Categories
Innovation Organizational Design and Development revised Technology and innovation management

Innovation as cultural as opposed to innovation as a technique or function

Originally published in August 2015, revised in January 2018

Reflecting on the correspondence I have received after my previous post and recent training sessions with manufacturers, I have come to realise that people are looking for tools and tricks to encourage innovation in their workplaces. Sometimes it is actually not even about innovation, but about making up for poor past decisions, such as not investing in technology or market development when they should have. Others think of innovation as a function or as a management tool that can be standardised into a job description or an area of responsibility. While this is possible in some contexts, I don’t find this approach to innovation of much use in the smaller and medium-sized manufacturing firms and the research/technology institution space in which I am working.

For me, innovation is firstly a value, a perspective of how organisations should be. When management says, “We are an innovative organisation “or” We want an innovative culture “or” Our reputation is that we are innovative”, then we can move to tools, portfolios, tricks and tweaks (those things that people in innovation functions must attend to). Many textbooks, articles and blog sites on innovation and technology management are then useful. Actually the challenge is to decide which of the bucket loads of advice to use, and consultants such as I typically help organisations to choose a few tools and provide guidance on how to use them fully and consistently. I would dare to say that it is relatively easy to help companies that are already innovative to become more innovative.

 

What really intrigues me is those organisations that do not think of themselves as being innovative, or that are from industries considered to be traditional and not innovative. Perhaps they used to be innovative, or perhaps they are innovative in some areas but not in others. Perhaps they had one or two tricks in the past that have now become irrelevant. These could be extremely competent organisations, such as a university department, a manufacturer of highly specialised industrial equipment or an organisation that simply designs and manufacturers exactly what its customers order. Even if the outputs of these organisations can be described as ‘innovative’, they do not necessarily have innovative cultures that are constantly creating novel ideas, processes and markets. In my experience these organisations have brilliant technical people, but management is often not able to harness the genius, experience or creativity of its people. The main reason for this is not a lack of technique, tools or tricks, but the lack of an innovative culture, leading to a lack of innovative purpose.

These organisations are trapped. They are equipped for the past, and they are paralysed by all the choices they have to make for the future. For management, it feels as though everything it has in place is inadequate and needs equal attention, ranging from attracting staff with better or different qualifications to finding new markets, developing new technological capability, sorting out cash flow and capital expenditure, and addressing succession planning.

Improving the innovation culture of an organisation is a complex issue. It is not about tasks, functions or tools, but about changing relations between people within and beyond the boundaries of the organisation. Innovation in these organisations is a sideshow, a project, whereas it really needs to be central to the business strategy, a different way of looking at the world.

When working with organisations that must improve their innovative culture, interventions like motivational speeches and optimistic visions of the future are not useful and could in fact deepen the crises facing management. Nurturing a culture of innovation goes far beyond establishing or refining innovation management functions. It is a strategic issue that is initiated by top management, but that will soon spill over into every area of the organisation, hence it cannot be driven by a management function called ‘innovation’.

Improving the innovation culture process starts with connecting management back with its people. It starts in the present, the now, not with future scenarios, not with using innovation techniques and better analytical tools, and in most cases not with some or other management fad. It goes beyond trying to improve products, processes or business areas, beyond gaps in management’s capability. It must look at the relations between people, between what people know and can do now (or knew and could do in the recent past), and the potential people see to make small improvements. It is essentially about many dialogues happening throughout and even beyond the organisation. After cultivating dialogue, management needs to empower the organisation’s people to allocate resources to activities that strengthen the learning culture, that turn even small improvement projects into processes that broaden thinking, deepen learning and motivate people to think beyond just their specific tasks.

When management has the courage to decide to improve its culture of innovation it starts a process that cannot be described as incremental improvement, as that sounds too directed. It is rather like a deepening, or an awakening, where employees are inspired to contribute, and management is more aware of what it can do to enable its employees to become more innovative on all fronts. Of course, management faces the risk that outdated management approaches that do not seek to empower employees to be creative will be exposed, and some tough decisions will have to be made.

