Project innovation builds global cooperations

Nov 5, 2015

Interview with Fabio Todesco, Managing Director of Tecos sas. TECOS SAS is an established agency that represents 18 leading Italian and European manufacturers of components for Solar Heating, Cooling, White Goods and Automotive Markets. Tecos places a special emphasis on Renewable Energy Sources and Energy Saving technologies in the heating and lighting sectors.

Invention and innovation are indispensible for the transformation of industry. What is the importance of invention and why does it lead to innovation and qualification?

Yes, when invention – which is quite different from discovery (the first is always the fruit of a plan, while the second may also happen by chance) – becomes innovation it can transform entire markets, not only individual industries.

Invention and the processes that arise from it to become ‘innovation’ inevitably bring with them increased experience to the companies and their production processes and can be the key to new revenue sources and new market segments. Several economists, including Austria’s Joseph Schumpeter, have long maintained that when an invention becomes an integral part of economic activity (that is when it becomes known and then utilized by the market) it finally becomes innovation. This is also the reason why the great industrialist Henry Ford stated; “there is real innovation only when a technology is accessible to everyone.” And it couldn’t be otherwise.

Innovation can also invert the hierarchies of entire industrial sectors provided that it results in a commonly used, mass-produced product (e.g. a household appliance). Then there are conditions that make a particular innovation more important than another, such as technological innovations that drastically improve quality of life for people (consumers) or – more recently – that produce significant results in ‘energy savings’ (i.e. reduce personal and thus global energy consumption), a very deeply felt topic in the current political and regulatory environment and one which we are following also in a very interesting case with our company.

What’s the difference between product innovation and ‘project innovation’?

This is a distinction that we often use to explain to our potential clients (typically manufacturing concerns in the Automotive, Household Appliances, Heating and Cooling sectors) what we’re going to offer them to improve their industrial ‘performance’.

A product innovation is an innovation that improves an existing product or technology by substantially improving its features and performance. It therefore considers the product as a physical component. A current example of product innovation regards one of our selected companies which has developed the first electrical resistance (heating element) without thermal inertia, that is so precise and fast in managing temperature that it results in much less energy waste when heating food or other substances. For us, project innovation is an innovation that concerns the global strategy of a company, the way and the manner in which they decide to approach their current market and new markets.

One would think that product innovation is always more important than project innovation, something that in reality is not true. We design innovations for which manufacturing companies have been waiting for years – in most cases without knowing it – and when they are applied they open up new markets for potential suppliers who implement them. This is Tecos role, to ‘help’ our potential customers understand that they actually need that particular project or product innovation.

What are the most interesting instances of ‘project innovation’ that you’re currently following?

We have two very interesting cases. The first concerns an historical company and one of our partners, which – after a 10-year collaboration with their circuit board supplier – convinced them to create a joint company in France for the development of circuit boards for other sectors. Where is the project innovation? The electronics supplier is one of the largest producers of circuit boards for the white goods industry (major home appliances), with 4000 employees of which 600 are engineers and they’re known for their high levels of expertise and their inclination for R&D. The crucial point is that we’re talking about a Chinese manufacturer, which – no matter how good – is too far away to be considered by European companies in other sectors. Being one of the largest producers, in theory they would also not be very flexible regarding minimum quantities for a project, delivery times, etc., which is also common among large American and European producers.

Here’s the project innovation: to compensate for the distance from potential clients and the lack of flexibility common to all large producers, these two companies decided to unite their structures in a joint company headquartered in Europe, thus reducing the distance and making available to their clients, when compared to large US and European producers, the as yet unknown added value of the flexibility to consider projects in other sectors with smaller quantities, rapid prototyping in UE, stocked in UE, special certifications in UE (no longer only in the main Chinese laboratory) and last but not least, a group of European engineers who ‘translate’ based on our European mentality, the company projects and send them to their 600 R&D colleagues in China. In our opinion, this is an opportunity not to be missed for many companies outside of the home appliance sector to finally have a large, competitive and competent supplier that is also, at long last, flexible.

The second case once again concerns again concerns one of our selected companies (responsible for the product innovation previously mentioned) that also developed a project innovation to bring back to Europe part of the market that had been lost to China: the enamelling of the cast iron grilles for the oven and cooktop sectors. To do this they located a foundry with special expertise in Colombia, noted the added value that producing in Colombia would bring (reducing the transit time by half when compared to China, closer to the American market, a substantial, skilled workforce at a lower cost than in China, etc.) and then brought the highly regarded European enamelling technology to Colombia. All of this to create a joint company and supply American and European clients from there.

In both cases, during some of the design and production stages, advantage is taken of the benefits of low cost production in countries like China or Colombia, but it’s worth noting that sales and market share are also brought back into Europe and jobs are also created in Europe. In addition we have many cases of project innovation – for products that allow for it –within Italian companies, with production entirely in Italy or in Europe.

Decades ago Japan was first in innovation; it was the ‘factory’ for the West. What Europe and the United States invented in their laboratories went to Japan to be produced and exported. Today, is the ‘factory’ still China, or does innovation concern instances of cooperation between companies in different countries?

As I said previously, today in the industrial sectors that we keep tabs on the ‘factory’ is no longer exclusively China, cooperation between companies in different countries is becoming increasingly important. These synergies create – by chance or according to a specific plan – exactly the type of project innovations we spoke of earlier.

At the production level, other countries can offer, because of their geographical position and specialized workforce, many more benefits and types of added value. China has remained the supplier country for components used in production taking place in China and is still one of the ‘factories’ for many products, especially in the consumer goods market.

In the industrial environment, China has instead become one of the most attractive and important markets for many of our own manufacturing companies that are adapting their structures in order to be able to sell in China.

(Photo ©B.S.P.I./Corbis)
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