Heavy-machinery enterprise innovative potential strategic management

The role of innovative development. The characteristic of modern approaches to heavy-machinery enterprise innovative potential strategic management. Analysis of the perspectives of innovative development of heavy-machinery enterprises of Ukraine.

Рубрика Менеджмент и трудовые отношения
Вид статья
Язык английский
Дата добавления 24.09.2017
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Heavy-machinery enterprise innovative potential strategic management

A.G. Semenov,

Economics Institute Director, Head of Enterprise Economics Department,

Classic Private University

In article the characteristic of modern approaches to heavy-machinery enterprise innovative potential strategic management is stated. The perspectives of innovative development of heavy-machinery enterprises of Ukraine are analyzed.

Keywords: innovative potential, innovative development, implementation of innovations, heavy-machinery enterprise.

Problem statement. An enterprise innovative potential management gains today a special value and urgency. The research objective is the development of the comprehensive approach to a choice of methods of the enterprise innovative potential management.

Analysis of recent researches and publications. The role and essence of innovative development is a subject of discussion at present for researchers in the field of economy. This issue has been revised in the works of such scientists as A. Marshall, Y. Shumpeter, M. Weber, B. Santo and P. Druker. Modern researchers also pay considerable attention to innovative development. Nevertheless, the theoretical provisions demand reconsideration and enrichment by experience of practical decisions.

The purpose of the article is a justification of a complex approach to heavy-machinery enterprise innovative potential strategic management.

Main material. Innovative development of economy allows using the hidden potential of industrial enterprise development. Intellectual and technological transformations need permanent continuation of researches. There are a lot of approaches to the enterprise innovative potential strategic management. Scientists develop a technique of carrying out a choice of innovative development alternatives, consider an assessment of innovative projects efficiency and shape the principles of innovative risks management. However, nowadays there is no universal approach to the classification of methods of the enterprise innovative potential development management, which would accurately coordinate the purposes and problems of the industrial enterprise functioning.

D. Price claims that strategic management of innovative potential can sound intimidating and overwhelming to many business owners. The most effective ways of strategic management of innovative potential are those that are simple, completed with the leadership team and key people in the company.complex documents that consume excessive amounts of time to create don't guarantee success. In fact, strategic management of innovative potential can be so overwhelming that it just doesn't work. The author also states that designing strategic management of innovative potential is just one of the first steps. Many organizations have strategic strategic management of innovative potential that is well thought out and crafted. Where they fall short is in the implementation of that plan. Implementation is the key. If one fails to implement, the results will not be what have been set out to achieve. In opinion of D. Price, implementation is the result of focused and continuous action. Strategic management of innovative potential doesn't just happen on its own: it requires corresponding attention. Regular meetings regarding strategic management of innovative potential also keep the plan moving in the right direction. Check-in meetings hold people accountable. When teams don't meet and don't keep their eye on the plan, the day to day interferes and the status quo ante remains [2].

D. Groves declares that understanding the short-term goals, limitations, and risks in an improvement initiative is prudent, but the focus of the executive team should be on the vision of the company several years from the present time. The author underlines that during the process of development of strategic management of innovative potential, it is essential to satisfy the expectations of the Board and other stakeholders [3].

Reassure all stakeholders by clearly communicating the case for change. It is especially important to satisfy and excite those stakeholders inside the company and elicit support of those who must design the new business processes and deliver the bottom-line improvements. Helping those individuals understand "what's in it for them" is crucial during the strategic management of innovative potential [3].

T. Baldwin suggests applying following criteria for selecting the best ideas for the strategic management of innovative potential [4]:

1. Cost to set up.

2. Time required to complete the new service offering.

3. Fit with current products and services.

4. Potential for growth and profitability.

T. Baldwin also claims that in planning, the traditional steps come into play, to include analyzing strengths and weaknesses, opportunities and threats (SWOT), competition, and available resources. These latter aspects further guide the decision making, providing a different set of constraints. The author underlines that many of the opportunities in the SWOT are considered during the stage of thinking. T. Baldwin suggests following questions for this stage [4]:

1. Which of the ideas fit the mission immediately, short term, and long term?

2. What are the time, talent, and resource requirements for the ideas?

3. Which of the ideas have the highest return-on-investment once implemented?

4. What does one have to do to implement the plan, as it pertains to people, skills, technology and funds?

A. Storey states that strategic management of innovative potential is about making choices. Without the metrics to provide a clear view on what good looks like it is hard to make those choices objectively. This has two consequences. First, it encourages a focus on cost rather than value. Costs are easier to measure and therefore something on which managers can show demonstrable progress. Second, it tends to discourage leading edge innovation. For a market-facing unit there may be huge rewards in being first to market with an untried business model if it proves successful [5].

But for a support function, without the value metrics which enable it to articulate a compelling business case, the risks rarely seem worth it. In short, functional strategy is more about being a fast follower than a market leader. Hence, often, the emphasis is on benchmarking, on understanding what existing best practice is, rather than on breaking new ground. This supports some types of change, for example following a well-proven outsourcing model for financial accounting. But it can prevent more ambitious strategic change that lacks an obvious cost justification, for example a new approach to managing talent [5].

