In a previous issue of Tellumat Engenuity we pointed out that innovation needn’t always be about new products. For example, new use cases are sometimes discovered for old technologies. But that doesn’t mean we should settle for ‘upcycling’ as our national brand of innovation!
To get out of our economic rut and forge ahead in an ever-changing world, South Africa and its corporate citizens must co-develop an innovative culture in all its varied aspects.
In practice, this means a significant public-private sector commitment comprising:
- Investment in research and development (R&D);
- Enough early-stage and growth capital being made available to innovators;
- More catalytic innovation ecosystems; and
- Investment in people.
Start with identifying the need
While innovating just because a conceptual idea is possible, interesting or ‘cool’ often creates new technology, techniques and methods which can and may be implemented for useful purposes in time, starting with the aim of resolving a real life problem or need, will improve the possibility of a sustainable demand and payback on the investment in a successful innovation.
Why R&D is important
Intel is a great example of a company whose success is based on innovation: Over the years, it has built up an unassailable leadership position in the IT industry with massive ongoing R&D investment and the resultant ability to constantly ship new and better product.
Intel understands the importance of R&D to its ongoing success; it serves to develop new knowledge and technology. Hence the company doesn’t approach R&D as a department in isolation, but as a capability that feeds into its knowledge base, and in turn leads to new products.
Capital – not just for the big boys
Not every company has budgets as big as Intel’s, but this need not hold back small and medium enterprises. According to an OECD publication, SMEs are increasingly attracting government funding, a rare source of seed funding that underscores just how crucial government support is in fostering an innovative culture.
As a last resort, start-ups can access capital through avenues such as collaborative partnerships or absorption into larger, trusted organisations. The caveat is that this often requires a start-up to give up a meaningful stake in (or even control of) their business. Be sure that absorption into a bigger business and falling in with its bureaucracy is acceptable to you and that your investor will agree to guarantee the preservation of your innovative, entrepreneurial character.
Aside from the very real need for more capital, something else is holding industries back from being innovative: The sort of catalytic event that moves industry and government to create great innovative ecosystems.
Unfortunately, businesses in a single market such as ours often lack a sense of shared purpose, and the impetus for embracing a common goal may have to be significant and come from external sources such as the government. A second problem is the fraught relationship existing currently between industry and government. One can only hope that relations will normalise and that government will channel more funds towards corporate innovation.
World-wide, successful innovation hubs like the London FinTech sector have shown that when industries band together and government provides the political sponsorship, it is easier to attract the necessary domain expertise, physical infrastructure and capital to grow these hubs.
But collaboration with competitors in the same industry, despite the best intentions of such a collaboration to improve efficiencies and global competitiveness, often results in Competition Commission investigations. As such, collaborators will have to take cognisance of the published Anti-Competition Guidelines and ensure that conscious steps are taken to protect themselves from a Competition Commission challenge if they are to benefit themselves, local industry and the RSA economy.
Invest in people
But in the end, the most important investment you’ll ever make is in your people.
Companies should invest in two kinds of education: Firstly, employees must remain current in their fields; secondly, they should be given specific training in innovation; and thirdly, an environment needs to be created where innovators’ ideas are respectfully heard and the best are moulded, developed and brought to fruition, without which innovative energy will rapidly wane.
Yet, fundamentals of innovation are not usually taught as part of science and technology curricula, and employee training can be hard to sustain, as it is an investment often seen as an intangible benefit.
Instead, investments that correlate directly and instantly with bottom-line results tend to win the day, but those aren’t always what propel a company sustainably forward.