How to Measure Innovation: DUBAL Company Report

Abstract

DUBAL gained its success due to its innovations. They helped the company to achieve its desired broad objectives and become more competitive by influencing its operations at both meso (organization) and micro (individual) levels.

Innovation measurement is vital for the organization as by dint of it the leaders can define if it can implement the changes needed to achieve success, meet the requirements of the personnel and the demands of the environment and customers. Financial perspective, knowledge, networks and context are to be assessed with the help of quantitative researches and qualitative surveys to measure innovations.

Introduction

In the past several decades, our world has changed greatly due to the innovations made in various industries. The researchers and business owners try to measure these changes not only at a global level but also at corporate. Still, they differ in their views on crucial dimensions and assessment methods.

To clarify the issue, we will focus on the company that became successful and worldwide-known due to its innovations. Dubai Aluminium Company Limited (DUBAL) is one of the biggest aluminum smelters in the world and considered as the 7th biggest smelter in the world in term of production (History 2015). Thus, it is a great example that can be used to investigate how the innovation is measured.

Theory and Hypotheses

DUBAL gained its success due to its innovations. They helped the company to achieve its desired broad objectives and become more competitive by influencing its operations at both meso (organization) and micro (individual) levels.

Measuring the innovations, DUBAL as well as many other organizations, gains an opportunity to ‘understand the hidden and exposed drivers that will help fostering a sustainable competitiveness in economies around the world’ (Madrigal-Sánchez & Quesada-Pineda 2012, p. 901). That is why we will consider this topic in different perspectives paying attention to various companies.

Innovation is crucial for any business as it allows the organization to gain success and remain competitive for a long time. The knowledge is even said to be the ‘key input to innovation’, as it is needed for the creative activities (Gamal 2011, p. 8). Innovation is the step made by the organization. It is the thing that makes the business grow by inventing new products, maintaining new strategies of management and decision-making procedures (Carmichael 2014).

As the company starts to innovate, its performance is to be assessed so that the progress or its absence can be seen, and the personnel can conclude whether the expected benefits are gained. It can be calculated with the help of several methods. Thus, the income and expenditures can be compared, the cost of non-financial resources measured, profit percentage, customer satisfaction as well as the employees one and the time needed for altered operations (Monitoring the performance of new business ideas 2013).

It was calculated that about 6 percent of the firm expenditures are to be dedicated to research and development for the company to gain strategic positioning in the sphere (Madrigal-Sánchez & Quesada-Pineda 2012). Thus, considering the innovations at a meso level, we underline its input and output of the particular company and its place in the market.

At a micro level, the workers are to have intrinsic motivation, which deals with the interest regarding the work that is not connected with profit (challenge, enjoyment, personal enrichment, etc.), and extrinsic one, which presupposes rewards and recognition (Rosenblatt 2011). Hammond, Neff, Farr, Schwall and Zhao (2011) considered the innovation in this perspective and proved that individual differences, peculiarities of the job and its context also play an important role in educational and other settings.

The innovation metrics changed greatly starting with 1950. Today their number has greatly increased, and the measurement is based not on the input or output but the process. Thus, such indicators are considered:

• Knowledge: it is evaluated by paying attention to the knowledge needed for the design of a new concept or item and the performance.
• Networks: as a rule the innovation is made by several individuals or even organizations, which is to be taken into account.
• Conditions: the context in which the firm innovates influences the success of the innovation greatly, so the policy, economic demand, social attitude and other elements play a huge role. Of course, there might be an enormous amount of them, but the main ones should be considered. So Gamal proposes to assess the innovation regarding ‘demand, clusters, management techniques, rest-return and system dynamics’ (2011, p. 10).

