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НОВОЕ «УМЕРЕННОЕ ПРЕДЛОЖЕНИЕ» -ИННОВАЦИЯ В ИРЛАНДСКОМ БИЗНЕСЕ
Морган Бреффни
JFC Manufacturing, Ирландия email: breffnymorgan@gmail.com
Инновация в ирландском бизнесе является типичным примером того, что экономист Daniel Isenberg описал как минивация (minivation) - стратегия минимальной инновации, и эта статья способствует дальнейшему развитию данной концепции посредством дополнительного термина modovation. На основе краткого обзора шести разнообразных ирландских компаний показано, что с помощью умеренных подходов можно добиваться великолепных результатов, будь то небольшие, но заметные изменения в процессах, стратегии или других факторах несейсмического уровня.
THE NEW «MODEST PROPOSAL» - INNOVATION IN IRISH BUSINESS
Morgan, Breffny
JFC Manufacturing,
email: breffnymorgan@gmail.com
Innovation in Irish business is exemplary of what economist Daniel Isenberg has elsewhere described as minivation - a strategy of minimal innovation, and this paper further this concept of with a supplementary phrase, modovation - innovation couched in the psychological concept of modesty. What follows is a brief survey of six diverse Irish businesses that have commonality in that they tend to indicate that modest approaches reap great rewards, be it small, clear changes to process, or strategy, or other factors of non-seismic scale.
Ключевые слова: инновация, умерен- Keywords: Innovation, modest,
ный, постепенный, Ирландия, рост, incremental, Ireland, growth, export,
экспорт, процесс, Coolmore Stud, JFC, process, Coolmore Stud, JFC, Storyful,
Storyful, Baileys, Riverdance, Ryanair. Baileys, Riverdance, Ryanair.
The Irish nation, since its accession to the European Economic Community in 1973, through to the present day has seen its economic circumstances and reputation shift from the bland to the hugely positive to the hugely negative and then recently back around again to a grey-area of mixed reviews1. First, there was the status of Ireland as a minor European player continuing its post-colonial modernisation. Then came the European Project; European Monetary Union and easy access to European credit that fuelled a boom of global renown.
The 'Celtic Tiger' became a global exemplar of success, and for a time Ireland was a country ranked as having the best quality of life in the world,
1 URL: http://www.ft.com/ intl/cms/s/ 0/bfe2048a-640d-11e3-98e2-00144feabdc0.html# axzz2ruPdDzDX
according to The Economist1. The bust that followed boom, a bust which slightly predated the global recession2, brought Ireland once again under the scrutiny of the global eye. This time the status rendered was that of cautionary tale, as a nation with more wealth per capita than all but one of the OECD countries3 became a nation where more than fifty percent of homeowers live in negative equity4.
Then, as a trioka of the IMF, ECB, and EU central leadership moved in with its bailout solution, Ireland embarked on strategic corrections and heavy-handed budgets that precipitated immediate tax-hikes, spending cuts, banking sector overhauls and waves of mass-emigration, report came that Ireland had emerged from recession, in 2013, registering a slight degree of growth5. Indeed, Enda Kenny, the Taoiseach6, appeared on the cover of Time magazine under the headline title 'The Celtic Comeback'7. Ireland instantly became a 'poster child' for austerity economics. Default was evaded; EU integration was maintained.
This is the common knowledge story; the story of how a country overly-reliant on credit and the construction industry built itself to sky-scraping heights of success and admiration, was levelled, and now begins to build itself up again with new foundations and new approaches.
The cornerstones of the new approaches are espoused as the following: wide-reaching reviews of banking regulation; bugetary adjustments; and a strategic emphasis on foreign direct investment (FDI). The first two factors listed - wise banks and wise budgets - are factors which curry favour with the European Commission, while the latter finds itself a more contentious proposal, given that Ireland has the ability to win Europe's lions share of FDI largely due to the fact that the corporate tax rate is 12,5%, a figure ultimately of utmost appeal to global multinationals that choose Ireland as their European hub of operations8. Indeed, Ireland successfully markets itself as a nation with a well educated workforce, where English is the native language, where the currency is the Euro, and where the rule of law is strong. Added to this, there exists in Ireland a
1 URL: http://www.economist.com/media/pdf/QUALITY_OF_LIFE.pdf
2 Colman M. Back From the Brink. Transworld. - Ireland, 2009. - P. 28.
3 URL: http://www.finfacts.ie/biz10/WealthNationReportJuly07.pdf
4 URL: http://www.rte.ie/news/2012/0817/333979-negative-equity/
5 URL: http://www.ft.com/ intl/cms/s/0/ 1ccdb0a4-211f-11e3-8aff-00144feab7de.html
6 The word Taoiseach is rooted in the proto-Celtic towissakos translating to: 'chieftain of the clan'. The Taoiseach is the head of the Irish government, as opposed to the head of state. The distinction is noteworthy since Ireland also has a directly elected president. The Irish model of prime minister mandate is based on the Westminster model, and thus executive political power rests with the Taoiseach.
