Investing in innovation
Innovation. If ever there was a word that needed its day, it's this one. Banned by writers, vilified by readers and excessively loved by marketers, it has become an over-used and tired term with little meaning and even less value. Until now. Today, innovation has become a core functionality for the business. It's not just an idea or a term, it's a culture, a value proposition and an essential business focus. It's the step that needs to be taken to ensure the development of sustainable organisations that are capable, flexible and adaptable.
Forrester defines innovation as a huge field of study that extends from product development to customer experience to channel to supply chain. Innovation can touch almost every part of a business, but there's no magic formula, no secret sauce for the business burger that will make it fly. Instead, it's taking chances, some of which will fail, and looking to how innovation can transform existing processes and solutions.
"You have to leave your comfort zone," says Lauren Timmer-Somer, head of Marketing and Interconnectivity solutions at Ricoh SA. "Forget what you think you know and question the processes you have in place today. If they are older than five years, you need to re-evaluate them."
Companies that insist on innovation tend to do two things: they invest in the human element and they invest in new infrastructure. It won't matter how much money is thrown at a project if the employees are not aligned with the strategy or capable of delivering on it. A company can introduce as many new processes as it likes, but if the people don't accept them, they won't be used. If people accept the strategy, however, then there will be a return on investment and innovation is set to soar.
It's not about the money
Unfortunately, as Timmer-Somer points out, most companies only look at the books when it comes to innovation. The problem is that in a digital and disruptive economy, innovation isn't a fringe benefit, it's a requirement.
Stuart Blyth, CEO, Rubix Digital Solutions, adds: "Investing in innovation is not a line item on a company's budget, it's an investment of effort and money into the mindset and culture of the company. The change needs to be driven from the top, with chosen champions within the organisation to help with change."
We are seeing big corporates partner with startups and more agile companies to bring innovation to the market.Bruce Arnold, Pivotal Group
The advantages of this is that innovation can boost growth and competitiveness by delivering real business benefits, including the ability to launch new products and services to market with greater speed. However, it can be impeded by operational sluggishness and the red tape that surrounds enterprise decision-making.
"While big corporates understand the importance of investing in innovation for growth, projects fail because the speed required for innovation doesn't happen fast enough," says Bruce Arnold, Group CFO and co-founder, Pivotal Group. "The only way a large corporate can innovate is through the right leadership to drive the change necessary for innovation to happen quickly. As a result, we are seeing big corporates partner with startups and more agile companies to bring innovation to the market."
Says Mark Walker, associate vice president for Sub-Saharan Africa, International Data Corporation: "Innovation can increase responsiveness to market conditions by up to 59%. The business needs to make space for innovation by incentivising innovative thinking, creating skunkworks that are open to, and allow for, experimentation, and accepting that failures are a part of the innovation process."
The real innovators
Innovation is about improvement and creating solutions for customers that deliver on return on investment. It also challenges existing paradigms and forces organisations to become more relevant, ensuring they are continually exploring opportunities to grow and improve their competitiveness.
So, of course, this begs the question as to who the real innovators happen to be - which companies are leading the way in innovative thinking, disruption and digital invention? At the moment, there are four sectors that are leading the way in South Africa - FinTech, EdTech, InsureTEch and AgriTech, with MedTech not too far behind.
"In FinTech, we're seeing an increasing number of new products, platforms and services emerging and maturing in the payments and financial inclusion space," says Yasaman Hadjibashi, chief creation officer, Barclays Africa Group Limited. "We're also seeing a growing number of innovators in the fields of big data and artificial intelligence, which are gaining traction across Africa."
For Hadjibashi, the real innovators are those who use their minimum viable product to forge creative and lean partnerships that help them to get innovation to market rapidly. There are numerous startups getting this right and their innovation is very likely one of the main reasons why South Africa is attracting people from across the world.
"Healthcare, IoT and big data, and hybrid networks, are stand-out examples of investment in innovation," says Mark McCallum, CTO, Africa Orange Business Services. "Investment into digital innovation is imperative to moving Africa forward and spurring economic transformation as it attracts foreign investment, assists in banking the unbanked to deliver more equalities and opportunities, and as it makes space and opportunities for entrepreneurship, and brings more people into the mainstream active economic population."
This is also being driven by organisations and the public sector as organisations build hubs, create summits and invest in awards to attract talent and inspire change. The Barclays Rise Accelerator programme has seen an uptick in international interest, the SA Innovation Summit attracts local and international interest, and the Innovation Prize for Africa has seen remarkable talent from across the continent move on to wet innovative appetites around the globe.
"To succeed in a strategy of innovation investment, the business should not think that innovation is only about financial investment and that it can simply spend its way to success," says Mark Warren, GM, Gemalto South Africa. "Innovation is linked to processes throughout your business; the people and expertise that you hire, the processes you establish to nurture innovation and your ability to manage knowledge. Innovation is about improving your capabilities so that you can introduce change, learn from it and improve your knowledge of your markets even further - paving the way yet again for more innovation."
Ten of the innovation numbers
- $11 trillion - this is what McKinsey believes IoT could generate. This is thanks to innovation in data.
- 25GB of data every hour - that's what a recent Quartz/Hitachi report estimated cars would be uploading every hour.
- Smart contracts - Forrester believes that smart contracts built on blockchain and IoT will soon become available.
- Shop in augmented reality - Gartner is down with the idea that AR will soon be a part of the shopping process as brands innovate to differentiate.
- Euros241 million - this is what Gemalto spent on research and development in 2015, and that's aside from the 107 patents, and 3 000 R&D engineers.
- 85% failure rate - that's how many consumer goods products fail in the market.
- 14 products out of 3 463 launched in 2012 met the Nielsen criteria for distinctiveness, relevance and endurance.
- 93% of executives believe innovation will drive revenue growth, says a PwC report.
- Singapore is the sixth most innovative economy in the world. The first is Switzerland.
- Johnson & Johnson has the highest weighted stock in the CNBC IQ100 Index - this means they are weighted against investment, development, control and the deployment of intellectual property to gain strategic advantage.
This article was first published in the April 2017 edition of ITWeb Brainstorm magazine. To read more, go to the Brainstorm website.