Different measurement frameworks can be used by the organization to find out whether their innovativeness (ability to innovate) is decent. According to the diamond model, such dimensions are to be considered:

• Strategy: the efficiency of strategic planning process, connection between the innovation and corporate strategy and mechanism for the strategy implementation is to be considered.
• Process: new product development process should be assessed as well as internal processes.
• Organization: the attitude of the firm towards innovation.
• Linkages: the interaction with the suppliers, customers, and other companies, etc. is considered regarding the knowledge that can be gained.
• Learning: the company is involved in the training and development of personnel, it gathers the knowledge from linkages, learns by experience and shares the knowledge (Gamal 2011).

The innovations are made in various spheres, and they influence different businesses so that they gain an opportunity to become more successful and make their work efficient. In informational management, innovation measurement is said to be connected with the evaluation of goals achievement, resources used, results gained and processes managed.

O’Raghallaigh, Sammon, and Murphy (2012) believe that the problems faced while measuring the innovation are to be solved not by adding other metrics but by the in-depth understanding of the context that existed when the innovation was maintained. Recently, in the real-estate industry, the innovative techniques of the Analytic Hierarchy Process were implemented. It was proved that the work of a team is crucial for the process of creating innovation.

Sarathy (2011) pointed that the influence of the leader on the employees is the driving force of any alterations, as they share their vision on different processes with the personnel. In this way, the leader should delineate the organization innovation vision, encourage and reward the followers’ contribution.

It proves the idea that the interaction between the personnel is critical because it allows people to gather their knowledge while the innovations are commonly made in cooperation. Solvay is one of the leading organizations in the chemical sector, which implemented new KPI scorecard for innovation in 2006.

The company measured input, output and process of performance to make them relevant to the specific business goals and comparable. It was proved that individual motivation is crucial, as employees demonstrated innovation excellence when being concerned. The innovation performance enhanced greatly, the personnel became proactive, and the realization of the importance of innovation spread across the company (Kolk, Kyte, Oene & Jacobs 2012).

By dint of shopfloor innovation the company that is known to the majority of the population increased its profit and decreased sheet metal pressing units. Toyota’s new approach allowed the company to save up to 25 percent of energy so that now they pay more attention to their unexplored potential. The main focus was on the staff; training and skill upgrading improved their performance, increased the quality of work and productivity (Urs 2014).

More connected to DUBAL are the European steel manufacture companies that tend to implement improving initiatives to make their business successful. They manage product and technology development as two different processes that combine in the entire innovation process.

Salo considered the innovations controlled by the metal manufacturer in Northern Europe and found out that the production of new products with the help of the electronic business applications allowed it to enhance the position in the market and increase profit. On a micro level, the innovation was evaluated due to the degree of its newness.

Being technically oriented the firm always encouraged the personnel to be proactive and responsive so the engineers were rather interested in creating new profitable products. It is also claimed that various electronic business applications and new management program undertaken by the sample company allowed its managers to streamline decision-making process (Salo 2010). Hydro is one more company in this sphere that deals with the production of metals, aluminum, in particular.

The organization has the diverse personnel, which is one of the main resources for innovation due to the various knowledge and experience. Innovative product ideas and concepts are claimed to be designed by dint of the combination of people’s views. Being highly interested in the reduction of the adverse influence on the environment, personnel are encouraged to make steps towards positive changes.

Hydro believes that they got a strong position in Europe because they are focused on the differentiation through innovation. They claim it to be their main competitive strategy, which they are not going to change, as it proved to be rather efficient. The value of knowledge is underlined because it is the driving force of any changes (Hydro 2013).

Thus, we can see that various organizations encourage innovative ideas that seem to be of advantage for their competitiveness. To make sure that the concepts they have designed bring the success after the implementation and will continue to be beneficial, they measure innovation. Still, even though the firms refer to the same dimensions, they tend to underline different elements that they believe to be crucial.

Moreover, 12 percent of organizations that participated in the survey conducted by the Boston Consulting Group failed to know the metrics that are utilized for innovation (‘Innovation metrics’ 2009). That is why the question of how to measure innovation remains on the front burner.

