53208
2015 -> Rao bulletin 1 December 2015 html edition this bulletin contains the following articles
2015 -> Darton College
2015 -> Training Workshop on Planning and Implementation of Multi-Sectoral Development Programme (MsDP) in Bihar Date : 6th
2015 -> Rao bulletin 15 June 2015 html edition this bulletin contains the following articles
2015 -> Rao bulletin 1 September 2015 html edition this bulletin contains the following articles
2015 -> Rao bulletin 1 August 2015 html edition this bulletin contains the following articles
2015 -> Science, and transportation united states senate

Download 2.73 Mb.

Share with your friends: