Gurit as an Innovative Organization - Case Study Example

Running head: INNOVATIVE ORGANISATIONS Innovative organisations s Table of Content Content Page No. Executive summary 3 1. Introduction 4 2. Market Position 5 3. Full year 2008 results 5 4. Outlook 2009 and beyond 6 5. Innovation friendly organisation 10 6. ITD Model 10 7. Gurit Product 11 8. References 14 Executive Summary: Innovation is an important technique of competition in today's business environment. The companies which keep on innovating tend to earn tremendous profits and enjoy monopoly in the industry. Innovation not only requires problem solving wisdom and thinking beyond the possible but also requires support at organisational level to be undertaken successfully. The organisation should also adopt business model which can eke the process of innovation and make the organisation enjoy hyper growth. In the paper we have studied Gurit as an innovative organisation and tried to find out the secrets of the successful innovations at the company. Introduction and Overview of Company: Gurit, the company is one of the leading contenders in the composite materials and solutions industry. The customer base of the company is spread all over the world. The company has three decades history of providing innovative composite materials, engineering solutions and technical support to its customers all over the world. The potential target market of the company is in the sectors of Wind Energy, Transportation, Marine and selected other application areas. The company has cutting edge over other competitors of manufacturing tailored materials according to the unique requirements of customers. These composite materials are manufactured by pre-impregnating the composite materials also known as "prepregs". Important components of composite material solutions include structural foam products, formulated resins, adhesives and gel coats. The company has continued research in order to manufacture materials having unique characteristics of minimal weight, maximal stability and stiffness combining with unlimited suitable design properties catering the needs of today's modern construction and interior decoration. "The Company has production sites in Switzerland, Germany, Spain and the United Kingdom in Europe, large facilities in Canada and China as well as the support of engineering, sales and service subsidiaries in the United States of America, India, Australia and New Zealand, Gurit is excellently positioned to serve a truly global customer base" (Gurit, 2007). The Company is listed in SIX Swiss Stick exchange and have it s headquarter in Zrich/Switzerland. Market position of Gurit: Market share is a good indicator of economic growth as compare to the financial analysis and raw sales data. The business model adopted by Gurit helped the organisation in increasing the yields in 2008 by improving the cash flows and increasing the returns on capital. According to the figures presented by the Gurit management the following trends were observed: "Target market sales up 6.7% in reported CHF; up 17.8% at constant December 2008 currency translation rates; Group sales including divestment effects up 1.6% to CHF 456.2 million Operational EBIT up from CHF -4.1 million to CHF 23.9 million Net income up from CHF 1 million to CHF 17 million Net Cash flow from operations at CHF 31.1 million CHF 1.7 million net cash 2008 vs CHF 45.7 million net debt 2007 Net working capital ratio reduced from 19.6% to 14.1% Flexible staff adjustments to volatile markets in Q2, 2009" (Figures taken from http://www.gurit.com/news.aspitemid=1277&itemTitle=Financial+year+2008+earnings§ion=000100010029§ionTitle=Market+News+items+from+around+Gurit) Full year 2008 results: The company reported an increase in net sales by 1.6% or CHF 456.2 million for the year 2008. The growth of 6.7% was also reported in target markets of Wind Energy, Transportation and Marine sectors. The improvement in the business model by the company turned the things round from an operational loss of CHF 4.1 million into a gain of CHF 23.9 million. "Net income improved from CHF 1 million in 2007 to CHF 17 million, equivalent to 3.7% on net sales. Net cash flow from operations was accretive with CHF 31.1 million and allowed Gurit to turn from a net debt to a net cash position of CHF 1.7 million at the end of 2008, which together with a strengthened 67.5% equity ratio provides a solid basis for the challenges of 2009". (Figures taken from http://www.gurit.com/news.aspitemid=1277&itemTitle=Financial+year+2008+earnings§ion=000100010029§ionTitle=Market+News+items+from+around+Gurit)Outlook 2009 and beyond: The company has planned to further modify its business model resulting in shape of minimized costs and improved profit margins due to the innovative and unique characteristics possessed by the products and services offered by the company. Innovation in an organisation is the result of recognition of market opportunities by the enterprise, the internal ability of the organisation to respond innovatively and constant updating of the knowledge base possessed by the organisation. The management of the companies experiencing the high growth rates understand the fact that innovation is the catalyst for hyper growth. Innovation is the resultant of sheer passion of growth and problem solving skills of high intellect people who are an asset for the organisation. Innovation of an organisation leads to explore new dimensions of products, markets, customers and business models, which lead the organisation towards new heights of success. Innovative organisations have following components. 1. "Vision and strategy for innovation 2. Culture supporting innovation 3. Processes, practices and systems supporting the process of innovation 4. Top management team leading innovation 5. Cross-functional teams mapping innovation road 6. Empowered employees driving innovation." (Kotelnikov, 2008) "It is important for the today's manager to learn in complex and highly dynamic environments. The ability of the organisation to survive in today's competitive environment has become a function of their ability to learn about the changes in the external environment and to adjust with them. The adjustment process requires a great deal of management skills. Managers must have the ability and skills to identify and influence consumer needs and preferences; establish good relations with suppliers in order to ensure an adequate and timely flow of materials at acceptable quality levels and prices; enter into agreements with unions in order to stabilize labour market conditions and be informed about the activities of competitors" (Putti, 1987). The notion of invention should not be confused with innovation. Although both leads to the development of some thing new but innovation goes one step further by not only developing the new product, process, idea, or thinking but also implementing it. Hence innovation can be defined as structured invention. Innovation is a continuous process of betterment being undertaken