value insights

Soft Innovation Factors- Valutrics

Innovation is often considered from a technological point of view, while there are other kind of innovation, such as innovation of products and process, referring to organizational and management models. In fact, companies need to introduce changes in the way the organizational structure of an enterprise, in external and internal relations, in management systems and in technical and administrative tools.

All these changes goes under the name of ‘soft’ and it is not less important as technological innovation.
There are some types of soft innovation:
1) Innovation based on science and technology but excluded on traditional indicators;
2) Innovation in processes, organizational forms or business models;
3) Innovation from the novel combination of existing technologies and processes;

Business development to new levels that enable companies to compete on the global stage has seen its importance grow every day. Competition of emerging countries with a high available labor rate and needing to work in conditions and rates that are different from those in industrialized countries awakened the needs of companies to move towards a level of development above the competition. In this new circumstances, development that shall be used require further Research, Development and Innovation (RDI) and more added value to particular and corporate clients, a reality that it is not unfamiliar to Portuguese companies.
In this sense, and for agro-food sector of this study, it was developed a diagnosis of the national panorama in general and of Regions concerned, in order to identify opportunities and therefore devising a strategy and its action plan.

Regardless of how innovation can take (development of new products or services, research, adoption of new technologies or introduction of a piece of equipment), its use as a
source of competitive advantage is essentially dependent on the existing knowledge of management plans, on the use of technology and on the interpretation of the markets.

Innovation can be defined as an application of new knowledge, resulting in new products, processes or services, or substantial improvement of some of its attributes. Inherent in this definition is the idea that products or services, new or improved, should have a market acceptance as a consequence as to improve profitability of the innovating company. It’s clear that, in principle, the greater the differentiation that results from innovation achieved by the company, the greater and more lasting will be your competitive advantage against competitors.

First, innovation involves not only theoretical or practical knowledge on a strictly technological (and scientific) knowledge, but also in marketing (prediction and interpretation of needs) and knowledge on the issue  of organizations. For example,  differences in knowledge regarding the collection and interpretation of information on
the current  market, customer  needs and preferences of its expected mutations (usually defined as part of the marketing) must be understood as factors of innovation. In fact, the market knowledge is inherent to the definition of non-technological innovation, since this is only if accepted by the market.

Secondly, innovation involves changes in the universe of previous technological knowledge. We can therefore consider the concept of “technological innovation” as a technology concept, in that it concerns to changes in technological knowledge base of the
company, whether it relates to the products / services, or processes of production, materials used as input, structure and organization, marketing, etc.

The third observation relates to the classification of innovations according to the degree of change that goes with them. It is common to distinguish between incremental and radical innovations. The incremental
innovations concern small improvements and refinements of products or manufacturing methods, resulting in better finishes, better
quality, increased functionality, etc.
In some cases (especially in electronics), as part of the improvements is useful to distinguish between incremental innovation in components and subsystems of the product, and product innovation in architecture, that is, the particular way these components and subsystems are interconnected.

Another distinctive feature of innovation today is the high pace of change. In addition to the growing complexity of innovative process, combining technological and non-technological knowledge, and technological areas previously separated , the pace of technological change is more pronounced. The life cycle of the product or production and services are becoming shorter and its renewal requires access and rapid assimilation of large sets of applied knowledge. The reduction of life cycle is particularly critical in some industries where the use of specialized tools to support development, with the creation of new methods allowing overlapping phases in parallel, becomes essential.  Production becomes, therefore, change-intensive and knowledge-intensive development. It is possible that the increasing pace of change of technological knowledge is contributing to the apparent decrease of the importance of vertical integration and economies of scale in production, benefiting the economies of scope, as in small companies as well as in large companies, but reinforcing the important role of small companies in  industrial network renewal.

It is the ability to access large areas of knowledge that favout a greater functional specialization of companies in certain sub-tasks of the production system, promoting “the
emergence of clusters or networks collaboration (with some territorial logic) and subcontracting services and production.

Therefore, the innovation process, with all its cross-functional complexities can not be understood as a process limited to a single company or organization, even if that company doesn’t hold these resources. The development or adoption of new technologies is now, in essence, an intensive process of collaboration between various types of entities that form a complex web of innovative activities. Technological  innovation in a multi-institutional environment requires greater ease of establishing inter-personal and inter-business relationships, thus overcoming the traditional formalism of institutional relationships.


Four main domains of  soft  innovation have been identified:

A first domain refers to organizational-based innovation. More precisely, this is about creating new forms of organisation, translated into changes such as hierarchy reduction, the introduction of teamwork and deployment of qualified labour, or changes in business practices or in the firm’s
external relations.

Another domain regards marketing-related innovation. This refers for instance to innovation in design or packaging. Regarding the case of creative industries, hidden innovation can for instance emerge from new forms of publishing or marketing campaigns

Third, business development innovation is related to new processes. More
precisely, this is about creating news business models and strategies, which
notably involve creativity and intellectual property . Soft innovation can emerge from new revenue models, branding or internationalisation.

Finally, a last domain refers to innovations in human resources and knowledge management. This can be for instance new forms of training.

The table below gives an overview of key factors influencing innovation strategies in  businesses:


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