A new way to Profile Businesses – Based on Competencies

As a part of our work in the North Central Region, we have been thinking about a new way to categorize businesses apart from the traditional industry based classification or cluster based categorizations.  In our work, we have found that clusters don’t exist in rural regions, because of the lack of critical mass required to define a cluster. But that doesn’t mean that the businesses in small rural regions cannot innovate or collaborate if they don’t belong to one cluster. Here are some initial thoughts on how to profile businesses based on their competency and help them collaborate to innovate.

Business Profiling

Regional Business Profiling and Innovation Networking Project

Innovation is key to sustainable regional growth and development and requires strong participation in open and collaborative networks. Successful innovation networks often consist of a critical mass of spontaneously-forming collaborative teams potentially located in different places, but working together and interacting frequently. Rural regions that may lack this spontaneous critical mass needed to proactively weave inter-linked networks of entrepreneurs, universities, government agencies, banks and other support institutions.

The North Central Regional Planning Commission (NCRPC) intends to identify, strengthen and utilize existing/underlying formal and informal networks to foster innovation in the region. The project aim is to help the NCRPC strengthen the region by assisting businesses as they connect and build regional networks that enhance competitiveness and capabilities. The current project work will be build on a previous pilot project work and use the knowledge base gained to advance innovation networking in the region. Previously, we explored traditional cluster and industry analysis in rural regions. While the previous work was intended to expose nascent traded clusters or key industries as well as underlying networks and regional attitudes; traditional cluster strategies miss the opportunities and overlook the complexities in rural areas. To overcome the limitations of cluster-based economic development yet benefit from its advantages, we propose to develop a new tool for categorizing businesses based on their capabilities and needs and pilot forming innovation networks based on such a profiling process.

Need-based clustering can overcome the traditional barriers caused by working in a rural region with only a specific industry(ies) that is(are) a part of the region’s key industries by including companies from different industries. Such a tool will cluster companies based on their capabilities, capacity and needs rather than simply the products that ship off the dock. This need-based clustering, in addition to network mapping, will identify sources of opportunity and collaborations. The project will link various companies, universities, regional organizations and other support institutions based on the needs and capabilities.

Project Goal

Increase the number of globally competitive innovative products and services produced in North Central Kansas.

Project Objectives

  1. To develop and pilot a process to profile businesses in the North Central Kansas based on their needs, capabilities, capacity and innovation readiness as opposed to their industry and product/service.
  2. To create a database of regional assets, businesses profiled and regional resources in an open system accessible to stakeholders in the region.
  3. To create a networking process that can help search for opportunities for collaboration among companies, regional educational institutions and regional organizations.
  4. To leverage lessons learned and insights gained in previous AMI/NCRPC regional pilot project and continue to develop and build a regional technology-based economic development strategy.

The Kansas Opportunity Innovation Network (KOIN)

Business differentiation and growth occur when opportunity intersects with ideas and the capacity to respond with innovative products and services. Some small rural businesses are able to connect with opportunities from around the world while others fail to make the connections necessary to sustain meaningful growth in global markets. Businesses in distressed or rural regions are especially apt to lack the informal networks necessary to keep up to date on new and disruptive ideas or opportunities. The challenge for many small rural companies and the communities and regions they support is creating an environment that transcends geographic isolation, discovers new markets, innovates openly and fosters global competitiveness to increase the probability of being at the intersection of great ideas and new opportunities.

The Advanced Manufacturing Institute (AMI) at Kansas State University and its state and regional partners in partnership with the US Department of Commerce’s Economic Development Administration (EDA) are building the Kansas Opportunity Innovation Network (KOIN). The KOIN initiative will help businesses and communities build networks to connect to opportunities in order to significantly multiply the capability of Kansas businesses to innovate and grow in rural and isolated areas.The network will act as an opportunity catalyst, boundary spanner, and connector for rural and/or distressed Kansas companies, communities, and regions wishing to compete in regional, national, and global markets with innovative technology-based goods and services. The network will specifically focus on:

  1. Profiling the innovation competencies, assets, capabilities, and needs of regions, communities, and their local companies,
  2. Developing the ability to scout out new opportunities, especially global opportunities, outside existing markets where center clients may have little to no connection access,
  3. Creating an actively woven network of technology providers, expertise, capital, etc and potential business partners that possess complimentary competencies who can enable center clients to respond in a competitive manner, and
  4. Facilitating the ability to readily connect and combine opportunities, companies, communities, and regions in innovative ways so that the response is greater than the sum of its respective parts.

The proposed network will employ innovative concepts/elements such as needs-based profiling/clustering, innovation assessments, opportunity scouting, boundary spanning, open innovation, design thinking, incubation, regional competitiveness, social networking, innovation network development, IT-based strategies, and innovative information visualization approaches.

