Despite the growing economy, continued investment in technological innovation in The Netherlands has decreased. The positive of this is that companies have begun to pay more attention to social innovation. This enables a better return on investment. The success rate of technological innovation is largely determined by 'soft' social innovation.
This is evident from the research presented on Thursday by the Erasmus Competition and Innovation Monitor 2014-2015, which annually assesses the state of Dutch innovation. The amount of new products and services has surged by 3.5 percent and the amount of improved products and services increased by 5.2 percent. However, investment towards research and development within Dutch companies has fallen by 1.9 percent in the past year. This is a continuing trend since 2009.
Management Layers deleted
Prof. Henk Volberda, professor of strategic management and business policy and leader of the research, said the decline may threaten innovation and competitiveness of Dutch business. The improving economy has led to an increase in the number of product and service innovations. This growth, according Volberda, could otherwise be explained in large by a removal of layers of management. The concequence of this is that companies are less hierarchically organised and often collaborate with external partners to increase the speed of their innovation.
This growth in social innovation of 8 percent has not only led to a better return on investment in research and development, but according to the study led more often to the introduction of new products and services.
Innovative ways of managing
The survey also shows that the development of new, disruptive innovations particularly innovative ways of managing, organising, working and collaboration are important. These forms of social innovation contribute 60 percent to the realisation of disruptive innovations.
Volberda: "The prevailing view is that investment towards new technologies such as the internet, data storage and robotics is the main condition for disruptive innovation. It is these companies that are very active in investing towards technological innovation and social innovation that have a higher degree of disruptive innovations."
Companies that are characterised by visionary leadership, are always looking for new business models and to collaborate with customers, suppliers and research institutes to achieve an average 45 percent more disruptive innovations. "The top sectors were lessons to be learned from this and focus unilaterally on technological innovation," concludes Volberda.
The views of staff
The study shows the researchers are taking into consideration the needs, feelings, and attitudes of the employees by the management as being of great importance in the creation of new product and service innovations. The four separate views of stakeholders: shareholders, competitors, employees, and customers - carry a focus on employees with 44 percent of new innovations.
"Focus on staff about what is happening within the organisation is important in removing barriers for new innovation and to gain more insight into the possibilities of achieving innovations within the organisation. Employees are much closer to the customer or supplier, and therefore often have good ideas that are not fully exploited," says Volberda.
The survey also shows a positive correlation between corporate social responsibility (CSR) and the ability to realise innovations.