To nurture an innovative culture requires innovation in itself. It requires management at different levels to rethink its roles from being directive to being enabling, from being top down to being more engaged with its teams.

Categories
Innovation Organizational Design and Development revised Technology and innovation management

Instigating innovation: Where to start

Originally published in 2015, revised in February 2018

I am currently focused on strengthening the manufacturing sector. I am speaking more and more at meetings and events, in boardrooms and to post-graduate students about innovation. In this increasingly engineering-minded world people frequently ask me for tips on how to get innovation going.

Some of the ideas people put forward are:

“How about an idea box?”
“How about canvassing ideas for a new product design from our customers?”
“How about rewarding our engineers with a profit share if they design a new product?”

However, the truth is that many manufacturing enterprises, especially the smaller ones, are too narrowly sliced into specific functions. They are mimicking large organisations and by doing so are giving up any flexibility and resilience that they might have had. Designers design, manufacturers manufacture and salesmen sell. This functional division of their hierarchy makes information flows about potential improvements, new market opportunities and some old tricks that could become useful again very difficult. The cost of coordination in these enterprises is very high. In these silo-based organisations the cost of finding information, new signals and new ideas from outside the organisations is extremely high, and in general they struggle to learn. Why I mention them is that innovation is something that most organisations are already doing, they just do not recognise it as such. Innovation is lost within functions, or is overlooked because a project is focusing on addressing some or other need. Every improvement project could also be used to change or improve the culture of innovation, to deepen the use of knowledge and to increase capabilities and options for an uncertain future.

A second problem is that most smaller manufacturers are mainly focused on product innovation. Which does not mean being focused on knocking the socks off their customers with frequent improvements or brilliant designs. Unfortunately, many of the more traditional manufacturers are focused on how to reduce the price or how to sort out quality issues. This is actually a kind of process improvement, but a very narrow one. The limitation of this incremental approach is that you can at best only grow and develop as fast as your customers can articulate what they want. Competitors or substitutes can also upset market relations by coming up with novel solutions that an incremental approach struggles to generate.

A third problem is that innovation is only carried out when customers demand it. It is passive. It functions in bursts to get things right, and then it settles into a problem-solving mode until the next customer makes some unreasonable demands. One should be grateful when clients give you a piece of their mind, but this is still far too passive to my way of thinking.

What many manufacturers lack, especially those in the more traditional sectors such as metals and engineering, is a focused effort by top management to build a culture of innovation that is actively trying to find product, process and business model improvements. The effort must be focused internally in order to constantly rethink the business and its core processes, and at the same time it must be focused externally on what customers and competitors are doing. The really good companies are also looking beyond current markets and competitors at new technologies and how they might shape the future.

Thus far I have addressed the business perspective. However, research organisations, technology transfer centres and industry support centres can also become trapped in a low-innovation culture.

I am currently working with a few industry groups and research and technology centres to find out how these organisations can move beyond the “catching up” and responding to change modes towards anticipating what will come next. This sounds perfectly simple, but by merely mobilising more and more people in the organization to search for what’s next has already yielded amazing results in a short time. Perhaps I am being over-optimistic, but I can already sense the innovation culture change in these organisations as more and more people become involved in searching for possibilities.

Here’s an apt quote attributed to William Gibson: “The future is already here – it’s just not evenly distributed”.

The first kind of search is to get more people involved in searching for what is already present within the organisation, but is not recognised or is not being used to transform the organisation. The second kind of search is to go beyond the organisation in related and unrelated markets and technologies. Take trends such as the global shift to automation, or the new developments in artificial intelligence and play with these within your organisation. Wonder out loud with your people about what this might mean for the organisation, for clients, for suppliers. How might these technologies or trends influence their investment decisions, their viability or their business models? Use these vague concepts to rethink the organisation, its networks, its technologies and systems.

