The International Consortium on Agricultural Biotechnology Research (ICABR)
Innovation management in
agrobiotech companies in
Dr. Klaus Menrad, Fraunhofer Institute for Systems and Innovation Research
Karlsruhe (Germany), e-mail: email@example.com
Biotechnology has emerged as a key technology for economic development in this century due to its potential to create new products and processes, increase productivity in existing industries and stimulate demand for highly skilled working forces. This relates to agriculture and their "traditional" supplying industries as well, in which modern biotechnology and genetic engineering approaches widen the available "toolbox" in R&D activities or allow the creation of plants, micro-organisms and animals with specific characteristics. Since modern biotechnology and genetic engineering represent rather complex techniques with a fastly-moving creation of new knowledge, especially small and medium-sized companies (SMEs) of the agricultural supplying industry in Germany face specific challenges in order to adopt these new approaches in their technology portfolio and to use them for the development or production of new products. Therefore the analysis of the innovation management of such companies is an interesting topic both from a scientific point of view as well as for practical reasons.
For the business success of small and medium-sized biotech companies it is of major relevance how they organise their internal management of the innovation process and how they integrate external resources. At present no commonly accepted theory of "innovations" is available which could form the basis for a theoretical framework of "innovation management" in biotechnology. Several scientific disciplines (e. g. economics, sociology, organisation theory) contribute to this subject without integrating the existing knowledge. There is a broad range of publications from different economic disciplines which develop, analyse or describe various tools of innovation management. The concept of "learning organisations" forms a framework for analysis of innovation management approaches, in particular the organisational and structural consequences resulting from changes in the environment of a company. Evolutionary approaches in innovation research analyse the impacts of technological change that has direct implications for innovation management in companies. Existing publications on innovation management are mostly targeted to large enterprises and focus either on the theoretical handling or on the practical realisation of this subject without strong connections between these two areas.
In 1999, 31 traditional and 41 specialised agrobiotech companies have been identified in Germany. More than half of the traditional agrobiotech companies employ more than 100 people, but only a minority of these companies already has biotechnology related products on the market. Almost all of the traditional agrobiotech companies have R&D collaborations. A "moderate foundation wave" can be registered in agrobiotechnology since the mid 90s in Germany: more than 50 % of the specialised companies have been founded in this period. Due to their start-up character all of these companies employ less than 100 people. In contrast to traditional agrobiotech companies, biotechnology related service activities are an important "cash cow in specialised agrobiotech companies. The R&D intensive character of these companies is illustrated by the high relevance of R&D collaborations although only a low number of companies already has patents in the biotechnology field.
Most of the specialised agrobiotech companies in Germany do not have severe problems in the scientific/technical field. Some companies criticize the high costs of patenting. There are some difficulties in the management of R&D co-operations as well like prevention of know-how drain or differing interests of the use of research results between partners. In contrast to the technical field, most of the specialised agrobiotech companies in Germany face considerable difficulties during market introduction and marketing of the developed products or services. Often company founders underestimate the time and the costs requirements during this phase in particular if there is no marketing and distribution specialist in the management team. In contrast to the medical field, financing of their business activities still causes difficulties in most of the agrobiotech companies in Germany. Despite of the strong growth of the venture capital investments in biotechnology only very few venture capital companies invest in agrobiotech companies mainly due to their limited growth perspectives. In contrast to the situation a few years ago, agrobiotech companies report of increasing difficulties to find specialists for R&D activities, marketing, sales and distribution as well as experienced production specialists in Germany.
Specialised agrobiotech companies should strategically manage their R&D co-operations according to their own core competencies. Important success factors for R&D co-operations are a clear analysis of the environment of R&D activities (including the assessment of possible alternatives), the identification of co-operation partners according to their scientific/technical know-how and personal criteria, clear and binding co-operation arrangements in written form, the introduction of project management tools and the establishment of precaution measures to minimise loss of essential know-how of the agrobiotech company.
Commonly-used instruments of data collection cannot be used in markets of agrobiotech companies which are in an emerging state. In those cases project teams of company employees with specific scientific/technical expertise and market research specialists should commonly analyse the market situation and future trends. Qualitative approaches (often based on expert interviews) have a higher relevance in prognosis of future market developments than pure quantitative methods. Specialised agrobiotech companies should consider market aspects and the view of potential clients in early phases of product development by hiring a specialist for this area. The domestic market mostly is covered by direct personal sales activities of the companies while in overseas markets mostly sales merchants or external distribution companies are used.
The existing problems in personnel acquisition can be tackled by hiring "high-potential" students and internal systematic training and education activities according to an individual career schedule (using external human resources specialists if required). "Participation of employees" (e. g. in working organisation, communication culture) and flexibility (both from the company and the employees) will form important success factors for agrobiotech companies in future. In this context personnel development strategies should be developed as well in order to extend the know-how and experience of existing personnel. Due to financial limitations specialised agrobiotech companies cannot pay extraordinary high salaries and hardly use stock option or similar programmes so far.