Why CEOs Should Prevent Cuts Of The Innovation Budgets

It happened many times before. Small company found its market niche and successfully filled it thanks to understanding deep customer needs and being very flexible and customer friendly. Company was fast in bringing new highly relevant products and services to the market; it quickly gained respect and popularity among customers and business partners. Success brought not only profit, but also increasing number of employees and growing byrocracy. Success became the Holy Grail; everything was adjusted short-term according to that. The company lost sight of the surrounding environment, the risk of losing competitive advantage was underminded. Nobody wanted to change something, what works currently and pays the employees´ salaries. When the economical crisis came – savings pressure was added towards this fear of change.Inovative agenda lost priority and consequently the company got into troubles. Either it was lucky, that some competitor or investor bought it, or one day it disappeared completely.

We start to see this scenario more and more often - current uncertain times are intensified by economical crisis. And it does not have to be that way. The ability to constantly innovate no matter what the short-term financial results bring differentiates the successful companies from the failing ones. That si why the valuations of a brand and of a company are based not just on the growth of turnover, profit and return on investment, but also based on the indicator of added value brought by innovation. The role of CEO in the innovative process is irreplaceable. Successful CEO gives priority, a green line to the agenda of innovation, not just to the amount of money allocated to the innovation investments. He or she creates such company culture that serves as a good base for generating new ideas and for their fast implementation.

The worldwide research and development budget of top 500 companies decreased overall only once – in the year 2009, until companies learnt that they do not want to lose their competitive advantage during the most vulnerable times. And also because some companies even increased their share – e.g. Samsung that keeps growing fast – that can be partically attributed to its innovation budget reaching 6% of turnover, amount that is about three times bigger than Apple’s. The question remains – will this low percentage of investment be sufficient for Apple to keep its innovative icon status? Will Apple keep its first place in the WW Most Innovative Companies rank, especially when the innovation and marketing guru, Steve Jobs, no longer runs this company and other competitors like Google and Microsoft allocate around 13% of their turnover?

Innovations allow companies to bring consumers a defined premium that can be reflected not just in the area of justified higher prices. Innovations and image help companies to increase its market share on declining markets, to differentiate self and thus survive in the long-term.
 
But even the biggest budget for innovation will not be sufficient, if companies use it for the wrong ideas, just to impress its stakeholders by the number of innovation projects in the pipeline instead of by the end financial effect the innovations bring. Innovations have higher chance for success if the new product/service idea resonates with the higher purpose of a company in the area of improving the world for its customers. A company can be successful with the innovation agenda only if it employs the best talents and enables them to creatively breathe and make clever decisions. Only then the CEO can decrease the anyhow high probability of failure.

This article was written for the magazine Obchod & Finance (Mlada Fronta E15) April 2013 issue - double click to download the original.

Why Managers Start Their Own Businesses

My views summarized by Dalibor Dostal from the Czech economical magazine PROFIT, a supplement of Mlada Fronta E15 Daily Newspaper, January 7^th, 2013 (photos by Michael Tomes).

 New Beginnings

Dalibor Dostál, Petr Švihel, Martin Zika

It is a wishful thinking for many people to lead a big international company or one of its divisions. For someone who could live this dream, top management role was not the end destination. It has only become a starting point for establishing own business. We bring you now few interesting change management stories from the Czech Republic. 

Jana Budikova: From Coffee to Strategic Management Consulting

Jana Budikova jumped into own business directly from the Managing Director role at Tchibo, where she was responsible for the Czech Republic and Slovakia and for which she obtained in 2009 Best Employer prestigious award. “I needed to fully realize my potential,” explains her motive for the change of her career.

Nowadays she works as an advisor for Company strategies. She helps companies to identify, quantify and seize new opportunities, to increase effectiveness of their marketing and sales activities, as well as organizational structures and processes. She also helps people to manage the change. “I can combine my strategic thinking with my inner need to inspire and charge people with positive energy, to change things for the better, to build something. I like results as well as management challenges and adrenalin from uneasy tasks. Strategic consultancy helps me to stay active in the international field – to work on projects across the European markets,” she says. These topics are also part of her lectures. During the remaining time Jana publishes her views in professional media, she is a regular speaker at conferences and she also passes her knowledge to young generation when she leads a group of Honors Academia students at the Prague School of Economics.

Even though sometimes it seems that everything was already invented and there is no possibility for a successful breakthrough, managers starting up their own business prove there is always something to explore. “New opportunities are popping up continuously, only the clients are more cautious with their investments into innovations. I see that at present the biggest dynamic and thus potential in the area of internet, big data management, mobile communication and social media. Other opportunities appear within the area of top class customer service. My role is to help my clients to innovatively seize these opportunities not just strategically, but also during their implementation and communication,” mentions Jana Budikova.

In her new role Jana´s biggest challenge was to be patient, get used to the fact that some things cannot run as fast, as she would like to.  “First it is necessary to plant the seeds, however it takes time before the flowers blossom, in my case before the company, respectively its boss decides to use my consulting services. In my type of business it is a never ending process of acquisition of new customers and pampering existing or previous clients,” explains Jana Budikova.  Obtaining new business remains the key challenge for start-ups.  While in the big corporations there are specialized teams with a lot of back-up functions in sales and marketing, Jana Budikova had to rely only on her own creativity.