That is what I call instigating innovation, when the dialogue led by the leadership mobilises more and more people within and outside the organisations to start thinking creatively, connectedly and in new ways about the future and the present. Lay a strong foundation for innovation by getting more people to think, imagine, connect ideas and improve.

Categories
Innovation Promoting Innovation Systems Thinking out loud

Post 3: The role of various organizations involved in education

This is the 3rd post in the series on building technological capability.

Contrary to common belief, building technological capability does not start with eduction. That being said, education matters and certainly makes any upgrading effort much easier. It is not only about the basic qualifications, but also about the ease with which existing employees can further their education.

With education institutions we include all forms of education, from basic to technical, vocational to post tertiary education. We also include public as well as private providers of education. Education lays an important basis with regards to skills, but also increases the absorptive capacity of a society. Advanced forms of education includes research.

In general, when we assess the role of education in assisting enterprises or industries to upgrade, we want to know how responsive the education system (broadly speaking) is. If a new standard is agreed upon in industry, how long does it take for the technical Universities to include this in their programmes? If a new disruptive innovation takes place, how fast is the curriculum updated? I remember back in the 90s when I studied for the first time, how the software we used at the university was no longer available commercially. Fortunately, all those Lotus 1-2-3 shortcuts still worked on Excel, I still use it today 😉

While the responsiveness of the education sector is important, what is ideal is a education system that not only responds to the needs of the private sector, but it preempts or anticipates what is needed next. This is very important for the manufacturing sector. Graduates must know not only what is now mainstream, but also what is expected or coming soon. This is where large parts of our South African university system lags behind. But this is not unique to South Africa.

A last point I want to make about the education sector is that it is also important to understand the role and contribution of the private sector to the education sector. In many countries there is a close relationship between the private sector and for instance universities. Companies contribute to to not only basic education infrastructure, they often fund research positions and projects. An industry that is complaining that they don’t get from the education sector what they need is most likely also not contributing through finances or advice.

Categories
Innovation Promoting Innovation Systems

Post 2: Technological capability: enabling enterprises to innovate

This is the second post in this series about building technological capability. I believe that this technological capability is best developed by an innovation systems approach with a particular view on emergent properties of the system. I have written before about the importance of taking a business perspective on an innovation system here and here. In the previous post I explained our concept of technological capability. I argued that one of the elements of technological capability is “The skill of the producers to imitate and innovate at product, process and business model levels. This is largely dependent on pressure to compete as well as pressure to collaborate with each other”.

In this post I will look a little deeper into this ability to innovate, collaborate and competition. For the remainder of this post I will take the perspective as a knowledge broker (or facilitator) working with an technology transfer center responsible to promote the upgrading and modernization of a sector.

One of the challenges of promoting an innovation system is that the technological capability in the private sector is not easy to see. Often we have to use proxy indicators such as exports to determine whether our industries are innovative and competitive. But export figures does not tell the whole story.

While the physical attributes of a product or component could tell us something about the sophistication of the product and the process behind it, even a simple metal component could be the result of an extremely sophisticated process that combines different knowledge domains, technological capabilities, materials (combining metallurgy and sand for instance in a foundry) and enterprises. Even if you have access to the premises, the tacit knowledge, experience and networks that are accessed to make a product is not always detectable.

Not only is it hard to determine what companies are able to do, it is also difficult to figure out what they cannot do. The fact that a manufacturer three years ago developed a successful product is not a guarantee that they can still do this. The finding that a particular function or technology is not present in an enterprise does not mean that they do not have access to this technology when they need it. When the entrepreneurs claim that they lack finance to do innovation this is often merely describing a symptom.

Enterprises that are able to adapt, change and improve not only their products but also their processes and business models are essential for any economy. This is about competition, but it is also about unlocking the capability of individuals, being more responsible with resources, and being responsible within a broader socio economic environment.

Finding ways to get enterprises to collaborate is very important for the health and dynamics of an innovation system. At the same time, stimulating competitiveness, not only at the level of price, but in terms of alternative approaches to solve a problem or in terms of different ideas and concepts is necessary. Often business associations and industry bodies are good with some limited collaboration, for instance on advocacy, but not so good at stimulating new (competing) ideas, approaches, models and solutions.

