Back to all episodes

How to do product innovation in MSP

| PODCAST 16.05.2023
What is the episode about?

In this episode, we talk to Paweł Huchla - president of the company's management board and co-owner of Inquel - at the same time a manager with an MBA, a programmer and a passionate sea sailor. 😊
In this episode you will learn what challenges SME companies face when they want to introduce a new product (or innovation) to the market. We will talk about how to turn these challenges into solutions. The “cherry on the cake” will be the topic of obtaining financial resources for development.

For those who prefer to read rather than listen, we have prepared a transcript of the entire episode.

Welcome to Inquel Talks. If you're listening to this podcast, you're probably looking to increase your competitive advantage by using technology, electronic devices, and software. If so, you've come to the right place. In this podcast we will talk about the latest trends and technological solutions. Thanks to them, you will be able to increase the efficiency and effectiveness of your business. This podcast will also include practical tips and advice that will help you fully use the potential of technology in your company. Inquel Talks is conducted in simple language, so you don't have to be an engineer to use it. Our goal is to help you better understand how technology can help you build a competitive advantage. Well, let's get started.

[T]: Good morning, I would like to welcome you to the next episode of Inquel Talks. Today my guest is Paweł Huchla, president of Inquel, and today we will talk about a super interesting topic from my perspective, but not only from my perspective, but also from the perspective of small and medium-sized entrepreneurs, the vast majority of whom in Poland. And what we will talk about today is how to do and how to carry out product innovations in companies from the small, small and medium-sized enterprises sector. Hello Pawel.

[P]aweł Huchla: Hello, welcome.

[T]: Well, Paweł, I think we'll get to the point, after a short introduction. Well, what we want today is for you to share your expertise, experience and knowledge on how to introduce such product innovations in SMEs. Listen, let me start off on a serious note. What do you think are the most important challenges that SME companies face, you know, when they want to introduce product innovation?

[P]: Before I answer your question, one more sentence of introduction. For me, this is also a very interesting topic and it's hard to even talk about it in terms of curiosity, it's my everyday life. This is something I encounter every day when talking to our clients about their new ideas, new products they want to introduce. And solving these challenges is extremely interesting, yes, watching how they deal with it and how we help them deal with it. I wanted to say that this is probably the coolest part of my job. However, returning to your question, what are these problems, there are several of them, they can be grouped in a certain way, I will try to discuss the most important ones one by one. Generally speaking, everyone, the first answer they would give is funds for implementing a project. Project always equals financial needs and this usually comes first. However, I must say that nowadays, when it comes to financing, after a short conversation it turns out that this is not the main challenge at all. Indeed, smaller enterprises have smaller budgets, it is true, but smaller enterprises, in turn, have greater access to subsidies, greater access to external support, and the use of external funds and external assistance may be faster in their case. This flexibility of a small company means that decisions are made faster, companies to cooperate with and decisions about cooperation are made faster. Listen, sometimes it happens that I talk to the owner of the company and we have a cup of coffee, high five and start the project. In the case of large companies, it has to go through management boards and management, and sometimes it takes a very long time, although we have already done such processes. Maybe I will come back to this financing later, but less obvious issues include, for example, difficulty with access to technology. Small businesses are focused on their core business and specialize there. If they sell a specific product, they are masters of that product. If their innovation is to involve the introduction of electronics, e.g. or was even knowledgeable about this topic at all.

[T]: Sorry Paweł, I'll come in… My observation is also the same. Technology is changing very quickly, it is very difficult for one person to stay up to date with the changing technology. Is this also from your experience, or does this also come up in your experiences? Maybe yes…

