Collective Strategy for Implementing Innovation in SMEs

Abstract

Collective strategy, which allows small- and medium-sized enterprises (SMEs) to take on orders that a single company with its limited technical resources cannot, does not function in practice. However, Kyoto Shisaku Net (literally, “Kyoto Prototyping Network”) is a group of companies that uses collective strategy to aggressively take on projects that other companies turn down for reasons such as “the specifications aren't finalized,” “there is no way to estimate the cost of this project,” and “common sense tells us that is an impossible request.” There are three reasons for the creation of this virtuous circle: 1) In the Kyoto Shisaku Net participation stage, member companies of the Net participate with the understanding that it is a place to practice the “five percent rule,” wherein companies devote five percent of their profit and time to new efforts, company growth, and opportunities for innovation. 2) In the prototyping stage, employees are motivated by participating in cutting-edge R&D, and the companies gain knowledge related to R&D. 3) After the prototyping stage, companies accumulate experience by taking on cutting-edge projects and can stop the vicious circle SMEs find themselves wherein they do not have the experience to win orders. In this manner, Kyoto Shisaku Net has created a virtuous circle mechanism that functions as a collective strategy by aggressively working on cutting-edge prototypes.