For a broker or intermediary it is still possible to move between and into enterprises to find opportunities for improvement. I am often amazed at how hesitant universities, technology intermediaries and research centres are to

Searching for opportunities for collaboration
Searching for opportunities for collaboration

embrace this privilege of being able to move around in an industry to see what is possible and what constraints or barriers to innovation exists. I will expand on that in a future post in this series.

For enterprises to find out what other enterprises can or cannot do is a lot more difficult. Firstly, by asking somebody if they can or cannot do something might give them a hint that a specific opportunity exists. Secondly, many companies do not like their competitors on their premises. Thirdly, there are many risks and costs associated with working with a competitor. Lastly, there is a risk that a competitor is able to exploit a joint opportunity better and thus gain more prominence in the market.

The ability of enterprises to find opportunities to work together is important as a means of reducing costs and gaining access to resources that individual enterprises cannot afford independently. For instance, skills development, joint marketing efforts are quite easy to cooperate on.

However, on issues such as joint research and development, procuring scarce and sophisticated equipment, or collaborating in a more intensive way such as a cluster often require an external broker. Often this kind of brokerage is hard to organize at the level of enterprises. Industry associations, Universities, technology intermediaries of government programmes aimed at industry promotion must step in. This is where I earn my bread and butter as many industry support programmes are ill-equipped to diagnose, articulate and facilitate these kind of firm level collaboration processes as part of improving an innovation system.

Let me bring all of this together. Enterprises that are striving to improve their performance, their value add and their overall competitive offering are an important element in an innovation system. These enterprises are expected to compete with each other, not just on price, but with different approaches, solutions and concepts. At the same time, we expect to see that these enterprises cooperate or collaborate on issues where there are benefits to do so. The dynamic of how enterprises interact with each other (collaborating and competing) is a direct contributor to the technological capability of a region, an industry or an economy. Where enterprises are not able to work together and at the same time compete with one another, a key ingredient to the technological capability is weakened. It is not always possible for enterprises to formulate or develop opportunities for collaborating due to many risks, costs and the difficulties associated with forming the cooperation concepts. This is a technology related market failure that sometimes can only be overcome by a broker-like service of Meso-level institutions such as technology intermediaries or education institutions.

Categories
Industrial Policy Innovation Private Sector Development Promoting Innovation Systems Technology and innovation management

Series: Building technological capability

In the next few posts I will focus on building technological capability in developing countries. I am specifically thinking of Sub-Saharan Africa as I write these posts, but I am sure that some of the ideas will be relevant to my colleagues working in other parts of the world.

What do I mean with technological capability? We see technological capability as going beyond what firms can do, to what societies or parts of society can use or do with technology. It is a capability that is manifest in products and processes, but that arise from a capacity to match a problem or opportunity with technological systems, sub-systems or combinations of systems. This means that technological capability is not only about technological skills (for instance in knowing how to combine different technologies, or what the latest advances are), but also has business and networking skills to identify and recognize opportunities, discover what solutions can fit the context and constraints (like performance specifications, prices, volumes) and how to organize supply, delivery and maintenance. It thus combines all the elements of innovation including product knowledge (understanding components, sub-systems, architectures), process knowledge as well as business knowledge.

To build technological capability in a country or an industry is the result of an ongoing search process where networks of businesses, academia and government officials search for what is possible at reasonable value and margins, what can and what cannot be done within the local context. What can and cannot be done in the local context is a complex issue that is affected by four factors that I will briefly outline below. It is not only an engineering design problem, and it is not only about products and patents. It is not about a lack of knowledge or a lack of PhDs and engineering students. There are several things that must be worked on at the same time but a whole range of actors working towards different goals.