7 URL: http://www.independent.ie/irish-news/the-celtic-comeback-enda-kenny-makes-cover-of-time-magazine-28817810.html
8 URL: http://www.forbes.com/sites/taxanalysts/2013/11/06/if-ireland-is-not-a-tax-haven -what-is-it/
historic cultural affinity with the United States, spanning centuries, that can be posited as a driver for the circumstances that have led to Dublin being the European headquarters for Google, Facebook, Twitter, Google, and Yahoo!1. The cultural bonds that precipitate business bonds are indeed strong. For example, the Taoiseach holds the unique position of being invited to the White House on an annual basis simply to celebrate Irishness shoulder-to-shoulder with the American commander-in-chief, as part of America's intense St Patrick's Day celebrations.
And so, FDI is strong, and in a separate vein, European cooperation continues to prevail in a healthy econo-political/relationship where Ireland can be pointed to as an example of country that successfully implements the European diktat of austerity as an economic principle of recovery. These are the fundamentals that are to drive the Irish economy up to and beyond 20162, and this is the popular narrative.
The lesser know narrative is that the Irish economy is populated with success stories that have grown as entities unto themselves, by themselves, for themselves, with their fates largely unbundled from the mania of the boom, the bust, and the recovery. While the banking sector and the construction industry were the mainstream routes to prosperity in the boom, the Irish companies that survived the recession - the ones that can be found trading handsomely today - are those that owe their success in large part to exercising simple strategies of development and expansion. These are typically the small-to-medium sized enterprises (SMEs) that kept themselves sober during the boom's intoxicating credit rush, and instead, focussed on incremental advances. These are typically SMEs, but they are joined by flagship larger corporations (and cultural entities too, as you will see below) that have manged to create and sustain viable businesses that can compete at a global level.
For the purposes of this discussion I have selected six Irish companies that are emblematic of Ireland's transformation over the past twenty-plus years. Some of them have been trading for that length of time, while others are representative of Ireland's economic success because they are fresh entities that profit from new thinking, exhibiting Ireland's modernisation especially in regard to its attitude to business.
The six companies I have chosen are as follows:
- Coolmore Stud, a global leader is horse breeding.
- JFC, a multinational plastics manufacturer.
- Storyful, a recently-sold online media outlet.
- Baileys, a niche drinks product aimed at women.
1 URL: http:/ /www.businessweek.com/articles/2013-04-04/tech-companies-love-dublins-tax-rates
2 2016 will be the centinary of the Rising (read: revolution) which would ultimately give rise to the Irish Republic.
- Riverdance, Ireland's global dance troupe.
- Ryanair, which is Europe's largest low-fares airline.
Innovation is at the core of all of these businesses. But the vignettes describing them below will not claim that these entities are radical innovators. Rather, they are minimal innovators. The vignettes serve as an Irish sample of success stories that lend affirmation to the work of Babson College economist Daniel Isenberg, who has written on the topic of incremental improvements to business methods.
«Minnovation - small tweaks on existing products - is what moves the ball of economic growth forward. Neither Facebook nor Google, for example, were technology pioneers»1.
Certainly, the businesses detailed in this survey contribute to Irish indiginous economic productivity via their bottom lines. But a linking theme that should emerge is that they are minnovators as Isenberg puts it; their innovation creates value via the simple art of tweaking.
Coolmore Stud
Since the early 1970s, Coolmore Stud in South Tipperary has gone from being a small estate to its present multinational status as being the world's largest thoroughbred racehorse breeder. It is a 'bloodstock superpower'2. The success of Coolmore, ran by Robert Sangster, Vincent O'Brien, and John Magnier has had its success attributed to more than just good management and luck at the races. There is a process innovation in play: shuttle breeding. This is when elite stud horses are transported across time zones so they can be available for two mating seasons a year - an Irish equine twist on the old-fashioned 'two for the price of one' offer. By exploiting the season differences between the northern and southern hemispheres, a shuttle breeder stands to breed more elite racing horses. And note, according to industry specialist Les Sellnow, «the driving force behind stallion shuttling has been Coolmore Stud»3. Such innovation is a simple process adjustment, facilitating aggressive scaling of the business in an industry previously thought to be location specific, and traditional to the point of being sedentary. This upping of the frequency of the stud-mare liaisons does not thoroughly revolutionise the bloodline mating business, but it does demonstrate creativity in terms of utilising assets. Consider what Harvard Business School's Rosabeth Moss Kanter has to say about utility innovation: «Sometimes innovation is to take your greatest asset and to find
1 Isenberg D. FT 15 January 2014. Retrieved 16 January 2014 via. - URL: http://www.ft.com/intl/cms/s/0/d5302bb8-40be-11e3-ae19-00144feabdc0.html
2 URL: http:/ /www.independent.ie/business/farming/27800-bales-a-day-saved-at-coolmore-29422100.html; http://www.irishexaminer.com/ viewpoints/columnists/matt-cooper / coolmore -stud-is-an-irish-success-story-we-should-show-to-the-world-150674. html
3 URL: http://www.thehorse.com/ articles/10334/dual-hemisphere-breeding
other ways to build on it... that kind of creativity I like a lot, because it's not the same thing as writing new software or inventing a new drug. It's a lot simpler. It comes from taking this asset or this thing and using it in several different ways»1. So in Coolmore's case, by shuttle breeding their top horses globally, they have found an innovative way to 'sweat their assets'. In this case, quite literally.
