INSME's Interviews

INSME: While in mature-economy countries the textile-shoes manufacturing sector is suffering from global competition, Geox has experienced a constant 30% annual sales increase (this is the turnover trend between 2000 and 2004). This successful result is due to Geox's capacity to create product innovation.
When referring to GEOX, does innovation concern only the product? In Geox's business formula, are there other innovative factors worth mentioning?

Mr. Polegato: Product innovation is undoubtedly a strength for GEOX. From the moment I introduced the “membrane” in the rubber sole, that is a material which prevents water from entering the shoe while allowing sweat particles to exit, Geox's activity has progressively been oriented towards technological solutions able to guarantee transpiration and impermeability. As a matter of fact, we have applied the membrane to waterproof leather soles. And in the apparel product line, we have applied the technology to jackets, with a cavity which allows the rising warm air and humidity to be expelled through special aerating holes, so as to ensure body transpiration. All these innovative solutions have been patented because we want to exploit (and obviously protect) our innovative technologies.

Yet, it is true that product doesn’t represent the only innovative factor. For instance, I was invited to the World Footwear Congress [Brussels, Belgium, 14-15 April, 2005] to talk about Geox shoes' selling system, which is another innovative factor. In our shops we do not display shoes in the windows. Instead we place them inside on the walls on special hangers. In this way, the potential customer can freely enter the shop, look at the shoes, touch them, ask for information on the products and prices. And if he is convinced, he tries them on and buys them, otherwise he puts them down and goes out. This is an innovation if compared to the usual selling system in traditional shops.

INSME: Being able to innovate is a must for companies today and your company is doing it with good results: Geox is present in 68 countries, has a direct and indirect workforce of 5,000 people all over the world and in 2004 sold 9 million pairs of shoes. Apart from the innovative elements you have just illustrated, what is the secret of such a successful business formula? Do you think that this formula can be replicated in other sectors or in other geographical areas?

Mr. Polegato: I don’t think that it’s a single innovative factor that determines Geox's success. It’s rather the mix of all the elements. The innovative idea by itself is not enough: in order to be successful, the enterprise developing it and bringing it to the market has to look after the whole innovation value chain. This is what Geox does.

And Geox model can certainly be replicated in other geographical areas or in other economic sectors. What is important in my opinion is to fully understand what innovation means, because on the one hand SMEs feel the need to innovate in order to cope with international competition, which is very fierce in my sector after the opening of the world market to Chinese products; on the other hand, it is generally believed that you only have to rely on marketing strategies to innovate. This is not true.

Real innovation arises from a creative idea that in turn springs from the solution to a concrete problem. For instance, in my case the problem was foot perspiration in rubber sole shoes. I solved it immediately slicing holes in my shoes to allow the sweat to exit [The story goes that Mr. Polegato got the idea for the breathable soles during a visit to the US, when his feet began to swelter during a trip to the Rocky Mountains]. But later on I learnt of a special material called “membrane” which is used in the NASA space-suits, I got in touch with its American suppliers, I obtained the material and I brought it to Italy. Joining the membrane to a perforated device, I invented this new technology which has been developed and improved with the help of some engineers and people from Italian university. The solution found solve the initial problem and this turned into a success.

INSME: Let’s talk about the relationship between research and innovation. Research is the fertile ground on which innovation grows and develops. This statement is widely agreed upon. Even the European Union translates it into an economic objective (3% of the European GDP is to be invested in R&D by 2010). However moving from theory to practice is not that easy: we know that most enterprises, above all small and medium enterprises, find it difficult to carry out research. This is not Geox's case: your company invest 3% of its turnover in research and manages its own research centre.
Can you describe the activity carried out by this centre and its importance in the framework of Geox's innovation strategy? Does your research activity contemplate collaboration with university centres? If it does, how would you consider the collaboration with these operators?

Mr. Polegato: Geox collaborates with the University of Padua [Italy] and the University of Trondheim [Norway]. In Italy we also collaborate with the National Council for Research, Milan Area. These collaborations have been, and still are, essential.

The Geox Research Centre is located in our headquarters in Montebelluna [North-Eastern Italy] and employs 15 engineers, who – this is important to point out – deal with technology, not design. As a matter of fact, we love to define our business not as one of producing shoes, but as one of technology applied to shoes, in particular rubber sole shoes. 90% of the world's population wears rubber sole shoes. Therefore the potential application of this technology of ours, which is certainly unique, is really huge.

Besides investing in research, we attach great importance to education. We have started a specialised training school, the Geox School, where we train the new graduates we hire.

INSME: University centres belong to that category of operators that INSME define as intermediaries, and to which its activity is addressed. To what extent intermediaries contributed to Geox innovative effort? And in a more general perspective, how important are these actors for innovative enterprises?

Mr. Polegato: As I said before, intermediaries are essential for all innovative enterprises. All the more so for the small and medium enterprises because they have neither the economic nor the cultural strength to experiment. Without experimenting you cannot put an innovative product on the market.

Collaboration with research centres is essential for growing your ideas, verifying them, testing them. However I would like to make a point clear: when an entrepreneur presents his/her idea to a university research centre, he/she needs to have a clear business project, not just new ideas. This is because ideas have to find a market outlet, and this is a job for the entrepreneur, not for the researcher.

INSME: Referring to public policy encouraging innovation in SMEs, can you mention any measure that turned to be beneficial to Geox when it started its activity? Is there any measure you didn’t find and instead you would have liked to find?

Mr. Polegato: I think that public aid is important, but as a general rule problems faced by entrepreneurs are precisely entrepreneurs’ problems. There is no public measure that can solve all the entrepreneurs’ problems.

Yet, public intervention is important in protecting Intellectual Property. A coherent normative framework is needed in order to fulfil this goal. As far as this aspect is concerned, I can consider myself satisfied. Geox has already been granted 30 patents for both product and process inventions. Our innovations are protected not only in Italy, but worldwide, in China too, where we are present in 50 stores, 20 of which are mono brand.

INSME: One last question: what would you consider essential for an innovative enterprise making its first steps on international markets? What are the obstacles and the opportunities that a small-medium entrepreneur has to face?

Mr. Polegato: Globalisation forces us to continually face new market conditions. Countries like China or India offer us new business opportunities while at the same time threaten us with comparative production advantages in different sectors. This accelerated rush towards highly competitive markets should push us to consider how important it is to be able to propose, at international level, traditional quality products that cannot be replicated for the technology and the expertise they embody.

This is why Geox is a valuable example: we have succeeded in exporting Italian shoes, already much renowned, but we have added technical innovations so that they cannot be imitated, also thanks to a careful and scrupulous patent system which has allowed us on the one hand easier commercialisation and on the other hand a higher guarantee against counterfeiting. Patent becomes a real passport for innovative technologies, free to circulate but easily trackable.

May, 2005 Copyright © INSME 2005

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