Winning with Global Innovation
Creating value through innovation is a global conversation. In today’s competitive world, both developed and developing countries need to come up with joint innovative solutions to counter global challenges; and they need to do this while simultaneously addressing the pressing needs of their respective populations. In this context South Africa needs to introspectively consider its capacity to take advantage of its strengths in innovation, directly shining a light on local firm’s innovation capabilities, the business and regulatory environment as well as local policy. As a country, however SA seems to be struggling with this, as it battles to break through the 50’s-ranking mark in the Global Innovation Index (GII). (In 2016 SA ranked 54 out of 128 countries).
Although South Africa competes with the best in the world in terms of market and business sophistication, glaring weaknesses in especially infrastructure, human and capital research as well as creative output present unattractive stumbling blocks, stating a country-wide case for getting back to basics.
Africa is still seen as one of the most promising regions
But despite stagnating innovation output and South Arica’s sub-par Innovation Efficiency Ratio, it is not all bad news. Africa is still described by many as one of the most promising regions of the future. Various African economies are labelled “innovation achievers” performing at least 10 percent higher than their peers for their level of GDP. These achievers include Kenya, Madagascar, Malawi, Rwanda, and Uganda; while South Africa is counted as a country that outperforms its income group on at least four of the seven GII pillars. Sub-Saharan Africa countries this year also showed their highest scores in Institutions and Market sophistication.
Economic forecasts predict that Sub-Saharan Africa will face an economic slowdown and as economic slowdown occurs, it will be important for Africa to preserve innovation momentum and to continue moving away from relying on oil and commodity revenues.
More resources are spent on innovation globally than ever before
According to the Global Innovation Index (GII) report more resources are now spent on innovation and related factors globally than at any other given point in human history. Results indicate that innovation – technological innovation in particular – is considered to be a major force for economic growth. The convergence of data analytics, commerce, and technological progress is seen as a key driver of innovation in the global economy. Moreover, entrepreneurship, evolving business models, and technological progress are at the heart of innovation. More and more entities are working together to innovate and create an impact, not only nationally but globally – in what is commonly referred to as the ‘sharing economy’.
Business expectations for 2020
These trends do predict an impact on the traditional business landscape and global business in general expect the following to be a reality in about four years’ time:
- Innovation is expected to transform revenue generation: Sixty percent of respondents expect to lose more than 20% of their company’s revenues as a result of disruptive innovation, if they do not change the way they currently operate.
- Innovation will be increasingly global and collaborative: Most companies work with external partners on their innovation agenda and will focus more on this going forward
- Most companies feel their innovation platforms are not ready to fully navigate this new landscape: The increasing size of innovation networks drives the need for excellence in governance structure and processes as the majority of respondents rate their capabilities to identify, select, build and operate, and exit innovation partnerships as (very) poor or fair.
- From a policy maker’s perspective, the specific capability gap and its implications will need to be addressed To date, four out of ten executives are not aware of non-financial support and incentive programmes and experience collaboration with government is tedious and limiting.
A capacity to harness innovation must be created
This study of more than a 100 executives globally reveals a dichotomy: Although innovation is expected to drive revenue growth and brand perception across industries in the short term, challenges remain in building the capacity to harness it.
In order to benefit fully from this evolving central role of innovation, management must become more and more global. Furthermore, customer-driven innovation and innovation in collaboration with start-ups, and with small and medium-sized enterprises as partners, represent the largest potential, but also some difficult challenges. Organisations that manage to do this well will be best prepared to capture the next wave of innovation.
According to the report the global economy is not back on track and concerns about weak future output growth and low productivity are now serious. Successful innovation strategies cannot afford ‘stop-and-go’ approaches.
Apart from an obvious policy and leadership imperative, this trickles right down to organisational level – the country’s basis for GDP growth. What are South African organisations doing to drive sustainable innovation outcomes and how are they collaborating with stakeholders, academia and research institutes to embrace innovation and growth?
To learn more about South Africa’s innovation landscape, keep an eye out for our soon to be released SA Innovation League Report.
The Innovation League report, published by Innocentrix will unpack innovation management imperatives and best practises in South Africa. Follow us on Twitter, LinkedIn and Facebook to get notified of its release.
The information provided here is based on the Global Innovation Index 2016 Winning with Global Innovation report. For a full copy of the report, click here.