We are operating in a context in which continual innovation is not only good for business, it is necessary for survival. The pace of technological change is accelerating and competition is rapidly increasing across Africa as global players scramble for a piece of African economic growth.
We have intractable social problems that desperately require innovation. Yet, despite the need for innovation and a history of getting it right, South African businesses are not innovating.
We spend comparatively little on R&D, even as a proportion of GDP and even compared to other emerging markets. All too often, we leave innovation to the developed markets, choosing only to implement and localise global solutions. This may make sense for the South African 'satellite offices' of global companies, but there is no reason why local business cannot take up a leadership position in innovation.
An African model of innovation has the potential to take business and brands global.
Why is it that South African businesses are so scared to innovate? We believe there are a number of key, interrelated reasons:
There continues to be a massive disconnect between the lives of ordinary South Africans and those charged with innovation in business. Marketers may not fully understand the people for whom they are trying to innovate.
To overcome this, it is important to have people from all kinds of backgrounds in the business, and to invest heavily in authentic customer insight - get out into the community, approach problems with empathy and try to really understand the needs, frustrations and contexts of your target market which will lead to much more relevant innovation than adapting a global trend to the local market.
South Africa has inherited a culture of authority. Like all post-colonial countries, our society was subjected to centralised and often brutal power and, unfortunately, echoes of this have continued in the corporate culture of many businesses.
When power is top-down, innovation becomes nearly impossible. Those who have breakthrough ideas will be too scared to mention them and collaborative ideation sessions yield almost nothing when participants do not feel safe to open up.
To overcome this, businesses need to become deeply people-centric: listen to, respect and value the opinions of all employees, flatten the hierarchies and encourage cross-disciplinary sharing of ideas. Let the most junior member of a team speak first and build on ideas rather than criticising them or breaking them down.
The South African marketplace, like many emerging markets and across Africa, is characterised as niche wealthy and mass poor. While margins are high at the top, so is competition and many businesses have, in recent years, tried to innovate for the 'bottom of the pyramid'.
But this market, by definition, does not have much disposable income and it is unrealistic to expect them to give up what they currently buy for new products or services. Many brands who have tried to win over this market have had their fingers burnt by this and have returned to the top of the pyramid.
We believe that it is this mass market that will truly transform and kickstart our economy into meteoric growth, but that business is approaching the problem all wrong. Instead of asking 'What can I make that the bottom of the pyramid can afford to buy?', businesses should be thinking 'How can I add to the incomes of these new consumers?'.
Instead of expecting the mass market to give up food or airtime for your product, why not innovate new ways to involve them in distribution or manufacture that allows them to generate more disposable income? How can consumers become resellers or creators of your brand?
This led us to the idea of transformative innovation: innovation that grows the market, creates jobs and leads to increasing prosperity and stability for business and brands. The innovations that will change South Africa and create powerful brands across Africa are not necessarily product innovations; but new ways of thinking about value chains, the bottom of the pyramid and social needs.
This can unleash huge creative energy and generate long-term business growth and competitive advantage for those who get it right. It is Africa's century and time for us to pioneer an African model of innovation.
Download Yellowwood's white paper Transformative Innovation: An African Path to Success.