To answer it, we conducted the research, which was also meant to prove, on the example of DUBAL, that assessment of income and spending is not enough to evaluate the success of innovation and such things as knowledge, network and context (demands, satisfaction, etc.) play a great role.

Methods

The study was conducted to define the best ways of innovation measurement include both qualitative and quantitative research. It is based on the primary and secondary data. The primary one was obtained by dint of interviews with employees, department heads and leaders across the organization. Secondary data was gathered from company’s database, website and previous publications in relation to company’s innovation.

The sample of the research included the DUBAL’s personnel. Due to the lack of time, the sample is limited. The inclusion criteria were:

1. a person is to work at DUBAL;
2. one is to be engaged in the operational processes for a long time to know all peculiarities;

The exclusion criteria were:

1. no information about the person in the sources;
2. no involvement in the innovation process and knowledge about it;
3. lack of knowledge about the general operations of the company;
4. lack of knowledge about other employees and their contribution.

In this way, the sample included two heads of departments, four leaders (managers) and nine employees.

The data sources were secondary ones. The inclusion criteria were:

1. correlation with DUBAL;
2. connection with innovation;
3. information about the personnel;

The exclusion criteria were:

1. lack of the data regarding the issue;
2. outdated information;
3. poor access;
4. authoritativeness of the data cannot be proved;
5. not a valid resource where the information is found.

All in all, the sample consisted of 23 items.

The study consisted of two researchers. The information gained from the interviews was considered the main one beforehand, so it was decided that the literature review should be divided into two parts. In this way, we searched for the information regarding the innovation and its measurement in general and in DUBAL.

Then we searched for the information about employees of the company. Thus, we realized what is to be included in the interview and were ready to discuss the issue. The next step was the design of the questions and the very interviews. On the basis of the obtained information, more relevant data was gained from the secondary sources. It was analyzed, and the results gained. Theoretical and managerial implications were discussed, and the ideas for further research were given. Finally, the conclusion was made.

The innovation is rather difficult to measure, as it includes not only quantitative but also qualitative data. That is why the interviewees were also asked to assess some elements even though their evaluation was biased by personal attitudes.

The research was based on such variables as:

• Independent: innovation;
• Dependent: the position of the employee, one’s involvement in the organizational processes and view on the issue;
• Control: time, the number of interviewees.

The calculations were made, and some results were given in percentage terms.

The interview consisted of a range of questions aimed at defining how the company measures innovation:

1. DUBAL is a leader in the industry, what do you believe to be the key element, which made in successful?
2. To what extent do you believe the innovation to be significant for the company? (1 – not significant at all, 5 – crucial)
3. How can you assess the innovativeness in DUBAL? (1 – extremely poor, 5 –excellent)
4. What do you believe to be the main dimensions that influence innovativeness? Why?
5. What is done in DUBAL to encourage innovation?
6. Are the innovations made by the company itself or it cooperates with other organizations?
7. How many employees are involved in innovation design? Are they influenced by someone?
8. Does the company benefit from the innovation? To what extend?
9. Is the income gained by dint of innovation greater than the spending on research and development?
10. Do the innovations influence the working process? How?
11. What is the influence of innovation on the way employees treat their job?
12. Is the decision-making process affected by the innovations? How?
13. Has the customer satisfaction increased due to the innovations?
14. In what way can you define that the innovation is successful?
15. Do you believe the knowledge to be important for the innovation?
16. Is there any training for the employees regarding the innovations?
17. Is it necessary to measure innovation? Why?
18. In what way DUBAL measures the innovation?

The answers helped to deepen into the employees’ understanding of innovation, its value on the individual and organizational level and measurement. They allow comparing this information with the data gained from the secondary sources to receive the most valid data.

Analysis and Results

The interview was conducted to define how the personnel treat the importance of innovation and to find out how they measure it. 15 employees were asked to answer the questions. These were two head departments: Mohammad Suwaidan (Head of Production Control) and Sanjeev Sharma (Head of Environment Department).