Goal: Increase the number of globally competitive innovative products and services produced in rural and/or distressed Kansas communities and regions

Targeted to: Individual companies, rural communities/regions, and distressed communities/regions

Objectives: The proposed network will accomplish the following objectives:

  • Enable clients to look beyond their immediate market/region to collaborate with partners in other markets/regions, and thus promote unique, boundary-spanning innovation opportunities.
  • Provide the advantages of urban clusters (opportunity volume, resource density, diversity of interactions, and proximity to markets) to rural and distressed areas where clusters do not exist
  • Identify  and profile companies, communities, and regions with capability and desire to create new markets/product/services based on their competency/innovation profiles
  • Develop a dynamic system to scout for and document new opportunities in targeted markets (markets not being limited by geography), based on previous mentioned profiles
  • Connect profiled network clients with identified capabilities to the right opportunities – provide business development services as required
  • Leverage a collaborative IT support system that will be a mix of database systems, interfaces, and visualization tools to assist in capability assessment, opportunity recognition, and partnership creation among businesses and/or regions and communities.
  • Leverage AMI’s experience and previous EDA investments in early-stage technology development, supply chain development, innovation-based economic development, and regional innovation systems
  • Create networks of innovation that link state universities to rural and distressed regions of Kansas

Why KOIN:  Traditionally, opportunity and innovation are considered spontaneous and elusive phenomena. Nevertheless, to develop a sustaining competitive advantage, established companies and emerging entrepreneurs must develop networks that consistently funnel new opportunities into their ventures. Additionally they must access external resources to rapidly add value and then successfully launch the resultant innovative products and services into markets, regardless of where in the world the opportunities, resources, and markets reside. Sustaining such a competitive strategy requires companies and entrepreneurs to have wide social networks. Unfortunately, many existing companies and entrepreneurs build relationships with organizations/individuals that are a part of the same social or industry network they frequently interact with rather than exposing themselves to the opportunities in broader networks. In many cases, entrepreneurs are disconnected from opportunities by gaps, or structural holes, in their network. This issue is often complicated in rural or distressed Kansas regions due to insufficient interaction volume and density because of geographic isolation and sparse population. AMI’s proposed Kansas Opportunity Innovation Network aims to fill in the structural holes for rural and distressed Kansas companies, communities, and regions.

Deliverables: The proposed network will provide the following services/tools to rural and distressed companies, communities, and regions:

  1. Business and Innovation Profiling – Characterize companies by who they are, how they do things, and their needs instead of their end products, profile communities and regions based on their assets and innovation readiness
  2. Opportunity Scouting – A dynamic scouting process and repository of available opportunities
  3. Networking – Connect or link entities to each other based on the best match of capabilities and opportunities
  4. Business Development Assistance – Services to attract new customers and penetrate new markets
  5. Planning Assistance – Provide services to assist with technology cluster strategy, regional TBED strategy and manufacturing Incubation
  6. Mapping & Analysis Service and Tools– Mapping regional assets, social networks, and regional innovation readiness assessments; developing innovative tools to share with other economic development agents

Initial Core Projects:    KOIN network will  link companies, community, and regions to opportunities, based on capabilities, by undertaking the following core projects in different regions hence adapting the learning by doing approach. Initial center partner projects range broadly across the scope of work, geography served, industry served, and regional characteristics. Additional projects are expected.

  • South West Kansas: Regional Asset Mapping Project
  • Rural Region: North Central Kansas – Regional Business Profiling and Innovation Networking Project
  • Distressed Urban Area: Greater Wichita Area – Wind Supply Chain Prospecting and Pre-Profiling Assessment
  • Military Base Closure: Parsons Army Ammunition Plant – Business Redevelopment Support
  • Manufacturing Park/Incubator: South Central Kansas – Rural Multi-County Regional TBED Strategy and Business Development Support
  • Statewide: KDOC – Business Profiling/Supply Chain Network Development Prototype
  • Statewide: KTEC – Clean-Tech Cluster Strategy Development – Social Network Development Support

Partners:

  • Kansas State University
  • Kansas Department of Commerce
  • Kansas Technology Enterprise Corporation
  • Kansas Association of Regional Development Organizations
  • Great Plains Development Authority
  • South-central Kansas Economic Development District Inc.
  • North Central Regional Planning  Commission
  • Southeast Kansas Regional Planning Commission
  • Great Plains Development Inc.
  • Rural Policy Research Institute
  • Local Workforce Investment Boards (Area I and Area IV

Business Profiling

This is an innovative service that aims to create unique profiles for the businesses in the region based on a business’s innovation competency by comparing assets, technical capabilities, business expertise, design capabilities and needs. This method of profiling combines the manufacturing capabilities and innovation competencies of a business to create a unique profile for the business. Profiling business based on their innovation competency enable innovation intermediaries to connect them with “best-fit” opportunities.

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Publicly Traded Kansas Companies over Time


The Coherence Profiler

Stumbled on this Profiler from booz&co. (this time lowercase is intentional). Refers to a booz focus called Capabilities-Driven Strategy

The Coherence Profiler.

Strategic Innovation Profiles

A recently released discussion paper by The Research Institute of the Finnish Economy discusses the use of strategic innovation profiles to understand the overall innovativeness of the firms.  The discussion paper entitled “Innovation does not equal R&D: Strategic Innovation Profiles and Firm Growth” by Mikko Ketokivi and Jyrki ALi-Yrkko (October, 2010) examines firm innovation and its link to firm growth.  Instead of using R&D budget as a measure of innovation they adapted the ‘innovation radar’ developed by Sawhney et al. (2006) and created  strategic innovation profiles based on that. The 12 dimensional operationalization scale they used took into account the non technical aspects of innovation into account. They found that apart from R&D, innovation in other dimensions like value chain strategy, brand and distribution channels are all linked to new product introduction.

The complete discussion paper can be found at http://www.etla.fi/files/2529_Dp1220.pdf