PRODUCTIVITY COMPETITIVENESS INNOVATION SME

1. BMW REGIONAL ASSEMBLY ANNUAL CONFERENCE 2011. PRODUCTIVITY COMPETITIVENESS INNOVATIONSME

2. “PRODUCTIVITY isn’t everything, but in the long run it is almost everything”.Paul Krugman. (1994)

3. The Past / Present / Future • Ireland’s economic success in the 90’s was driven by increases in the numbers employed and growth in productivity. • Productivity growth will be the most important long term driver of Ireland’s competitiveness. • Productivity growth is essential to enabling pay increases while maintaining our cost competitiveness. The Independent Business Organisation

5. IRISH CORPORATIONS TAX @12.5%

6. Source: ISME Research

7. SME • SMEs constitute 98% of 240,000 companies and 52% of employment. • A vehicle for economic growth, job creation, competitiveness, innovation and social cohesion. • The acid test of entrepreneurial urge is the willingness to take calculable risks. • The entrepreneur will employ himself/herself and deploy his or her own capital. • The non-entrepreneur only engages in the first part. The Independent Business Organisation

8. SME • Disadvantage of having limited human and financial resources. • More locally bound. • In being small there is also strength, flexibility, innovation. • Capacity to rapidly adjust to changing market conditions. • The real distinguishing feature, the personal financial risk undertaken by the owner manager and entrepreneur. The Independent Business Organisation

9. SME-Why Support them.(1/2) • Employment increase • Profits stay in the country • These Profits seek new investment & business environment. • Increase local skills range-generates a self-sustained cycle of growth-full set of corporate competencies located at home. • Less likely to move • Creates a sub-supply base The Independent Business Organisation

10. SME-Why Support them.(2/2) • Creates role models for entrepreneurs • Creates local serial entrepreneurs • Less costly to support • Creates a balanced portfolio of economic activities which insures against technology, market and sector shocks. The Independent Business Organisation

11. Characteristics common to innovators and Entrepreneurs. • They are not troubled by the idea of failure • They know innovation requires that one works in advanced areas where failure is a real possibility • They realise that failure can be learned from and that the 'failed' technology can later be re-used for other purposes • Innovators are curious about what is happening in a myriad of disciplines, not only their own specialism • Innovators are open to third-party experiments with their products • They recognise that a useful innovation must be "robust", flexible and adaptable • Innovators/ Entrepreneurs delight in spotting a need that we don't even know we harbor, and then fulfilling that need with a new innovation • Innovators like to make products that are immediately useful to their first users. The Independent Business Organisation

12. INNOVATION • INNOVATION IS MARKET DRIVEN, RATHER THAN GRANT LED. • GRANTS STILL IMPORTANT. The Independent Business Organisation

13. “STATING THE BLEEDIN OBVIOUS”AWARD The Independent Business Organisation

14. Analysis of Ireland’s Innovation Performance March 2011 FORFAS. • Larger firms tend to innovate more. • Indigenous firms are less innovative than foreign-owned firms in Ireland. • Particular modes of innovation are more suited to certain industries and sectors than others. The Independent Business Organisation

15. Barriers to small businesses investing in R & D. • Bureaucratic process. • Expense of conducting R&D. • Low levels of grant aid for SMEs for funding for R&D. • Research vouchers of €5000 do not cover the expenses of the, majority of research projects. • HE institutions lack mandate to transfer applications of research to SME sector. • Ireland has a lower than average OECD rate of trained researchers. • Tightening economic conditions make R&D less attractive for SME owner/manager. The Independent Business Organisation

16. Drivers of Innovation • Improved quality • Creation of new markets • Extension of the product range • Reduced labour costs • Improved production processes • Reduced materials • Reduced environmental damage • Replacement of products/services • Reduced energy consumption • Conformance to regulations The Independent Business Organisation

17. Promote innovation among SMEs • Develop a campaign to increase SME awareness of the importance of innovation; • Provide an innovation auditing service to SMEs; • Provide basic skills training in innovation process management for technical and marketing staff; • Provide support to SMEs in identifying future innovation trends; • Support placement of SME innovation personnel within MNCs to learn best practice; • Expand the number of tailored, action-oriented, sector specific training programmes; The Independent Business Organisation

18. Promote innovation among SMEs • Make innovation an integrative subject at third level; • Support Linkages with HE institutes/universities. • Encourage collaboration between the innovation and marketing functions in SMEs to ensure innovation is market led; • Develop a portal to facilitate sharing of best practice linking marketing and innovation; • Develop innovation management processes tailored to SME needs. The Independent Business Organisation

19. Thank you. ISME Theindependentvoice of the SME Sectorwww.isme.ie Phone 01 66 22 755 The Independent Business Organisation