4 leaders participated in the research, including Abdulrahman Belqaizi (talent management & leadership), Mohammad Amin Fikree (training operation), Ravindra Khare (international audit) and Iman Al-Omrani (business applications). Moreover, there were 9 workers, who hold lower positions and are guided by the leaders.

On the basis of the interview, we found out that 80% of the participants believe that the organization became successful and competitive due to its strategies that encourage innovations. The rest 13.4% claimed that DUBAL became a leader in the field be dint of the employees cooperation and 6.6% believed the quality to be the key element. Mohammad Suwaidan also supported the importance of quality, as he controls the production, but admitted that it is only one of the several crucial elements (2015, pers. comm., 9 Nov.).

The innovation is significant for the company according to the opinion of 7 out of 15 interviewees (2015, pers. comm., 9 Nov.). Its advantage can be seen by dint of innovation measurement, which showed that the 133 million of savings were gained in comparison with less than 6 million saved 3 years earlier. Moreover, the milestones in such results are claimed to be achieved due to the ground-level staff’s contribution (The innovative capabilities of nations 2014).

The rest of the votes divided equally and supported the idea of innovation to be crucial and not really important for DUBAL. It should be mentioned that the department heads underlined the necessity of the organization to design brand new concepts, as they are the ones that allow it to make a step forward and attract more customers. Moreover, they have gained several awards for innovative ideas, which made them worldwide-known (2015, pers. comm., 9 Nov.).

Sanjeev Sharma underlined that many innovations made by the company are aimed at the reduction of the usage of resources (2015, pers. comm., 9 Nov.). Implementing the changes, the firm calculated the reduction of the energy used and found out that only in 2008 they have saved 6 percent of it and this number increased in 2009. The thermal efficiency also cannot be ignored, as the innovations allowed the company to reduce the waste for almost 10 percent during 9 years (Excellence through innovation 2013).

The main dimensions that influence innovativeness are not the same in the employees’ points of view. It may happen because of the difference in their involvement in the issue. Still, the strategy was mentioned by all of the interviews, which proves its significance and their wish to reach the main goal.

They also considered that DUBAL is enhancing the employees’ performance by encouraging personnel development and providing them with training as well as with leaders who will direct the workers. Except for that the innovation design is said to be supported by the rewards (2015, pers. comm., 9 Nov.).

According to the corporate review, DUBAL values its employees and provides compensation policy and strategies aimed at the enhancing of the retention of achievements (Delivering excellence 2014). Substantial rewards are provided by the organization to involve in business active participants of continuous improvement.

They include ‘EHS Councils; Suggestion Scheme; SelfActuated Teams (SAT); Continuous Improvement Teams (CITs); and High Performance Teams (HPTs), which have superseded the former Performance Enhancement Program’ (Growing stronger together 2010, p. 17).

The personnel underlined that the innovations are made due to the efficient cooperation of different departments of the company. The heads of the department claim that about 90% of the employees are involved in this process. Following the leaders, they gain the opportunity to perform excellent teamwork (2015, pers. comm., 9 Nov.).

Thus, many workers befit from the innovation as well as the whole organization. DUBAL is considered to be among the best companies in the field not only in UAE but the entire Middle East and has even won the UK and US competitions (Growing stronger together 2010). They gained numerous rewards including such things as Middle East Business Achievement Award, Idea of the Year, Businessman of the Year and others (Awards 2015).

The income gained by dint of innovation is said to be greater than the spending on research and development (2015, pers. comm., 9 Nov.). Numerical data is gained from the report presented by DUBAL, and it supports the interviews words, as the revenue changed from AED 8.670 billion to AED 11.144 billion in a year (Excellence through innovation 2013).

