Encourage the domino effect of innovation
19 Nov 2012 09:51 | Ravi Chhatpar
Innovation is one of those terms that everyone is talking about nowadays, which means it ends up denoting different things to different people. This risks turning the term into a corporate buzzword that does not really say anything.
The problem is that innovation really is a broad discipline. It encompasses the Apples and GEs with their cutting-edge technology and frugal entrepreneurs who make energy solutions out of trash and spare parts.
True innovation is about creating meaningful behavioural change. There may be new technologies involved that captivate the attention of early adopters, or business results involved that impress shareholders and financial markets, but we do not call it innovation unless consumer behaviours undergo meaningful change. With this definition in mind, what can we say about innovation in Africa? Where have we seen meaningful behavioural change?
Innovation is happening at various scales in various places on the continent. But it is happening too erratically, too slowly and too disconnectedly. It has not created flagship enterprises with track records of consistently innovative offerings that make a difference. It has not created benchmarks to handle tough problems that are recognised outside Africa (with the exception of M-Pesa in Kenya). It has not created thriving communities of entrepreneurs that attract plentiful venture investment.
This argument may come off as questionable — why does it matter if African innovation has reached such levels? Surely, the most important thing is for African innovation to have positive impact on African consumers?
In fact, this recognition is critical to ensure that the African consumer continues to be well served through innovative offerings over time.
The case of Chinese innovation illustrates why. This very phrase might be uncomfortable for some. Yes, China is not known for innovation in the traditional sense and is often criticised for intellectual property rights infringement and a copycat culture, the antitheses of innovation. But China also teaches some very important lessons about innovation. Its successes in localising innovations — taking existing ideas and making subtle, seemingly incremental alterations that resonate disproportionately with consumers — are wake-up calls for companies who don't appreciate the importance of truly understanding local consumers.
In Africa, there is not as much real innovation as there could be or needs to be. Why? There are many reasons, but here are three that we witness repeatedly.
First, innovation requires an exceptionally deep understanding of consumers, and most companies do not have that. Creating real behavioural change requires an understanding of people's deepest needs, aspirations and motivations.
At frog, we obtain this understanding through immersive ethnographic research, which emphasises smaller samples sizes in greater depth, as opposed to larger sample sizes with statistical validity. We recently conducted a study with FinMark Trust, producers of the annual FinScope report on financial inclusion. We lived in local accommodations in Seshego (near Polokwane, Limpopo) and spent hours in the homes of research participants. The insights from this work inspired innovation opportunities very different from what is in the market today.
Second, too many companies focus only on the sexy part of innovation — coming up with creative ideas. While ideas are critical, a clear path to business viability through a plan for scaling up is equally critical. Without a scale-up plan, innovations risk having their impact limited to a single target community or segment.
Our work with Wonderbag, a South African company that creates a heat-retention bag designed to reduce the use of electricity, gas, paraffin and wood needed for cooking in South African underserved households, illustrates scale-up innovation.
The product's technology is novel, but product costs make scaling up challenging. We created a mobile app that tracks usage patterns and carbon savings, creating a database that measures the company's impact. Wonderbag now leverages carbon trading for financial sustainability.
Third, many companies fail to realise that the innovation problem they are tackling may have many components beyond their control. It is a systems innovation problem.
Few companies have the luxury of being vertically integrated like Apple; most are part of complex ecosystems of suppliers, partners and regulators, some of whom can be controlled or influenced and many of whom cannot. Innovation in this context requires choreographing the dynamics of the ecosystem.
Addressing these three challenges in Africa gives aspiring innovators a real chance at bringing to market meaningful innovations that can positively change consumer behaviors while also remaining business-viable. This will beget further meaningful innovation from competitors who must respond and from non-competitors who are inspired.
It this domino effect that can eventually shed light on what the voice of African innovation truly can be.
Ravi Chhatpar is executive strategy director at frog
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