In many instances the public sector is more eager to develop domestic technological capability than the private sector itself. The private sector in Sub Saharan Africa is in most countries fragmented, and search costs as well as coordination costs at the level of products, processes and networks are very high. That is why those that can afford to take risks and that can afford to take a long term view will most certainly benefit disproportionately to those who are driven by short term profits. For instance, local manufacturers of components that invest very little to nothing in R&D cannot be expected to compete in the long run with international or regional competitors who are investing in R&D.

My late friend and business partner, Jorg Meyer-Stamer argued that there are four pillars [1] that technological capability is built on:

  1. The skill of the producers to imitate and innovate at product, process and business model levels. This is largely dependent on pressure to compete as well as pressure to collaborate with each other;
  2. The economic, political, administrative and legal framework conditions, which determine whether incentives to develop technological capability exist. In the past, it was often not recognised that these incentives do not exist in many developing countries, especially if an import substitution policy relieved companies of all pressure to be competitive or to innovate;
  3. Direct support by technology-oriented state institutions or specific types of knowledge intensive service companies – depending on the given development level, the competition situation and the characteristics of a technology branch in the given country. These organizations disseminate technical and expert knowledge between different actors, knowledge domains and industries and play a critical role in the use of and application of tacit and explicit knowledge;
  4. Indirect support by the public and private educational system; in addition to a sound basic education it is important that technical training of a suitable quantity and quality is available at the secondary-school level and also in the universities. The private sector often plays a role in short term training aimed at particular technology applications. Overall the responsiveness of the education sector in identifying and responding to changes in how technology is applied, developed or used in society.

The close interaction between these four pillars creates technological capability. Thus technological capability differs between countries and even within countries because the context differs. A single firm may in the short to medium term manage to get a sophisticated product into the market, but to sustain its position it will sooner or later need to tap into the education system, the knowledge networks of intermediaries and technology experts, or in supplier networks. Technological capability is not measured at the level of patents or products developed (this does not measure the system, it measures a single firm), but is best measured at the level of regional or international competitiveness of industries, entrance of new domestic and international competitors, and exports.

What developing countries fail to achieve is to crowd in many firms and industry networks by creating public goods that intensifies competition and that force firms to collaborate on critical issues like skills development, the development of industry specific infrastructure, etc. Despite being a big buyer in many countries, procurement patterns, priorities and performance criteria are not available to domestic producers (until it is too late). The education sector is mainly funded to provide basic and undergraduate education along strict disciplines, not to constantly upgrade the existing workforce to cope with technological shifts and the integration of different knowledge bases. Universities are funded to do research at a product or process level, not to do applied research that will modernize industries. The importance of various networks of technological intermediaries and knowledge providers are overlooked.

The private sector must also shoulder some blame. Industry bodies are often mainly focused on advocating for favorable conditions to protect existing investment or interests, not on increasing local supplier networks or building industries. Firms would often rather collude than collaborate. Industry associations are typically organized via traditional sub-sector structures, while global production is becoming more integrated, multi-disciplinary and application orientated.

In closing, technological capability is not only created through policy. It is not created through industrial or innovation policy, although it helps. It is not created by individual champion firms, although this certainly makes it easier. Technological capability is built as a result of an innovation system where the context matters. Firms able to manage their own internal technology and innovation are essential, but these typical arise out of public funded investment into technology intermediaries, management capability and the overall performance in the education sector. It is not possible to increase the technological capability of a group of firms in a particular industry without looking at the broader context where the four areas outlined earlier shape the outcomes in the medium to long term.

From my experience in assisting to promote technological capability in developing countries an ongoing facilitation effort funded by the public sector AND the private sector is needed to broker collaboration, but also to look at ways that local demand can be met by the broader system in the long term. In many countries and industries the best host for such a process is a technology intermediary attached to an university or a development programme, with a mandate to build networks around local opportunities that is not only about engineering, but also about reducing the costs of finding opportunities, suppliers and suitable technologies.

 

Notes

1 – These four pillars later became the foundation of the RALIS methodology that we use to diagnose and improve innovation systems.

