The majority of South African business executives believe disruption and innovation will have little to no impact on their operations.
This is one of the biggest takeaways from a study conducted by consultancy firm Grant Thornton. The firm's second quarter International Business Report (IBR) research explored the awareness of disruption and risk among South African businesses.
A total of 100 business executives were interviewed in SA for the Q2 2016 survey findings.
The study notes South African companies are slowly waking up to the concept of disruption and radical innovation but they are still not taking the impact it can have on their business seriously enough.
According to the findings, almost two-thirds of companies (63.4%) in SA believe disruption and innovation will have little to no impact on their operations.
Grant Thornton says disruption, which goes hand-in-hand with radical innovation, encompasses the way that completely new processes, products or services are created, sometimes creating entire new markets and marking a dramatic shift away from existing business models, products and services.
Asked specifically whether their businesses were actively investigating or experimenting with possible radical innovation to change or introduce new business models, products or services, 18% of South African business executives indicated they were not taking any steps to address disruptive innovation; 35% said it would not be applicable to their business; and 10% had no idea if they would be affected or not.
In contrast, of the 100 business executives surveyed during the second quarter of 2016, 11% were seriously planning to launch a new business model, products or services and 25% were investigating possible innovative and disruptive ideas.
Michiel Jonker, Grant Thornton's director of advisory services, says it is clear companies have difficulty in developing foresight and are not doing enough to gauge just how much future possible events and technologies would affect their industries.
He points out the IBR data made it clear innovation and disruption were clearly not part of business risk registers and strategies of companies across industries. And foresight is missing in business strategies in general, he notes.
"South African companies need to be aware of the new technologies and innovations that can be advantageous to their operations," says Jonker. "My concern is that, according to our research, so many companies did not even know what disruption entails.
"What Uber has shown us is how simple it is to completely disrupt a market and at the same time create a new market. It has opened the doors to people who would never have used metered cabs while at the same time the disruption on the vehicle rental industry is still unknown."
Of the 64% of respondents who indicated they had a business risk strategy in place, just more than half indicated their risk plan factored in disruption. This means almost 50% of businesses still do not consider disruption as a serious risk during risk strategy formulation, not to mention the opportunity to disrupt their own industry, Grant Thornton notes.
"Too many businesses still think they don't have to think of disruption and that's alarming. Technology disruption - such as 3D printing, robotics, digital medicine and nanotechnology - in particular has the ability to affect entire industries. Although there is more awareness these days, there is not enough attention given to it at a strategic level," Jonker says.
He adds that some industries think they are not susceptible but any sector can be affected. "Take 3D printing which can be used to manufacture mining and engineering components to spec and on site. This would affect importers, freight forwarders, and of course, the manufacturers of the components as well."
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