This is according to Accenture's Innovation Index 2017 released at the Accenture Innovation Conference this week. South African businesses, from large corporates to SMEs, have only experienced a moderate increase in innovation, scoring an additional two points from 2016 to reach 52 points in 2017.
Over the last three years, the score has only increased by six points.
William Mzimba, CEO of Accenture SA and chairman of Accenture Africa, told ITWeb that he believes businesses do not want to spend money in a state of uncertainty. "The money is available, but they are setting it aside, to wait and see."
However, "in a rapidly digitising business environment where new players are disrupting traditional revenue streams across all industry sectors, it is now more important than ever for companies to be stepping up their innovation game".
He says the biggest challenge for South African businesses is that they do not know how they are going to make their money back. SA is a very limited market for investors and it does not get the crazy evaluations of Silicon Valley, he notes.
"Investors would rather put their money in private equity."
He says this will change when government regulation changes. The South African government is starting to incentivise investment in innovation, and this will help the space as investors will then be able to write off money as a tax break if the innovation does not work out, instead of losing it all, he explains.
Mzimba says incremental innovations are equally important as disrupting whole business models. He advises businesses to start innovating ‘on the side'.
He says the most interesting insight for him from the report was that businesses understand that the fourth industrial revolution is upon them but they seem to be in a state of inertia and are not innovating as fast as he thought they would.
Accenture says the index is designed to provide a national benchmark for innovation, providing businesses and policymakers with an authoritative and objective snapshot of the state of innovation within their organisations and SA.
"Companies are struggling to seamlessly translate their innovation strategy to well-executed innovations that realise maximum benefits. Our findings point to several areas creating this anomaly – from weak innovative cultures and poor organisational processes that do not fully support the innovation vision of organisations, to inadequate information dissemination and collaboration, and narrowly focused innovation policies," says Yusof Seedat, director at Accenture Research.