Categories
Complexity and Evolutionary Thinking Innovation Thinking out loud

The future aint what it seems

I have written many times before about my serendipitous journey into the topic of complexity. One of the important insights for me is that we cannot really predict much of the future under conditions of uncertainty. While there are many things for which we know what the consequences are, we have to acknowledge that there are many situations where we simply don’t know how things will turn out.

As I became more sensitive of the consequence of the insight about unpredictability I realized how much of my work hinged on assisting customers to somehow plot and engineer a specific future path. I moderate at least one strategy session for some or other developmentally minded organization every month, sometimes many times more. All these organizations want to set their portfolio of interventions into motion, and want to make sure their plans are foolproof and environment proof – meaning that failure can be avoided somehow.

Recently I started following Dave Snowden’s advice, assisting customers to have much deeper conversations about what is going on NOW, and what is possible NOW. We’ve been using the 3 Criteria for Quick Wins for a while (see note below), but now I emphasize living in the NOW. At first I felt a bit insecure to insist that we stop trying to focus on the ideal future, but now my confidence has grown. The amazing thing is that many of my customers are responding positively to this focus on what is possible now. Maybe it is more intuitive to work from the current. Maybe South Africa has become so complex that we can actually not afford to spend much time in the future.

I must add, we do still look at the future. I am not promoting a junkie style of optimizing the current without a view of the future. There are some things that we know about the future. For instance, if a University decides to increase investment in post graduate research, they know they will increase revenue, increase research outputs, without necessarily increasing fixed overheads. But we don’t set a high goal, set milestones and lunge into action. We start by saying “how does post graduate research work now?”. We explore the options, the possibilities and the obstacles. We also look at what we’ve tried in the past and whether the context has changed so that we can try a small experiment again. Then we develop a portfolio of small low risk interventions that can be executed simultaneously.

I have been following this approach for just a few months and I must admit that I am pleasantly surprised by the outcomes. Of course it felt weird in the start to leave customers with a portfolio of experiments instead of a clearly developed log-frame like project plan full of milestones, champions, indicators and deliverables. But I can see how my customers’ organizations have become a more healthy, balanced and perhaps even more naturally innovative.

The future ain’t what it seems because we have so many things we can do in the present. It takes real leadership to work with what we have and it takes real courage to break with the typical management-style of detailed project plans, log frames, project charts and the like.

 

Note about quick wins.

As Mesopartner, we define a quick win activity as one where:

1) The resources are within our control. This includes funding, but also key resources, key people and willing champions

2) The results are easy to communicate. Preferably the results are visual so that the benefits of change are disseminated easily to others.

3) We can take the first steps of implementation very soon, within days or weeks.

 

 

Categories
Innovation Technology and innovation management

REPOST: The difference between academic and industrial science

In the last 5 years I have posted my blog articles on the topics around my work. I re-use many of these articles in my ongoing consulting and training work. Below is an article that I originally posted on 20 August 2011. This is one of the popular posts on my blogsite that was posted before I had the current following.

For my frequent readers, please forgive my trip down the archives!

One of my favourite authors on the topic of science is the late John Ziman. Ziman played an important role in popularising science and its role in the technological evolution of societies.  

In his last book, Real Science, he made an important distinction between science in academia, and science in industry. This is relevant to me because I am assisting universities to conduct more relevant scientific research that will benefit industry. At the same time I am assisting industries to intensify their scientific research.

According to Ziman, academic science works towards the Mertonian norms introduced by Robert K Merton in 1942, also known as CUDOS. Merton advanced our understanding of the ethos of the scientific process. I like Ziman’s (2000) discussion of the Mertonian principles. CUDOS is as an acronym that denotes good academic research and stands for:

