South Africa is lagging behind when it comes to innovation, according to a recent World Bank report. But why is innovation so necessary for business? We need to empower more people to participate in the economy, and innovation is necessary to create opportunities and stimulate growth. There is also a close correlation between levels of innovation and new venture start-ups. The more a country supports new venture creation and small business the greater the rate of diffusion of innovations in that country. Innovation can also be leveraged to improve business processes to save on costs or increase the value that's being provided to clients, and innovation can also be applied to augment client user experiences or even to better manage business risks.
What’s the problem?
First of all on a human or psychological level, South African business confidence levels are at it lowest levels in over 30 years.The rate of innovation in South African businesses are being curtailed for a number of reasons. Innovation can take years to develop and comes at a tremendous cost and risk. In a depressed economy we have an environment where people are reticent because they are uncertain about the medium- to long-term prospects and this stalls the process. What follows is low investment levels, where people favour deals with established businesses with proven track records who are already earning a revenue. Then there is also a crisis in education in South Africa that’s resulting in a dearth of skills, which was evidenced in a 2016 World Economic Forum survey measuring maths and science education that placed South Africa last.
But it’s not all bad news. Our current environment is actually good for business innovation although our economy is in a bad state, there are problems in big business and government and different kinds of social pressures. All these issues create a fertile environment that encourages people to innovate so they can do things better and create opportunities. And there are also environmental issues like the drought in Cape Town being played out all over the world, driving the need to find alternative water and energy solutions.
What can be done?
You can’t innovate on your own. Walter Isaacson, author of The Innovators, described how the Internet was developed from a military instrument to become the platform it is today. This couldn’t have been done without collaboration between big business and small business, government, academic institutions and social activists. [If you are a business owner, finding the right people to collaborate with is crucial].
Taking an idea to the next level
- If you have an innovative idea and would like to develop it, start by identifying who you want your ultimate customer to be.
- Then find two or three businesses or people who will typically represent that customer, involve them in the development process and ask how they will work with you.
- What attracts funding is a gap in the market. [Think about how you will commercialise your product and] Come with an investment mindset from day one.
- Once you get your prototype built, you need to think about how you are going to manufacture and distribute it widely. The plan around how you commercialise something is important. [If you don’t have capital yourself]
- You will need to find suppliers and manufacturing people and investors to come on board so you can continue the development process. They will all be asking how it will translate into a return for them and will want to see how the product will be commercialised so they know how they will get their returns.
Finding the right partner to grow your idea is crucial. Aurik Business Accelerator partners growing businesses with insights into collaboration, investment and commercialising to take your idea into the market and turn your business into an Asset of Value.