[P]: We are talking about two levels of access to this technology in general, because the obvious thing, at least for me, is that technology means engineers who know this technology. And small companies in the SME sector are not able to build their business on the side and build entire R&D, which will be able to possess and develop this knowledge only for the needs of their one product. For example. This doesn't even make much business sense at all, but I also started talking about different access to technology here. Remember that in order to create a new product and talk to the company that will develop this product, you need to be able to talk to this company, right? This is what entrepreneurs who are at different technological levels come to me with. And you have to talk to everyone differently. And sometimes people come to me who are so involved in their business that they are simply not interested in electronics at all. And it is very difficult for them to talk about this electronics at all. Firstly, and secondly, they are completely unaware of the great possibilities offered by electronics. And this is also the barrier to access to this technology. No awareness at all of how it can be used and what the possibilities are. So my task and the task of my sales team is, at the first stage, to find out what technological level the company is at and adapt this language to their level, so that there is, let's say, some kind of technological equalization. At least at the level of this perception, right? Where, after explaining what they want, can we, when telling them about our ideas, use a language that they understand, right? This means that one idea very often gives rise to completely different ideas later, because for someone who didn't realize that something could be solved with simple electronics, this idea opens their mind to more and more ideas. We talked a bit in a different direction, but coming back to your question, very often, especially in the case of Polish companies from the SME sector, we are dealing with the my-company complex. Someone comes and says: you know, I have this idea, but with the big ones, I have no chance. They will do it better and they certainly have more resources, so it will be better for them. And this is not true, because we have large projects behind us, let's take Szumisie, for example, where the company successfully competed with global brands and, not being afraid of a challenge, they created their own product and won. That's why I believe that, first of all, you cannot confine yourself to your smallness. And somewhere recently I heard a very wise statement, which I subscribe to with both hands, that self-confidence and belief in success are very important in business. There are two other factors, but that's for another podcast, but without this faith it's hard, right? And our task, also in cooperation with potential clients who want to introduce innovations, is to convince them that this innovation is at their fingertips and that they can use it. And it has nothing to do with their size, because we can design modern electronics in Poland and then produce them, scaling this production to their needs, so it's not like they have to buy ten thousand pieces of their product that they developed with us. They can only start with small batches and test this market, right? This, this opens their eyes and they say: I didn't know, so I make this product.

[T]: Ok, so this size is also related to the issue of, I would say, limitations and entrepreneurs not noticing some flexible cooperation models, right? In the sense that there may also be some mental barriers or those resulting from insufficient knowledge about how different companies can provide, let's call it different, solutions. This means that there are also more flexible solutions than, for example, ordering a whole container of devices from China at once.

[P]: Yes, yes, yes, that's exactly it. Another such challenge is something I mentioned earlier, i.e. the lack of research facilities, the company's lack of access to high technologies and the cost, the barrier to entry into this technology, yes. Here I definitely recommend establishing cooperation with a company that has the know-how and this technology. And in the process of talking about innovation in general, it is very important to examine whether the company we are talking to has know-how tailored to our problem. Maybe I'll say it with an example, because it illustrates it better. If we want to make a device that will introduce Bluetooth solutions to our devices, communication with, for example, a smartphone, we should choose a company that has competences, i.e. has in its portfolio some products that are based on Bluetooth solutions and mobile applications, it gives us a guarantee, first of all, that we are dealing with a partner who will provide us with a solution faster and cheaper. What's more, they have solutions that are proven, i.e. they will not experiment on us, they will only provide us with a solution that, for example, works, as in our case the Bluetooth solution, in hundreds of thousands of devices already introduced to the market.

[T]: Okay, listen, thank you for the first part, to sum up, I found four things, i.e. four challenges, facing SMEs. Lack of funds, which can be solved thanks to this, thanks to, I would say, subsidy programs, co-financing, right? Difficulties with access to technology within the company itself, this access can be sought from external, let's call it experts, suppliers. A complex for a smaller company, you are talking about attitude and cooperation with people who can provide knowledge. But what is the advantage of small companies is, above all, flexibility and such unspoiled, sometimes unspoiled thinking, I would say so, right? And the last thing, insufficient research facilities. Dear entrepreneurs, it is also worth supporting external entities, be it companies dealing with research and development or scientific units. It is definitely worth keeping in mind that with some problems it is worth going to a specialist who will solve a given problem for 10, 20, 30 years and will save us these 10, 20, 30 years of getting to know each other.

[P]: Well, you know, maybe if someone listens to us, they will think, there was no Bluetooth 30 years ago, what experience does he have in electronics, right? But let's remember that electronics is old and our team includes people who have been working with electronics for so many years and there are aspects of electronics that do not change. Analogue electronics, which must accompany digital electronics all the time, is an example of a field where this experience is accumulated for years, this is a very difficult part related to electronics and gathering people with such experience for companies that are medium-sized and focused, are on their own product and they can't really go beyond the area of this product, well it's complicated.

T: Ok, thanks. Let's move on to the second issue I wanted to raise. In your experience, do companies have trouble finding an idea for a new product? What's going on with these ideas? Are these ideas of good quality? Do they exist at all, are they of good quality? How do you rate it?

[P]: You know what, I consider myself a very innovative person. I love inventing new things and it often happens to me that I wake up in the morning and think to myself, oh, this is a cool idea, right? To answer your question about where good ideas come from, I can then say, I don't know, I just didn't dream about it, I have no idea, right? However, of course, there are certain methods of conduct and recommendations that we have for our clients that help with this. The first thing is to analyze the needs of your customers. Well, my morning innovation with which I woke up may be a great idea, but if it does not solve, sorry, does not solve any problem, then it is worthless from a business perspective, right? However, we, of course, run businesses and do it to make money, so we must bear in mind that our innovations must solve the problems of our customers, and observing our customers, talking to them, analyzing their needs is the best method to learn about their needs, Yes?

