Next Generation – Planray Case in family transfer, Innovation renewal and expansion
Published on 21 November 2018
Finland
This is the good practice's implementation level. It can be national, regional or local.
About this good practice
Problem Solved:
The successful innovation renewal and expansion of a SME through a generation shift case. The operator is a family owned Industrial automation manufacturing company, Planray Ltd from Kainuu region. The transfer was initiated through the following business level and organizational challenges:
1) A need to scale-up turnover, reduce market vulnerability 2) unconsolidated product portfolio 3) zero level of activity from the company’s board of directors 4) Lack of process and planning for innovation management(acceptance and integration) 5) retention of tacit knowledge
Process
1. The buyer was decided well ahead of time
2. Transfer of Implicit knowledge was solved successfully in this case, firstly by the nature of the transfer (family succession). Secondly the crossfade approach maximized the retention of knowledge from transferor to transferee also using advisory services. Crossfade ensures smooth transition of tacit knowledge from seller to buyer.
3. Innovation renewal was secured by conducting a range of R&D projects with public funding assistance.
4. Innovation integration was implemented and provided the basis for business expansion through action plans from the R&D initiatives.
Regional orchestration:
Confederation of Entrepreneurs (advisory), ELY centre (advisory, funding), Regional council (funding), Finnvera (BT services), KasvuOpen event (Legitimate external benchmarking).
The successful innovation renewal and expansion of a SME through a generation shift case. The operator is a family owned Industrial automation manufacturing company, Planray Ltd from Kainuu region. The transfer was initiated through the following business level and organizational challenges:
1) A need to scale-up turnover, reduce market vulnerability 2) unconsolidated product portfolio 3) zero level of activity from the company’s board of directors 4) Lack of process and planning for innovation management(acceptance and integration) 5) retention of tacit knowledge
Process
1. The buyer was decided well ahead of time
2. Transfer of Implicit knowledge was solved successfully in this case, firstly by the nature of the transfer (family succession). Secondly the crossfade approach maximized the retention of knowledge from transferor to transferee also using advisory services. Crossfade ensures smooth transition of tacit knowledge from seller to buyer.
3. Innovation renewal was secured by conducting a range of R&D projects with public funding assistance.
4. Innovation integration was implemented and provided the basis for business expansion through action plans from the R&D initiatives.
Regional orchestration:
Confederation of Entrepreneurs (advisory), ELY centre (advisory, funding), Regional council (funding), Finnvera (BT services), KasvuOpen event (Legitimate external benchmarking).
Resources needed
Total value of the internal ownership transfer process (share capital), approximately 50 000€.
The total funding, including both public and private contribution, for the company’s innovation renewal process was approximately 0.5M €, pvided by ERDF (x2), ESR (x1), TEKES (x1).
The total funding, including both public and private contribution, for the company’s innovation renewal process was approximately 0.5M €, pvided by ERDF (x2), ESR (x1), TEKES (x1).
Evidence of success
The Innovation renewal introduced four new intermediary products to the market, cooperation with distributors in China through a market placement strategy and the need to recruit four staff. Turnover up 60% from 2015 to 2016 and profit up 10%.
The Succession enabled the transition from indirect export sales to direct export sales. Lack of board activity was solved, the previous CEO is now currently acting as the Chairman of the Board, providing a permanent advisory role.
The Succession enabled the transition from indirect export sales to direct export sales. Lack of board activity was solved, the previous CEO is now currently acting as the Chairman of the Board, providing a permanent advisory role.
Potential for learning or transfer
A change in ownership provides a good opportunity for innovation renewal,This good practice is readily transferable to other SMEs/regions based upon the following:1)Trust between buyer and seller must be established. 2)Acceptance of innovation renewal is of equal importance, businesses considering generation shift options must also be audited for product/production process innovation performance, and if not conduct innovation readiness improvements.3) Succession approached by a crossfade method ensures the absorption of tacit knowledge from the transferor to the transferee which is key success factor in the innovation renewal. 4) The buyer must have the correct background, knowledge and education to the core operations of the company.
Successful innovation integration, requires financial investment. Regional Institutions providing support, (loans & grants for R&D, recruitment initiatives, loan security) must also be committed to improve and prioritise generation shift cases.
Successful innovation integration, requires financial investment. Regional Institutions providing support, (loans & grants for R&D, recruitment initiatives, loan security) must also be committed to improve and prioritise generation shift cases.
Further information
Website
Good practice owner
Organisation
PlanRay ltd.
Finland
Pohjois- ja Itä-Suomi
Contact
Senior project manager