Jfc Manufacturing
JFC is an agricultural supplier that has the sense to have a extensive R&D division. Based in the West of Ireland the company has been, since the 1960s, exporting agriculture and marine-related products into European markets. This owner-led and managed company has been turning out durable plastic products for decades. The stock includes feeding-troughs, stakes, silos, et cetera. All of these are made mainly of plastic, whereas the traditional item they replace would have been made of wood or metal. It is a simple product series that moves traditional products to a new material. This company's success is based on business process innovation and does not need to be based in Silicon Valley to be 'innovative'. Business innovation can and does happen anywhere. Profitable business innovation is based on R&D but not necessarily dependent on the hi-tech model of business growth. That JFC are performing dedicated R&D has been rewarded with the expansion of their presence in the global marked right through the downturn with year-on-year growth2.
Storyful
Storyful represents a new phenomenon in the digital age. The company, unlike JFC, has only been around for two years. Its innovation is curating online news media content and selling it on to traditional media outlets. At the end of last year (2013) it was bought out for €18 million by Rupert Murdoch's News Corporation3. In an increasingly unregulated online content market it created a niche around the reliability of news material4. To earn vast sums due to just a three-year project is testament to the power of simple tweak-model innovation.
Baileys
Baileys are a drinks company fashioned for a more globally sophisticated customer with a focus on women. The key profit driver was an EU subsidy which encouraged businesses to take milk production out of
1 Rosabeth Moss Kanter, Harvard Business School's Ernest Arbuckle Professor of Business Administration. - URL: http:/ /www.idaireland.com/innovation_ireland_review/
2 Interview with founder and CEO John Concannon, 1 December 2013.
3 URL: http://www.irishtimes.com/business/sectors/technology/storyful-sold-to-news-corp-for-18-million-1.1634572
4 Interview with Mark Little, 19 June 2010.
commission because of the distortions and surpluses of milk in European markets, as the existed a 'milk mountain' that followed a milk market subsidy. Clever marketing and use of a subsidy scheme from the State led to the creation of a series of new alcohol products aimed at women customers who had been previously neglected in the marketing efforts of the drinks industry. This is a good example of how a market-led innovation can be employed to harness such things as an existing state subsidy.
Riverdance
Riverdance is another Irish export, and exports stand for 90% of the Irish economy1. This time, we consider a cultural export. By rejuvenating Irish dancing via the process innovation of simply having more dancers on stage at any one time (as was the case in the blowaway debut performance at the Eurovision Song Contest interval act of 1994), a hit brand was formed, a brand that has gone from strength to strength, and still tours to this day. There exists also a control for this analysis; the 1981 Eurovision interval act: Timedance, scored by the self-same score-writer of Riverdance, Bill Whelan. The variable for Riverdance is thus, simply, more numerous treading and tapping of the boards, with all else remaining quite similar to the 1981 critically-unacclaimed Timedance performance2. The innovation was incremental, the innovation was modest, but significantly successful.
Ryanair
The final Irish business success story that I wish to discuss is Ryanair. With annual profits up 13% in 20133, and with the current status of Europe's largest low-cost airline, we must ask, how did they innovate their way to such success? They did so by providing a service that had never been provided in Europe before: providing a no-frills service that remained value for money, that took the glamour out of flying and made up for it with cheaper fares, 'democraticising the skies'. This was a concept new to Europe, but note, it was not new to the world. In fact, Ryanair is modelled on Southwest Airlines, the original low-cost carrier, operating in America. Ryanair continues to expand, and has recently been granted approval to begin flights to Russia, and this winter it is in negotiations with Moscow's airports to do just so. But again note, this is not a pioneering innovation, as it was EasyJet who were the first low-cost airline to connect Russia to Western Europe on a budget. Such may be the key to Ryanair's route to success: ambition, but there is modesty layered into it. There are novel features that they bring to the routes they undertake, but these features are
1 URL: http://www.finfacts.ie/irishfinancenews/Irish_Economy/article_1025535_printer. shtml
2 URL: http:/ / www.ceolas.org/artists/Planxty.html
3 URL: http://www.ryanair.com/ en/ news/20-may-full-year-results-2013
not novel on the other side of the Atlantic. There is expansion to the Orient, but it is a not the first company planting its flag. Being an excellent copycat, and fundamentally, a legally permissible copycat, is a strategic innovation in itself. Indeed, it calls to mind the old adage, 'pioneers get shot, and settlers make money'.