[P]: Many of the products we have made for our clients have come from this, this analysis. The second good practice is to constantly monitor the competition. I can boast that we do it together with our clients, we even go to trade fairs where our clients exhibit, we observe the stands right next to them, we see what is happening there. In order to discover technical innovations on the market together with them and also be inspired. Because it often happens that, God forbid, it's not about copying, right? Because in order to provide value by copying a certain solution, we limit ourselves in some way, right? It is much more interesting to propose something new, something that the market does not know yet.

[T]: Well, you know, it's often said that copying with style means, more or less, looking at what the competition is doing, thinking about what you can do better, how to better solve the user's problem. So combining these two elements, I absolutely understand. I hope that, dear listeners, you also see this need. It is said that it is no longer possible to invent anything new in music, all sounds have been created and now it is their different interpretation.

[P]: Yes, even this definition of plagiarism in music is starting to no longer apply, because it was four notes in a certain order, a certain repetition, it was already plagiarism, now it turns out that it doesn't matter much anymore create, right? However, copying, I simply don't like this word because it has a pejorative meaning in Polish. However, based on a certain solution, providing something better, something that solves more problems, that's what I'm talking about. We have an example of a client who produces heating cables with which he melts driveways in front of places where large trucks enter, instead of doing it with a snow shovel, a special circuit is switched on. They used controllers from the market, but these controllers often broke down, they could not be managed remotely and there was often a situation where a service technician would come and the sale took place throughout Europe and change one setting, increase the temperature by one and everything would be fine. intervention. We met with them, examined their needs, saw what it was about and created a new driver for them, or did we copy the other one? No, functionally our version included the functions provided by the competitor's controller, but we added remote access, automatic monitoring, and weather forecast checking, for example, to adapt the system to external conditions. This means that we delivered a product that solved many of the customer's problems and, thanks to its reliability, reduced service costs.

[T]: Great, very nice example, thanks.

[Q]: What's next? Cooperation with other companies, well, I should mention that first, if I wanted to advertise, right? But listen, it's true that only I have such experience, only a clash of thoughts, talking through the problem with someone who has a completely different view of the problem allows us to develop surprisingly interesting solutions. And that's why I strongly encourage you, it's always easiest to talk to existing clients, so I encourage them to do so, so that if something comes to my mind, a new idea, they come to us with this idea and check the feasibility of implementing it. They checked and what would happen when the idea of a man who knows the industry perfectly collides with a man who knows the technology perfectly, right? And really interesting things come out of it, we have a lot of such projects together that were created this way. And trying, right? Because without trying, we will be locked in our, in quotation marks, room where we will test the solution in our heads, it will never work, right? It won't be something that will appear on the market.

[T]: Maybe so, do you have anything to add or should I skip ahead?

[P]: You know what, this is a very broad topic. I think we have other issues to discuss, so I propose leaving this topic. If…

[T]: I understood.

[P]: … it will interest someone and we will see that there are questions in this area, we can make a separate podcast for this. Because this is a very interesting issue in the field of innovation.

[T]: Ok, so yes, we have several ways to answer where to get ideas. That is, analyzing users or our customers, monitoring competition, and cooperating with other companies. Okay, we have limited resources now and it's not even about money. Such a basic resource is time, which is limited and, as you said, you are quite innovative, prolific when it comes to opening new things. And somehow you have to decide which projects you engage in and which you don't. Because it also sounds very beautiful about it, dear ones, come to us with everything, I understand. On the other hand, I was not born yesterday and I already know that, like you, like me, like every one of our listeners, I am sure that every day I ask myself the question: what do I need to do, what do I want to do, what is necessary for my business, and what can I resign? And now, with this long introduction, how to choose the projects that we continue to implement?

[Q]: You know, this is a form of investing, right? Investment is risk and here all methods of dealing with risk in business and investing work perfectly. First of all, a new product is about cost. A new product is associated with risks that may arise during the development of this project. The project can fail, right? A new project is the time we have to prepare it, and time is also competition. Because we must know that it rarely happens that we have the comfort of working on something new, and the entire market is waiting for us to finish and introduce a given solution. When assessing projects, it is very important for us to take a broad look at all these problems. So we sit down with our client and carefully analyze what the resources are, what his time expectations are and what these time expectations result from, right? Because this is also important.

