Innovation Management and Controlling in SMEs

Abstract

1. Introduction Innovation management is based on the innovation business strategy that must respect the business strategy, meaning the company's long-term missions, visions and targets. The core of the innovation management is a systematic approach to implementation of changes that should lead to improvement of the products, processes or position of the whole company. The innovation activity is successful only if there is an appropriate response from the market, for example in the form of higher sales or happier customers, in the form of image strengthening and creation of better relations with the individual groups of the company. However, at the same time source options and financial requirements of the company owners and creditors must be respected and the innovation activities cannot endanger the stability of the company. It is not possible to perceive innovations only as an improvement of the products that we offer. We can change the business processes, products, as well as the overall focus and direction of the company. Innovation management, however, must be a carefully balanced controlling system (M-C model). Process management based on the M-C model (4) can be defined as the Management Control System that includes a comprehensive view of management on the basis of management accounting, management theory and personnel management. It is an interdisciplinary management system where the most important thing is not the interface of the process but the understanding of business management as a whole, mastering planning tools based on research, objectives, visions and missions (management) and control tools based on evaluation of deviations and proposal of risk management measures (controlling). The M-C model shows that a successful business can work only if you manage to grasp all of its processes and understand their interdependence. 2. Innovation Management Innovation management in small and medium-sized companies can be divided into the management of strategic, product and process innovations. Each of these innovations contribute to the overall success of the company and therefore it is possible to express it hierarchically (Figure 1) when every higher positioned innovation means a higher level of realized value. [FIGURE 1 OMITTED] 2.1 Process Innovation These are innovations of an operational nature (which is why they are sometimes called operational innovations). Process innovations usually do not bring an immediate competitive advantage but the basis for obtaining the company's long-term position. In principle, it is the optimization of all defined business processes of strategic and operational importance in order to increase efficiency using systematic improving of the activities aimed at cost avoidance or increasing performance. There are many methods that are not used by small and medium-sized companies to the full extent but within the framework of the process changes they should be used at least partially. The following methods can be used as the basis for a process innovative mix: Lean, Six Sigma and TOC (Kosturiak and Chal', 2008). The TOC Method (Theory of Constraints) is based on the search of the so-called narrow space of the process and its subsequent elimination in order to increase its throughput and continue immediately with the search of another weak point. The principle of Six Sigma Method is to increase the stability of the individual processes. The Six Sigma Method has many modifications and was originally founded on six basic principles that greatly expand the activities associated with process innovations--customer orientation, correct information, continuous process improvement, flexible management, distribution based on cooperation, pursuit of perfection in case of tolerance of failure. Problem solving in Six Sigma Model is based on the so-called five steps procedure: Define--Measure Analyze --Improve--Lead. …