She could also rely on top-class know-how that she has obtained in her previous assignments at the big multinational companies. “I had the opportunity to learn from the best leaders. I have obtained the international bird´s eye view, when I have managed the important German market or when I was responsible for the sales and marketing development of the Eastern European region. I have learned the importance of ethics in business. I have realized that it is a necessity to thrive for win-win solutions. It takes a lot of time and effort to build a trust (for a Company, a brand, or a person), however it could be lost very easily,” says Jana Budikova.  Jana also talks about the importance of putting customers and consumers and their needs into the center of the Companies´ attention.  The key is to master the art of establishing the right priorities and motivation of the staff for putting them successfully into practice.

Jana´s own business helped her to find a new dimension for her professional self-actualization. “I can choose which projects I will spend time on, which people I will meet and which direction and goals I will choose to pursue.  Only now, while running my own business, I have understood what creative freedom means. On top of that I have met a lot of inspiring people who I would never had a chance to get to know during the standard manager´s time pressure. I also have more time now for self education and for my own personal development, as well as for passing my experiences to the younger generation,” concludes Jana Budikova.

Picture text:

SOURCE OF INSPIRATION

Jana Budikova helps managers with strategic planning. Also the top Company leaders need to be inspired and enthused with positive energy. 

DOWNLOAD THE ORIGINAL ARTICLE IN THE CZECH LANGUAGE (HERE)

Management Quotas For Women Are Not Just Evil. The Discussion About Them Helps

We do not like when somebody tries to enforce something upon us. It especially irritates us, when it is related to the rules of Company management, as it happened now in the proposed European Directive regarding number of women in the leadership positions. After all, human resources decisions should be driven by qualification and personality traits of each individual, by the area of expertise of given company and by culture of each country.

The European Commission proposal had awakened a wave of negative emotions across whole country, across all levels and business branches. My spontaneous response is also very clear. Who will next time believe that the newly appointed member of a supervisory board got the position because of her skills, not because of her gender? How fast the 40% quota could be realistically in force when the current level of women in management in the Czech Republic is one of the lowest from the European Union (estimated at 4%-8%)? How could we remove emotions from the discussions when the suggested Directive clearly aligns men against women?

The EU proposal in any case represents a change, even though the individual members of the European Union still have to agree to it. It stands for the shift in the public viewing of the equal working rights. Each such decision brings uncertainty and fear while the number of influential and well paid positions could become even more deficient for men because of this step. All of that at a time when there is a lot of restructuring in place due to economical crisis, when there are plenty of men looking for new opportunities and the outlook for positive future is out of sight.

From the bird’s eye view I can say that the quotas are not just pure evil. After in-depth observation of the stories of women in leadership I have to admit, that there is something good about it. Viviane Reding, the EU Commissioner managed to bring up the debate about necessity of balanced representation of women in management. She gave a new spark to the debate by opening the today’s taboo of hidden discrimination for the top positions and women’s career glass ceiling. Reding has done that bravely at a time when the supply of quality top men-managers overcomes the demand and it is even harder for women to overcome the prejudices.

This article was written for the leading Czech economical magazine EKONOM No.48, Nov. 2012.

The Journey To Inspiration

The most satisfied, healthiest and happiest people in the world are those who have found their passion and who continuously cultivate it. They do not want to be just successful; they want to stand for something. They permanently search an inspiration for their personal or entrepreneurial growth and by that they awaken the enthusiasm of others. They nearly always find the time to support others. Their progressive goals give their life a lot of extra energy.

These wise people have realized that their dreams are fulfilled when they approach them with humbleness. The Austrian neurologist Viktor Frankl was very clear about it: “It is not possible to create neither success, nor happiness. They can only be viewed as an outcome. And this will only happen as a secondary effect when a person gives up himself to something bigger than his own being. Once a person manages to find his life mission, the whole world will become enlightened.”

I also like when things get moving. During the last years I have realized, that when I want to leave a footprint in his world, I have to start to change from within. When we will be happy and satisfied with ourselves, our positive inner peace will help to attract positive things into our lives. We will shine and our inner energy will be contagious for others - first in the small circles, later in the wider ones. And matters will turn to the right direction.

I try to encourage my colleagues not to be afraid of being themselves, of breathing for the Company´s growth. Last but not least to mobilize them that it is more advantageous for all to act as one team. I believe that the hurdles on our journey appear only because we need to further develop ourselves that we need to shift forward ourselves and the things and people around us. When we get into difficulties, it is necessary not to lose one´s head, not to give up the goals. We have to remain truthful to ourselves, to continue to listen to our inner voice and to our intuition. We have to expect the success and put maximum energy into everything we do. When we are sufficiently persistent and determined, our dreams will be fulfilled.

I am inspired by people, who target not only profit and growth of personal fortunes. I admire all those who have their passion for what they do and who always put a little bit of themselves to everything they do. When somebody mentions their name, the others became enlightened, because they remember well, how they recharged their batteries during the last mutual exchange of positive energies with this pal. Robin Sharma, the wise man and author of many development books, always tries to leave people in better state of mind than he found them. The imagination that everybody would have this approach is more than attractive.

The source of new ideas for me are not only the books of wise men (like Robin Sharma, Rhonda Byrne or Paulo Coelho, Steve Jobs or Jack Welsch), but also I am thrilled to meet interesting people during work, sport or social occasions. One of this special events was organized in September in Zlin by Jaroslav Rasa, the founder of ABRA Software, who is visionary and inspiring person himself. His conference Forum of Inspiration was devoted to the legacy of Tomas Bata, Czech founder of the worldwide-known shoe company Bata. 

We need positive role models more than anything else during continuously tough economical times. So why should we look for them abroad, when we can meet them in person in our country?

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This article was written for the magazine Business Woman - for their first ever issue - 1/2012.
You can DOWNLOAD THE ARTICLE (in CZECH).