INNOVATION-BASED ECONOMY

Portugal 2019 | ECONOMY | VIP INTERVIEW

TBY talks to Jorge Portugal, General Manager of COTEC Portugal, on innovation, “Industry 4.0,” and aerospace clusters.

What is the importance on innovation in the Portuguese economy?

COTEC is framed upon the vision that our economy has been through a transformation from low-skilled production toward the opening of our markets, transitioning to an economy based on innovation, variety, small batches, and high speed. As a result of innovation, companies have acquired new knowledge and developed more technologically advanced products. One of the key capabilities necessary to move into a different business model is to be able to manage innovation processes, and this is where COTEC comes in. We frame capability into several pillars: alignment between the market strategy and innovation strategy, human resources, culture, new knowledge sourcing, project management, open collaborative networks, funding and the protection of industrial property at a time of stronger value integration. User protection is critical now that one is sharing information with their customers and clients. Protecting one's know-how is the ultimate means of boosting one's competitiveness. We are focused on this key issue that companies face when they integrate more closely with clients.

What are COTEC's key objectives?

For us, one of the key aims is to generate open innovation and collaborative networks. Many companies improve their production lines and value chains, though they do not work with outside external partners. Some already source knowledge from universities, though not yet from business peers. COTEC is a network that brings companies together. We are not focused on any sector or specific level of company development. From the outset we looked to create synergies between SMEs and large companies as a key mechanism for promoting economic growth. We now see a growing interest from larger companies to address the innovation problems they need to solve, and they believe interaction with SMEs with specific skills from other sectors may bring in additional expertise that can help. Working with the government also plays a major role, and Industry 4.0 is a great example of identifying innovation barriers to be overcome.

To what extent can a culture of innovation act as a catalyst for job creation, and what impact can it have on supporting SME development?

The typology of our economy is one of the few large companies without much potential to grow, and therefore our growth potential is in moving SMEs to different stages of scale and impact in terms of turnover or employment. From that perspective, we demonstrated a strong correlation between innovation and the ability to manage these processes with a proprietary maturity framework called Innovation Scoring. We demonstrated also the growth potential of SME companies. This would have a growth impact on the national economy of approximately 0.5% of GDP. Innovative SMEs create more and better-paying jobs. Because they are more profitable, they play an important social role since they distribute more profit across society. This growth model supported by innovative SMEs is a sustainable one, both in terms of business growth and achieving quality employment. SMEs in the COTEC network are on average smaller and stuck in that trap between size, scale, and level of innovation. They have many opportunities to grow but simply do not have the resources or financial capital to address those opportunities.

What initiatives have been the most effective in achieving COTEC's core objectives?

For example, Portugal's aerospace cluster has been evolving for 100 years. During this time, a number of companies active in maintenance, transport, injection-molding, and metals have been entering the market, and it has been growing strongly over the past decade. In 2004, Brazil's Embraer bought OGMA from the Portuguese government and in 2008 it opened two factories. Other international companies followed in the last years. For the cluster of activities, Portugal is currently in the extremely selective club of aeronautic manufacturers. There are almost 200 companies in Portugal working in some way; however, this is just one example and there are many more. We need to stimulate a cluster of activities in order to extract the growth potential because most are highly capital-intensive and knowledge-intensive and able to provide quality employment. They provide many positive externalities with a great deal of networking in terms of collaborative innovation and high potential for growth. As aeronautics, we can identify several clusters, including food, the agro and pulp and paper industry, tourism, and health as having excellent prospects for new growth and investment.

What image you would like the international investment community to have about Portuguese innovation?

In the last 25 years, we have been building an international case to have the appropriate talents and capabilities in different areas. We have well positioned universities that are training researchers and professionals in management and engineering with one of the best engineering faculties in Europe, and the best proof of the way we train engineers and managers is the success of the Portuguese abroad. A number of sectors have been transformed into innovative businesses and we are able now to use not only the supply capabilities, but also have markets and business that can use those innovative capabilities. What we need is external investment to boost and consolidate these areas of high-value activities. More investment will have not only a direct effect but a multiplying one because the country is ready to grow on the next-generation demand. We already have the connections between the companies and universities that supply the source of knowledge; however, we also need a great and international partner network. COTEC may help to bring together and activate those cross-country networks of innovation with what we call entrepreneurial discovery, which is not only about the business people and entrepreneurs but the scientists, technicians, and companies that supply technologies.