  • Communalism – fruits of academic science should be public knowledge (belongs to the whole scientific community), and the communication and dissemination of results are as almost as important as the research itself,
  • Universalism – researchers and scientists relate to each other regardless of the rank and experience of the researcher. The norm of universalism requires that scientific findings are evaluated objectively regardless of the status, race, gender, nationalism or any other irrelevant criteria,
  • Disinterestedness – academic scientists have to be humble and disinterested. Work is done in a neutral, impersonal and is often recorded in the passive voice. It disassociates with the personal or social problems, and focus on advancing knowledge or solving a very specific problem in an almost clinical way.
  • Originality – every scientist is expected to contribute something new to the archive, while building on the knowledge of predecessors. Unfortunately this also sometimes constrains how creative academic research can become. “new” could mean new data, questions, methods and insights.
  • Scepticism – This norm triggers important brakes on scientists, as it involves critical scrutiny, debate, peer review and contradiction before being accepted. It is important as it deepens understanding and knowledge from different research perspectives, and should not seen as being completely negative, rather it should be seen as being necessary.

 

Industrial science works towards what Ziman (2000:78-79) calls PLACE:

  • Proprietary – the knowledge is not made public (or at least as little as necessary is made public),
  • Local – it is focused on local technical problems rather than on increasing general understanding,
  • Authoritarian – Industrial researchers act within a hierarchy and must work to please senior management, in other words, it is not serendipitous,
  • Commissioned – it is undertaken to achieve practical goals rather than to just improve knowledge, and
  • Expert – industrial researchers are employed as expert problem solvers, rather than for their personal creativity and writing or teaching skills.

 

Ziman argues that when universities undertake contract research for industry, they somehow cross the boundaries between these two approaches to research. For instance, industry is more interested in solving a specific technological challenge and would prefer that senior researchers work on a problem. In the last 50 years it has increasingly become necessary for universities to raise 3rd stream income, so it a universally accepted practice that universities undertake research for and in cooperation with industry.  However, a university must prioritise the development of interns and junior researchers (and achieve other social goals). Furthermore, industry may not be interested in registering a patent (immediately), otherwise their secrets gets shared with the whole world. Academic researchers on the other hand, are expected to deliver publications when they cannot deliver patents or licenses, thus there is another conflict of their objectives. Perhaps a last comment is that universities are under pressure to solve social problems that are deemed “relevant” by prevailing political pressures, while industry prefer to solve problems that are immediate, relevant and that may even be in contrast with the desires of the prevailing political and social debates. Practically this means that at the moment industry may need to automate to remain competitive, thus incurring job losses, while government and the society may be demanding job creation for people with little or no technical education.

 

Universities must understand this tension, and must operate within and between different modes of conducting research. Current legislation perhaps assumes one standard approach to university research, that always results in something that can be published and or patented (licensed), and it further assumes that the value (and cost) or research is known at the time of start of the research or after completion. Practical experience indicates that this is not always the case. Sometimes the value of research only becomes apparent when it faces market forces.

 

Sources:

ZIMAN, J.M. 2000.  Real Science: what it is, and what it means. Cambridge: Cambridge University Press.

 ZIMAN, J.M. 2003.  Technological Innovation as an Evolutionary Process. Cambridge Cambridge University Press.

Categories
Innovation Promoting Innovation Systems Technology and innovation management

Innovation happens in a systemic context

I am preparing to conduct a 2 day training on diagnosing innovation systems. The participants will be mainly from universities, but there will be also some senior government officials responsible for promoting industrialization and R & D.

I already know what some practitioners will ask me. They will ask “why bother with an abstract concept like an innovation system if we can directly help enterprises to innovate?”

This is not a trivial question. Practitioners from universities that assist enterprises to develop new products, solve problems, conduct research or improve processes have direct evidence that their services are contributing to better results, new products, new markets; in other words, they are directly facilitating innovation.

However, helping one firm at a time is costly, and takes up time. While this kind of 1-on-1 support is necessary, it is not sufficient. Innovation is only to a small extent the result of isolated actions by producers and their technological intermediaries that support them. We need to recognize that there are many other facts that makes it more likely that whole industries, countries or regions will be competitive because they are innovative.