[T]: Paweł, I'm sorry, I would like to do one more thing. I understand that you can sit down and collect this data and that is necessary. My point is, I'm an entrepreneur. I have 10 ideas and in other words, each one is quite complicated. How do you choose 3 from your experience? So we have a very simple exercise. Of the 10 ideas that have appeared over the last 2 weeks after I got up in the morning, I know that I will be able to talk to you about 3. So what should I do to choose the most optimal and promising ones? What to look for? What to look for?

[P]: First of all, I would like to congratulate you on so many good ideas.

[T]: I don't know which ones are good. I want to choose the 3 that are good.

[P]: If you have 10, it's already great. You know what? This is a difficult question, because sometimes I like to be guided by the flash too, you know? And for me, the flash is something that I can't explain. So it's going to be hard for me to do it here too. If I had 10 ideas, I would definitely choose one that has a sparkle around it. Just like that, right?

[T]: It's me… Sorry, but I'll take it further. That flash.

[P]: Wait, I have two more. I'll tell you what about the other two. I'd save this one for that sparkle, you know? Because, with all due respect to my knowledge of my market and how I know my business, following my heart and checking with a person who is familiar with technology and can evaluate this idea makes sense in my opinion. So this is an area where it is worth taking a risk. I would choose the remaining two projects not from my heart, but from my mind. And here we need, well, modest, but some analyses. It is worth considering in those areas where we have facts. It is very important to base such decisions on facts. And our clients operate on facts in the area in which they are familiar, i.e. in the analysis of their market and in the analysis of customer needs. So it's best to choose projects that have a high chance of market success, i.e. they meet the specific needs of our customers, which we know about and we know that they are willing to pay, right? That this added value is greater than the later cost incurred when acquiring such a product. The second thing is the time perspective. But you have to be very careful here, because it is difficult for our clients to estimate how much time such a project will take without consulting us. However, there is no point in getting involved in projects from our perspective, i.e. innovative electronics projects. Which must enter the market faster than in a quarter. So this is the minimum period when you can even… So if we have an idea that looks like this: if I launch a product in a month, I will be successful, this is not an electronic innovation project, for example, right? Introducing a new product takes some time and at least a quarter is the time we need to build a prototype and be able to take it to the market to test it. How does the market react to such an innovative product? Well, maybe I'll sift out a few of your ten ideas here. I was talking about clients. Competition is also important, right? Well, we need to perform a simple test that will confirm that our product is indeed innovative. Unfortunately it is…

[T]: Innovative or unique, or both?

[P]: You know what… I mean innovation here, as well as uniqueness, right? Because when you introduce something innovative to the market, it has to be unique to me, right? However, once you introduce it, it is no longer really innovative, because it has already been developed. Someone is selling it. So for me, checking this innovation means checking whether it is already… Because it is innovative in your head, and now you will check whether it is really so in the market. And unfortunately, I have such a sad experience that human ingenuity knows no limits. And a lot of things have already been invented. And it often happens that someone comes to us with a very cool idea, we do simple market research, it turns out that such solutions are already on the market, they are doing well and it is a good idea. The only question is whether we want to enter into a product that is already on the market, right? Let's remember that we are talking about innovation here, so maybe I won't start the topic now, it may be a good topic for another podcast, how to introduce and develop products that are already on the market and we want to compete with our competitors. However, if we want to introduce something innovative, finding it on the market for me means excluding the idea from those ideas for implementation. I think that's all, you know, because at the very end I will say that I have it in my head to come with all ten ideas to this partner, my technological one. And  I would say about everyone. Because only then can we jointly assess all the aspects that are important when making such a decision.

[T]: Ok, let me ask you an even more precise question, because one thing comes to mind, going back to the very beginning of our conversation. Financial constraint, no? As if regardless of the latitude and longitude of your wallet, there will always be some kind of limitation. How to approach it, you know, when choosing an idea I will come back to it again. How to choose an idea considering whether you can make money from it or not? Because you also mentioned one problem, that everyone thinks that it's… I mean, they don't want to spend money on it, that's one thing, but another, I understand business and my experience says that in the end, if you act , then you want to make money and you need to make some financial analyses. What would you recommend here? Or what would you pay attention to when choosing a given project?