Analysis & Discussion
The above vignettes are proven examples of Irish companies that are exemplars of incremental rather than radical innovations. They are Isenberg's minivations. Perhaps it is also apt to offer this quite similar portmanteau, modovators: modest innovators. Modesty, a word of 16th century origin, mid 16th cent.: from French modeste, from the Latin modestus 'keeping due measure,' related to modus, 'measure'1. And this is a good thing, for, to quote W. Edwards Deming, 'you can't manage what you can't measure'.
Ireland can be said to be managing its innovation sector with considerable success because the examples above show a mindset of incrementality through business fundamentals and many of the above companies are of a vintage that kept building their operations modestly in contrast to the boom-mentality that came and went, when all of the above companies that are old enough to have existed through the Celtic Tiger simply kept things modest in the midst of a decade of general credit and construction hysteria. Pacing oneself in a time when many corporate entities expand too fast and accelerate towards collapse is a mark of modesty in the positive sense of the word. Small process changes, like those above, are the key to healthy innovation management. Moss Kanter echoes this point:
«First of all, you have to have respect for ideas of all sizes. You need a culture in which you think small as well as thinking big. . . You've got to let a lot of little ideas see the light in a small way. If you build that into the culture, you get three things. You get a lot of modest innovations that keep you making progress, making continuous improvement. You also ensure people are more accustomed to change. If you have a culture in which people are always tinkering, experimenting, making things a little better, you have a culture in which people expect change as a way of life, so they're not so resistant. The third thing is, sometimes a small idea can turn into a big idea. If you value small ideas you provide opportunities for them to flourish»2.
Observe her use of the word 'modest'. Modesty and, by extension, modovation, has been shown to work in Ireland. But is modovation a cultural fit with the Irish mentality? Indulging in asking this socio-psychological question, can we posit that modesty is quite an 'Irish' trait? In the same way
1 Oxford American Dictionary, rendered 30.01.2014.
2 URL: http:/ /www.idaireland.com/innovation_ireland_review/
one could suggest that being spendthrift is a 'German' trait, or being patriotic is an 'American' trait? A comprehensive answer to this question is a quest far beyond the scope of this paper, which is admittedly a hand-picked survey of business success stories. The objective of this paper - to simply inform about the nature of innovation in a country with a turbulent recent past, economically speaking - has been fulfilled. But couched as an afterward, is modesty quintessentially Irish? And does this permeate the perspective of Irish business innovators? The above modovations hint at this. And, tangentially departing from our purely economic thinking which supports itself in these pages with a body of empirical sources, note that it is also widely written, albeit impossible to verify, that a sociocultural norm in Ireland is indeed a leaning towards modesty.
As to the why behind such suggested national modesty, what I write is speculative, but somewhat qualified by your humble author's authenticity as a writer with an Irish passport: Possibly it's about being comfortable with having neighbours more ostentatious than oneself, and even imposingly or exploitatively more ostentatious than oneself, as can be argued is the case with Ireland's status first as an Imperial British possession and more recently as a Great British neighbour. In a culture where one-upmanship is impossible to foster due to an unequal balance of power between trading nations, perhaps being 'thankful for small blessings' carries the day in economic development, and, by extension; business innovation, where small innovation is good innovation, somewhat 'safe innovation'. Needless to say, the many Irish entities that contributed to the hubris of the Celtic Tiger do not fit this putative mould, but those that exist now are fit for analysis as successful firms that thrive in a culture of modovation. JFC didn't invent plastic, and Ryansir aren't the Wright brothers, nor did they create the Boeing 737, but yet these Irish companies create great revenue for the Irish public purse. In moving on from the Celtic Tiger and the 'Celtic Recession', the companies that drive progress via modest innovation strategies are the companies best-poised in the globalised economy to weather any oncoming economic storms, right from its position as on the western tip of Europe.
References
1. Isenberg D. Entrepreneurs and the Cult of Failure // Harvard Business Review, April 2011.
2. Isenberg D. How to Start an Entrepreneurial Revolution // Harvard Business Review, June 2010.
3. Isenberg D. Worthless, Impossible, and Stupid: How contrarian entrepreneurs create and capture extraordinary value // Harvard Business Review Press, 2013.
