TI05 - September 19

Which impact do innovation awards have in the companies’ business?

The multiple awards that companies and the Portuguese researchers have been stacking up leads to business, and leverages the reputation of the whole rank. However, the message from the entrepreneurs is clear: it’s necessary for communication to be effective, so that the final customer, namely the foreigner one, has the perception that the Portuguese textile and clothing industry is, at a larger scale, the avant-garde of what best is made in the world.

António Freitas de Sousa

The accumulation of prizes that highlight the Portuguese textile and fashion innovation – one outstanding characteristics of their DNA, which turned them into success cases, both inside and outside Portugal’s borders – is, simultaneously, cause and consequence of the industry’s reputation and credibility.

A clear symptom of the virtuous matrimony between companies, universities and advanced research centres, the awards are also capable to contribute directly to the rise of business margins, closing of the development cycle which is, ultimately, its very reason of existence.

“Awards are not all the same. Those that focus on the companies are the ones that bring the most immediate results. When, for example, in a contest associated with a foreign trade fair, a company is awarded and the products exhibited, that has an impact on the international market”, explains Braz Costa, general manager of CITEVE, one of the top research centres in Europe. “Then there’s another type of awards, maybe more technological, that have no direct influence on the company’s business, but has consequences in the medium and long terms”, reputation wise. “The Portuguese textile cluster highlighted position amongst other innovative countries may not have an immediate effect on sales, but has an extremely positive effect”, underlines Braz Costa.

Precisely to boost this effect, CeNTI, the institute that undertakes research in the areas of nanotechnology and smart materials (associated to CITEVE), of which Braz Costa is also a manager, “is the entity in Portugal that holds the highest number of patent requests: 110 since 2010, 16 granted and 40 at an advanced phase, which is remarkable because it is a painstaking process” and extremely thorough.

Paulo Vaz, general manager of Associação Têxtil e Vestuário de Portugal (ATP), has no doubts regarding the efficiency that innovation awards have in terms of producing an outstanding general image of the sector at an international level, leaving the competition far behind.

Agostinho Afonso
“The margins are always strict, but more innovative products allow the company a better margin”
“Awards are a great reputation stimulus – straight off from a communication standpoint – which is very good, collectively, for the sector’s image”. If these awards are, in some way, a differentiating drive, they also imply a continuous investment – not on the awards itself, but in what the awards point to: a company’s direction.

The impact on revenue and even business margins, “if not immediately, it will certainly be felt in the long term. It should not be pure pride, they have an economic objective in mind”, added Paulo Vaz, highlighting that “the awards that companies have been accruing are not a part of that ‘prize industry’”.

As for the possibility to make a direct alignment between innovation prizes and business margins, each company is its own case. Let’s look at two opposite examples.

For Agostinho Ribeiro, Têxteis Penedo’s executive director, “innovation prizes give visibility to a company, which enables the access to certain business niches that would be otherwise out of reach. The margins are always controlled, but more innovative products allow the company better margins”. In the matter of reputation, there are no doubts: “it is extremely important for the sector and for Portuguese textiles, especially at an international level”.

On the other hand, Rui Castelar, head of SIT, states that “awards are an asset, no doubt, but I don’t find it feasible to make a direct correlation between prizes and margins”.

An idea shared by Miguel Pacheco, of Heliotêxtil: “If an innovation award isn’t artificial, I believe it motivates companies with the acknowledgement given, but does it translate in terms of business? In many cases yes, in others it’s collateral”. At any rate, the importance stands, also because “they are a way of consolidating the image of the sector in the international markets, for the visibility they carry”.

Rui Castelar, SIT
“Awards are an asset, but I don’t see a direct correlation between prizes and margins”

However, Miguel Pacheco finds that the sector is exposed to what one could call the ‘prize industry’, and highlights the need to ascertain “those that are really worth from those that are worth almost nothing”.

Paulo Augusto de Oliveira understands, however, that “in terms of visibility, awards are always positive, but the business practise might not correspond since there are prizes awarded to products with no commercial interest. However, that might end up generating synergies that help to sell other items. I don’t see a direct relation between prizes and awards, but the reputation that spreads is a very positive aspect”, enhances the CEO of Paulo de Oliveira.

Mário Jorge Silva, of Tintex, turns the attention to a subject that his peers have given little visibility to: “companies’ difficulty to make their awards known” and, moreover, having difficulties to draw their utmost importance. “Tintex, at the same time it wins awards, it also holds a very well-structured marketing and communication campaign, letting the client realize our strongest assets: our development efforts. This is the reason why our average prices have been rising. Communication is fundamental: we must make the client perceive our real value. I don’t understand nor accept that, if we have a better product, it should be sold for less than those in other countries”. “Innovation must be transformed into results. It must be an investment rather than a cost”, concludes.

The entrepreneur’s verdict, besides a valid opinion, it’s a statement for the whole industry: closing the virtuous cycle of innovation is only possible when the investment undertaken is transformed in revenue, and on the rise of margins and profits.