Are we on the right track with endless discussions about how to help industry recover?
Business people and trade organizations are focussing on the cost of labour. But that in itself isn’t a solution. Is it better to buy a BMW in China than a Renault because of Germany’s more beneficial labour costs compared to France’s? It’s true that the cost of labour is too high here in Belgium, but if we think that this is the sole root of problem, we are simply being dishonest with ourselves.
Politicians shout loudly calling for more innovation. And Belgium does indeed score badly when it comes to investing in R&D, but there isn’t always a direct link between levels of investment and quality of innovation. I’ve been in contact with technology companies at home and abroad for over 20 years, and it’s clear that Belgian engineers score very highly in their specialist domains when it comes to productivity and creativity.
Furthermore, too much focus on product innovation results in a rat race in which having the lead is now less important with insufficient financial gains. No single company can keep on winning this race. Option NV couldn’t maintain its lead over Chinese companies. And Barco had the same problem over multiple technology cycles, which current CEO, Eric Van Zele, recognized as soon as he took up his role.
Companies can only profit from the raising of R&D stakes by avoiding the battle as much as possible and packaging technology in solutions that the market wants. Because the more product maturity grows, the more the market demands a better package. Most clients aren’t looking for the latest products; they buy the product that creates the most value for them.
This means that skills other than just innovation from R&D departments are required. Understanding customers and the environment is crucial for delivering value. A value-driven approach gives products longer lifecycles so they can remain competitive with large volumes. This improves the financial leverage of investments, increases profits, and enables a company to finance its further expansion. Not ‘time to market’ but ‘on time to market’ is the motto.
You are ready to work on this sustainable growth when your product innovations reinforce the added value that your client perceives (because otherwise you are only innovating in order to beat your competitors in the technology rat race). Clients are then prepared to pay more for your strengths. This is possible when your R&D personnel have enough contact with clients to really understand how and why your products are used. When your sales and marketing activities no longer focus just on the product, but also on creating added value. And when you organize your entire company in such a way that everyone is focussing on clients and the market.