The innovations influence the working process, as new technologies reduce the resources used, enhances the performance and increases the quality of the products (2015, pers. comm., 9 Nov.). DUBAL DX technology, for example, ‘has progressed from the conception and modeling phases through to industrial implementation in a very short period’ as it needs no external magnetic compensation and allows DUBAL to achieve the best technical performance level in the industry (Excellence through innovation 2013, p. 7).

DUBAL identifies its success by ‘measuring performance in terms of financial results, customer focus, internal processes, and people learning and growth’ (Growing stronger together 2010, p. 12). To enhance performance, they have implemented the Business Excellence program, which occurs to be the basis of their innovations (Prahl 2000). It is used for all improvement initiatives made within the company. Utilizing Business Excellence program and Suggestion Scheme, DUBAL saved a huge amount of money.

As the employees are trained and educated, their knowledge increases greatly. They make decisions on its basis as well as on the previous experience of the company and gain better outcomes (2015, pers. comm., 9 Nov.). The company undertakes the strategy that allows them to assess the knowledge, creative thinking and experience of personnel.

The evaluation is maintained on the daily basis so that employees produce numerous innovative ideas without regard to their supervisors. Such actions are allowed due to the implementation of the DUBAL Suggestion Scheme. In this way, during 2011 more than 32,000 ideas were created. More than 20,500 of them were also successfully maintained and recognized (The innovative capabilities of nations 2014).

To promote further development, the High Performance Team approach was implemented. It allowed the company to be sure that the innovations will also influence the working process and make it more efficient. The Seven Quality Control Tools and the Lean Six Sigma approach appeared to enhance the knowledge base of the organization, which is to be used in the decision-making process to reduce the number of possible wrong decisions made by the personnel.

The Corporate Strategy Performance Review system motivates the employees to reach the firm’s goals and innovate (Growing stronger together 2010, p. 11). The innovations made by DUBAL are aimed at the streamlining of the working process. The company takes into consideration the environment protection, so they are also connected with the reduction of natural resources used. Thus, the personnel are willing to work effectively and innovate. Moreover, their achievements are rewarded, which makes them even more involved claims Mohammad Fikree (2015, pers. comm., 9 Nov.). To check if the staff has some issues a survey is conducted every 3 years (Facing the future in partnership 2013).

Customers’ satisfaction is one more element that contributes to the competitiveness of the organization. It increases under the influence of the successful innovations, and today DUBAL has lots of clients worldwide. The products are constantly changed and improved to meet the clients’ demands (2015, pers. comm., 9 Nov.).

DUBAL already serves lots of customers from 50 countries and plans to continue expanding (Aligning it with business growth strategy and globalization 2010). The clients refer to the company believing it to be the one that can provide services and products of the highest quality as they see that its achievements are appreciated in the international market.

According to the interviews, the innovation can be considered successful if the advantages of its implementation can be clearly seen. The workers claimed that the main proof of the success of innovation is the increase of the income (2015, pers. comm., 9 Nov.).

The department heads also underlined the importance of other elements that are used to measure innovation. Mohammad Suwaidan said that it is also based on ‘measuring inputs to innovation (research and development expenditures, educational costs, capital investment) and outputs (publications, patterns, workforce size, and experience, innovative products)’ (2015, pers. comm., 9 Nov.).

The leaders also mentioned the importance of fulfillment of demands, the increase of customer and employee satisfaction, knowledge and decision-making improvement. The necessity of the measurement was explained by the significance of its results. It was said that by dint of it the leaders of the organization can define if DUBAL can implement the changes needed to meet the requirements of the personnel and the demands of the environment and customers (2015, pers. comm., 9 Nov.).

The limitations of the study included the sample, time and the on dimensions needed to measure innovation. In future researches, specific examples of measurement should be included and compared with those of other companies. Moreover, the expansion to the whole Emirates Global Aluminium is expected.