[P]: You know what, there are two aspects here. The first aspect is the financing of a project that aims to develop some kind of innovation and, in fact, an innovative product, because we are not talking about innovation itself, we are not talking about strictly university research, I would say. We are only talking about business here, which means that as a result of our actions we must obtain a finished product, which we implement into production and then it goes to the market. The first thing is the costs of this development, and the second thing is the price at which we can enter the market with such a product. In other words, can our idea be produced at such a price that someone will want to buy it, could buy it or could even consider buying it, right? And these two issues need to be considered separately, actually. When it comes to the costs of project implementation, my recommendation is to ask, talk and check. Because I have seen many valuations of this type of research and development work and the range of costs of such a project is gigantic. Therefore, dear entrepreneur, if you make an inquiry to an R&D company and receive a response of PLN 1 million, do not throw this project into a drawer, but ask another company and check with others. Because here I will come back to this know-how of companies. If the company has know-how in an area that can be perfectly adapted to your innovation, this project may be much cheaper than a company that will introduce such technology from the beginning. And it will try to pass on the costs of acquiring this new know-how to you. The second issue is looking for external financing. Very good prospects are opening up for us at this moment, and I think that it is a very good moment to try and try to reach for such additional, external money. For example, we cooperate with companies that specialize in subsidies and are prepared to take over projects from us and support our business partners in obtaining additional funds. However, when it comes to the issue of introducing the product to the market, the unit price will determine whether the product will actually be a market success. You can't forget about it, for it to work, someone has to pay for it, someone has to buy it, and this is the knowledge, dear entrepreneur, that you must have. You need to know your market, know your customer's needs and know how much they are willing to pay for innovations. You come to us with this information and, unfortunately, be careful. The approach of not giving this unit price, because if I do, they will produce it for me at this price, is a wrong approach, because it prolongs the talks and creates a kind of ping-pong that will lead to some compromise that will not be entirely beneficial for really satisfying for both parties. Giving the expected market price at the beginning and matching the solution technology to it gives much better results. And in this final form, let's remember that you can open your device that you get from the company that produces it. You can write down all the elements that are inside. You can price it and you will know how much the production of this device costs. That's why there is no fear, at least in cooperation with us, that when we hear 100, we will sell for 100, even though we produce for 1, right?

[T]: Ok, Paweł, I would sum it up this way: this financial issue, as I understand it, also involves doing some analyzes and adding a business model to it. So if it produces for that much in my market, we have distributors who impose their margins, logistics, marketing costs, etc. This needs to be taken into account in some financial analysis.

[Bird. This is your knowledge. We can price unit production for you, but you have to put your business models on it and consider whether it makes sense.

[T]: Sure. Thanks, Paweł. I'm really glad. We are slowly approaching the end and I have a very open question. Do you have any tips or the most important thing about how to do product innovation in SMEs that you would like to share at the end?

[Bird. I think if I had to say one thing, I would say: test, test and test again. I don't believe in innovations that are worked on in laboratories for months and suddenly a product emerges that is supposed to be a revolution on the market. In my opinion, the best method is to work on, constantly work on the product and constantly research this product, check it, modernize it, change it, adapt it to the market. Because in this way, nowadays we can provide value to customers, in the way they are accustomed to it. We are here now, we live in a world of rapid changes. Customers expect that… This is what applications on our phones have accustomed us to. We are constantly updating them, we are constantly looking for a new function, a new icon, a new solution. You can function in the same way with electronic devices. They can be quickly adapted and changed. The technology, for example, that we offer to our clients, we specially select this technology in such a way that we can quickly update the software, change functionality, develop on an ongoing basis and adapt to customer needs. I think that this is also the basis of our clients' business success thanks to this cooperation with us, that we can quickly adapt it. Here, too, there are often constant discussions about whether it should be in China or not, this is one of the arguments, listen, because the cycle of work on a project that is constructed in China is between 2 and 3 months. So we can count on the fact that every 2-3 months we can report a defect or modification and after that time we will obtain a prototype that will be ready for testing. In cooperation with us, we sometimes shorten it to even 2 weeks.

[T]: Ok, so I would sum it up, test, test, test. This is because the world is changing, users are changing, so whether it is systems, devices, or something that solves users' problems, it should adapt.

[P]: Yes, that's right, and besides, you know, humility, well, great, something that you think is a great idea doesn't have to be a great idea for others, right? This needs to be checked and this is also testing.

[T]: Great, Paweł, thank you very much for the interview. All the best, ladies and gentlemen. And see you soon.

[P]: Thank you very much, greetings to everyone, goodbye.

Episode guest:
Paweł Huchla
Prezes Zarządu, współwłaściciel - INQUEL
W Inquel do moich obowiązków należy kontakt z klientem, szczególnie, jeśli zaczynamy dopiero współpracę. Nawiązuję też relacje biznesowe, które często przeradzają się we wspólne projekty. Dużo uwagi poświęcam strategii rozwoju firmy. Przyglądam się również powstającym projektom i staram się wnieść do nich nowe spojrzenie. Bardzo cenię sobie pracę z ludźmi, wiele przyjemności czerpię ze słuchania ich i stwarzania im najlepszych warunków pracy.