At the same time S. Beardsley claims that building these advantages is not easy: companies must alter the way they craft strategies, design organizations, manage talent, and leverage technology. The best way for executives to begin is to understand the nature of searching, coordinating and monitoring activities required to exchange goods, services, and information. During the past half century, the faster pace of specialization, globalization, and technical change has profoundly altered companies, their customers, the supply chains around them and, consequently, the nature of work within them and at their borders. The result is a dramatic increase in the volume and value of interactions. In most developed economies today, four out of five jobs involve them; only one in five involves extracting raw materials or working on a production line [6].

A century ago, the proportions were reversed. The number of jobs chiefly involving the most complex interactions is growing faster than any other type of job in developed nations. Examples include running supply chains, managing the way customers buy and experience products and services, reviving brands, and negotiating acquisitions [6].

We developed a comprehensive approach to a choice of methods of the enterprise innovative potential strategic management. Methods of functional management are applied to the management of technological innovations: the analysis of economic efficiency, the analysis of design and technological divisions activity and FCA. Methods of technical and economic calculation are applied to the management of product innovations: the assessment of investment efficiency indicators, the assessment of marginal profit; the other methods are applied to the management of non-technological innovations: the definition of an innovative development stage, choosing the innovative strategy.

The above mentioned methods constitute a complex approach to strategic management of innovative potential as depicted on drawing 1.

Drawing 1. A complex approach to the innovative potential strategic management

Some of the given methods can be applied to the management of several types of innovations. So, a method of the assessment of investment efficiency indicators can be used both for the management of product and technological innovations, and a method of the definition of a stage of innovative development can also be applied for both technological and product innovations.

The indicators of innovative development of heavy-machinery enterprises of Ukraine are conveyed in table 1.

Table 1. Indicators of innovative development of heavy-machinery enterprises of Ukraine in 2013, thousand grn



Total expenses on innovative development


Capital investments


Expenses on technological innovations


Expenses on product innovations


Gross profit


To change the economic situation within heavy-machinery branch of industry it is recommended to improve the structure of manufacture and realization of metallurgical production in a direction of sales increase of its more profitable kinds taking into account real and potential market capacity. It is necessary to elaborate competitive advantages that the factories should hold, namely high level of quality of production and constant amelioration of the technical design documentation.

Thus, the scientific novelty of the research is the application of a comprehensive approach to the enterprise innovative potential development on the basis of allocation of types of introduced innovations and respective methods of management. At the same time, further research should consider a problem of the definition of an optimum ratio of quantity of introduced technological, product and organizational innovations. It is necessary to investigate the influence of different types of innovations on the enterprise competitiveness and molding of the organization innovative potential.

Conclusions. The results of the analysis and systematization allow using a comprehensive approach to definition of methods of the enterprise innovative potential development management, thus a priority problem of further researches is the assessment of a settlement indicator of an optimum ratio of different types of innovations.

strategic management heavy machinery


1. State Statistics Service of Ukraine (2014), "Naukova ta innovatsijna diial'nist' v Ukraini 2012. Statystychnyj zbirnyk" [Research and innovation activity in Ukraine 2013. Statistical yearbook], Derzhkomstat, Кyiv, Ukraine.

2. Price, D. (2011) Strategic planning improves results with consistent implementation / Available [online] from: http://strategic-management. bestmanagementarticles.com/a-20597-strategic-planning-improves-results-with-consistent-implementation. aspx. - Accessed 25 January, 2015.

3. Groves, D. (2010) Business improvement initiatives: strategic business planning, implementation, and assessment, pt.1/Available [online] from: Ошибка! Недопустимый объект гиперссылки.. - Accessed 11 January, 2015.

4. Baldwin, T. (2010) Thinking strategically first makes strategic planning work / Available [online] from: http://humanresources. about.com/od/ strategicplanning1/ a/thinking_plan. htm. - Accessed 23 February, 2015.

5. Storey, A. (2011) Cracking the process. Why is it so hard to develop a functional strategy? / Available [online] from: http://www.articlesbase.com/strategic-planning-articles/cracking-the-process-why-is-it-so-hard-to-develop-a-functional-strategy-4555 825.html. - Accessed 12 April, 2014.

6. Beardsley, S. et al. (2006) Competitive advantage from better interactions / Available [online] from: https: // www.mckinseyquarterly.com/Organization/ Strategic_Organization/Competitive_advantage_from_better_interactions_1767. - Accessed 25 December, 2014.

7. Kolesnichenko, V. F. (2006), “Investment basis of the enterprise innovative activity”, Abstract of Ph. D. dissertation, Economics, enterprise organisation and management, Kharkiv National Economic University, Kharkiv, Ukraine.

8. Chuhray, N.I. (2003), “Industrial enterprises innovative potential shaping on the ground of marketing and logistics”, Abstract of Ph. D. dissertation, Economics, enterprise organisation and management, National Academy of Sciences of Ukraine, Lviv, Ukraine.

9. Shkvyirya, N. O. (2009), “Farming enterprises innovative activity development”, Abstract of Ph. D. dissertation, Economics and enterprise management (economics of farming and agriculture), Crimea Agritechnological University, Simferopol, Ukraine.

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