Discussion

Innovation is not the thing the workers are to be always targeted at and manage as their daily duties but a key driver that should be permanently taken into consideration. It makes the owners and the personnel think of how they can improve the business and move it forward. Without the innovation, the company is likely to yield to the competitors, lose key employees and operate ineffectively in general.

It evolves the business making the personnel develop and enhance their knowledge. To innovate successfully, people are to understand how to use and combine different elements, such as resources and technologies, etc., for the company to use them in a new more advantageous way.

In this situation, the staff starts to perceive their job differently, and they are likely to be willing to undertake more responsibilities. Innovations also attract customers and make them purchase goods and services, which is beneficial for business. Moreover, by interviewing them, one can understand what is needed to be implemented.

Innovation measurement is vital for the organization. The innovation performance depends on the investment and labor force directed to research and development, as they are the critical elements targeted at the creation and design of new items, services, and operational strategies. In organizational perspective, the innovations are measured regarding their impact on the firm’s competitiveness, profitability, market share and meeting customer’s needs.

At the individual level, innovations depend on the personnel’s motivation and the way they are enabled to innovate. The innovation metrics include not only the easy-to-measure dimensions (income, education costs, employees involved) but also more abstract ones (knowledge and decision-making improvement, fulfillment of the requirements, customer and employee satisfaction).

Any organization can calculate the revenue to measure innovation, so we focused our attention on the improvement of innovation performance and dimensions that are difficult to measure.

Referring to the DUBAL’s example, the organizations can get to know how to spread shared views on the organizational purposes among the employees so that the majority of the workers will define the innovation as one of the main perspectives of the company.

Good innovativeness is one of the things the workers support, as it makes them highly involved in the operations and proud of their work. DUBAL promotes the Business Excellence program that is maintained under the umbrella approach. This recognition strategy integrates all initiatives under one program and reduces time and costs needed for the implementation.

The implementation of the High Performance Team approach helps the leaders to promote employees’ development. It allows DUBAL to be sure that the innovations influence the working process and make it more efficient, so can be advantageous for other organizations also. Moreover, the Seven Quality Control Tools and the Lean Six Sigma approach improve organizational knowledge and decision-making process.

The survey conducted with the employees every three years allows the President, CEO and other leaders find out what the workers think and want to share. The workers can report the most serious issues anonymously for the leaders to pay attention to them and design solutions. In this way, they can implement organizational changes that will meet the personnel’s demands and requirements, which is likely to make them more satisfied with the job.

The Corporate Strategy Performance Review system is more than just beneficial for the company. Being maintained utilizing the Balanced Scorecard format, it motivates and encourages the employees to reach the firm’s desired goals and provide advantageous innovations to streamline this process.

In this way, all levels of organization are taken into consideration. Thus, innovative ideas are evaluated ‘in terms of financial performance while helping to achieve future growth by measuring performance in terms of financial results, customer focus, internal processes, and people learning and growth’ (2015, pers. comm., 9 Nov.). The achievements are seen at organizational and individual levels due to the awards gained by DUBAL.

The innovations also allowed DUBAL to become the leader in quality. Their services are applied to the Quality Management System standard, which allowed the company to gain awards. Being friendly to the environment and realizing the problems Dubai face regarding the resources, DUBAL is constantly searching for the innovations that would make the usage of energy more effective. So they refer to the efficiency-improving measures rather often.

Conclusions

The literature research and interviews proved that innovations are significant for DUBAL. While measuring innovations they consider different dimensions to check if the company can provide new advantageous concepts and products as well as to assess organizational success in the field. DUBAL finds it crucial that their ability to measure the effectiveness of innovations including those related to the organization operations, quality of services and energy conservation.

It provided them with the opportunity to define cost reductions, which made the company more stable financially, and decrease negative effect on the environment, which attracts the customers and makes the firm competitive. Thus, financial perspective, knowledge, networks and context are to be assessed with the help of quantitative researches and qualitative surveys to measure innovations.

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