continuously in shape of upgrade in the current designs, features and components of the product. Innovation is at its best when the innovator keeps on finding ways of making the product cheaper, fast paced, better performing. The interest of the innovator is protected by getting the copyright or patent. Innovation can be best undertaken by studying the needs of the market customers and understanding their requirements. The requirements of the customers can be better understood by comparing them with the solutions and products available to address these requirements. Finding gaps between the requirements and the solutions in addressing the problems can better off the innovation process. Although the process won't surly lead to 100% success but it will reduce the chances of failures. Most of the innovation fails as the contenders first undertake the invention process and try to find market for that. The approach often results in shape of failure as most of these inventions lack marketability. Innovations can be of two kinds: Organic and disruptive. Organic innovation is ann enhancement of the solutions provided for a problem or can be similar in nature of the previous products. Disruptive Innovations are conceived and achieved, but if successfully implemented and marketed can result in tremendous profits for the innovator by providing the company with cutting edge of unique characteristics possessed by the product or service. In order to undertake an effective innovation process it is important to follow three rules: The organization should focus on the differentiation approach for the solution with the establishment of focus on customer success and the execution model adopted by the organization. The organization should also develop a culture to help understanding the changes brought by the innovation and to motivate other people to adopt the innovative approach. The business model of the organization should depict the ways in which the customers will be benefited by the innovative idea being adopted by the business. There should also be a consideration of the market in which the innovation will be sold and the profit streams generated by them. It is important for the organization to undertake the innovation through properly planned methodology. The organic innovations can be a result of the research and development activities undertaken in the organization. It is not necessary to undertake a separate process for that. The duration of the innovation process normally comprise of12-18 months from the idea conceiving to the final product development. It is the innovator who reaps the fruits of profit by the successful product development, implementation and adoption by the target customers. It is important for the innovators following the disruptive ideas, to undertake an evaluation of the business elements before working on the innovation and product development process. Although there are not very high rates of success being observed in case of many disruptive innovations, the organization wide adoption of the innovative ideas or products can increase the success rate. Two Fundamental Views on What It Takes to Manage Innovation The technology development at Gurit is aimed at improving the performance and reducing the costs of the composite solutions used in the mega-structures. The research and development at Gurit is undertaken in three different directions including composite part manufacture; structural design, materials research and development, and composite processing. It is through the co-ordination of information from these three directions that the company is able to maximize the effectiveness of the products and services by optimizing the performance and minimizing the cost. Innovative Product: In the range of innovative products offered by the company, PB1000 Modified Benzoxazine Resin is an important addition. The product is the modernized generation of the aircraft interior designed to cater the needs of today's most modern and technically advanced aircrafts. The Features & Benefits of the product includes: "Fibre reinforced thermosetting preimpregnated material for aircraft interior parts No free phenol and formaldehyde, fulfils AP2091 Non-volatile curing, 140C / 45min, 160C / 15min Outstanding surface quality Excellent FST and Heat Release behaviour, fulfils ABD0031 Improved mechanical properties Long shelf and shop life" (Taken from Gurit Home page) The product was recently nominated as a finalist in the JEC Innovations Awards 2009. PB 1000 is the advanced version of the aircraft interior prepregs formerly produced by the company. The product is prepared in accordance with the standards settled by the AIRBUS AP2091. It is "a modified benzoxazine resin that is without free formaldehyde and phenol and satisfies the most recent environmental standards" (Gurit, 2007). It features a non-volatile, rapid cure, generating a perfect void and porous free surface, through which time and cost consuming rework, is eliminated. Gurit's novel PB1000 fully complies with demanding international JAR/FAR fire protection regulations regarding flammability, smoke, toxicity (FST) and heat release. Due to its excellent mechanical performance, PB1000 is perfectly suited to fulfil present and forthcoming stress criteria for interior design. Meeting increasing demands on cost efficiency in aircraft interior manufacturing, PB1000 is also designed for commonly used fast hot-in / hot-out curing processes. This unique material performance combined with a competitive cost price level makes PB1000 an advantageous choice for aircraft interior applications and is clearly capable to replace phenolic systems. "PB1000 is a modified benzoxazine resin that boasts zero formaldehyde and phenol residue, satisfying the most recent environmental standards like AIRBUS AP2091. It features a non-volatile rapid cure, generating a perfect void and porous free surface, through which time and cost consuming rework is eliminated." (Gurit, 2007) The unique characteristics of PB 1000 include: Cost effectiveness and compatibility with the international JAR/FAR fire protection regulations regarding flammability, smoke, toxicity (FST) and heat release. The product is made on fast hot-in / hot-out curing process hence increasing the cost efficiency and addressing the demand of companies of reducing the costs of the interior. References Gurit, (2007). Financial year 2008 earnings 30th March 2009, retrieved as on 4/5/2009 from http://www.gurit.com/news.aspitemid=1277&itemTitle=Financial+year+2008+earnings§ion=000100010029§ionTitle=Market+News+items+from+around+Gurit Gurit, (2007). Unrivalled Technology in Advanced Composite Materials, retrieved as on 4/5/2009 from http://www.gurit.com/page.aspsection=000100010007§ionTitle=About+Gurit Kotelnikov, V., (2008), Innovation-friendly Organization: The Key Components, retrieved as on April 29th 2009 from http://www.1000ventures.com/business_guide/innovation_aweorg.html Putti, J., M., (1987). Management: A Functional Approach, Mc-Graw Hill. Read More