Magazine article Management Today

Why Managers Need to Change the Way They Work

Magazine article Management Today

Why Managers Need to Change the Way They Work

Article excerpt

The innovation gap in Europe is to do with management not technology.

Everybody in management and politics agrees that innovation is the golden key to the future, that without innovation the future for the firm and the economy will be leaden. If this is the case, Europe has far more to worry about than its currencies; its supposed technological leaders may already have lost the race.

That, at least, is the harsh message of a global innovation league produced in August by CHI Research. It ranked nearly 200 top companies on three counts: the number of US patents awarded in 1991; 'high impact' - the relative frequency with which a company's patents get cited; and the median age of its patents. The top 25 firms consist of 11 Japanese (taking the first four places), 11 Americans and only three Europeans: Philips, Siemens and Hoechst, all in the bottom half.

Are there extenuating circumstances? Maybe the Europeans are less concerned with filing for US patent protection, and about seeking patents altogether. A more likely factor is probably to do with sheer weight: the much-lamented fragmentation of European industries means that innovation is spread over more companies. Yet these excuses won't remove the hard reality. Take cars as an example.

Europe's motor industry is no more fragmented than Japan's: each has a handful of world-class competitors. But Japan has three car firms (Nissan, Mazda and Mitsubishi Motors) among the 15 with the highest-impact patents, Europe none. There's a glaringly obvious connection between this innovatory lag and Japanese penetration of Western car markets (which would be far deeper in Europe but for artificial controls).

As for size, neither Mazda nor Mitsubishi is large by European standards - and all three Japanese rank among the 15 companies which, to quote Business Week, are 'closest to the cutting edge'. That is, their 'technology cycle time' is shorter: about four-and-a-half years for the three, against nearly eight for General Motors. The latter, of course, symbolises another aspect of Europe's lag: that many of its key markets have a heavy non-European presence.

Consequently, American technology took the lead and the Japanese have followed suit. Countries with no camera or copier industries are not going to generate much innovation in copying or photography. …

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