For industries, countries and regions to innovate, a more systemic approach is needed. It must be recognized that innovation rests on:

1. The interaction between companies, which include interaction with:

  • input suppliers,
  • equipment manufacturers,
  • competitors,
  • joint ventures,
  • alliances; and
  • demanding and sophisticated customers

2. The interaction between companies and their supporting institutions:

  • Education institution and training providers that are not only responsive, but creating the skills needed for tomorrow
  • technology extension that reduces the cost of experimentation and that overcomes high costs,
  • knowledge intensive business services and technical consulting services that adds value
  • Research and Development institutions and specialists that are accessible,

3. The framework conditions that determine:

  • the incentive to innovate (which is often related to the pressure by others to compete and try harder)
  • the direction of technical change
  • the overall market conditions domestically

4. The ability to leverage unique regional demand or sophisticated demand to create innovation eco systems

In Africa, we have to focus on using the unique regional demands placed on our industries, our products and our innovation systems. We have to use these unique demands to create supporting institutions, creative firms and specific products that responds to these needs. Because our domestic volumes are often low, we have to focus on making sure that we can better integrate different disciplines, technologies and knowledge bases. This will require much more than innovative products and innovative processes, but will demand that we also create innovative business models.

Conclusion

We have many examples of entrepreneurs who have (despite some very demanding local conditions) managed to create innovative products and processes that have been successful globally. The question we are trying to ask with an innovation systems approach is “how do we increase the chances of our innovators to be successful by creating a dynamic system around the entrepreneurs?”. We recognize that a creative entrepreneur or technologist is not enough to create a new momentum. The whole system around these entrepreneurs need to be dynamic and innovative in itself.

When we get institutions, experts and policies around entrepreneurs to be more innovative, we will immediately see results at the levels of firms, industries and regions.

Categories
Innovation

Business model innovation in manufacturers in developing countries

The topic of Business model innovation is receiving increasing attention as a solution to surviving in turbulent economic times. The discussion on business model innovation to me seems to be driven by finding ways to respond to opportunities, unmet needs, creating new markets or thinking up novel ways of doing business. Many articles on business model innovation contains phrases like “responding to change”, “rapid” and “creating opportunities”. From my experience of engaging with many typical manufacturers in developing countries they don’t identify with this literature. It seems like many firms are able to absorb external changes, partly by ignoring them or simply by being to paralyzed to change. I think in some instances this is also their saving grace in the short term, although in the long term it might erode the competitiveness and dare I use the word “resilience” of the firm.

From my weekly engagements with business, it seems like we need to get our industries in developing countries to better respond to semi-permanent or emerging long term framework conditions. It reminds me of the story of the frog in the pot of water on the stove; because the heat (negative framework conditions) is increasing slowly most firms do not realize the pending disaster of not making these external forces part of core business strategy. I think it is called conditioning.
What many of the manufacturers that I am engaged with are struggling with is finding ways of responding to some of the obstacles, irritations or constraints in their environment that seems to become established or permanent features over time. In South Africa, many manufacturers are waiting, hoping, or lobbying for electricity prices to come down, for labour to become more reasonable, for government to curb the influx of more competitive imports, for inputs to become cheaper, for government investment grants to increase, etc. At the same time, the average size of orders are going down as other countries are able to manufacture the same quality at a much lower landed cost.
From visiting more than 50 manufacturers in traditional manufacturing sectors like valve, pump and industrial equipment this year I can see that those manufacturers that take these external factors as drivers for change or key considerations in their strategy are thriving. While the rest of manufacturers seems to be making mainly small incremental adjustments, hoping that something in the external environment would change returning them to their previous levels of competitiveness. The problem is that too few firms have the will to respond to some of the slow moving changes in their environment. Those firms that do change their business models to adjust to the prevailing circumstances are doing well despite still being in the same country as those firms that are simply trying to cope.
So what I would like to see is a dialogue on how to use business model innovation to deal with these semi-permanent constraints in the external economic environment as drivers for innovation within firms. To me it seems that many manufacturers do not feel driven by opportunity anymore, especially when they perceive the prevailing economic and political conditions to be negative or anti business.
In the field of promoting innovation systems we have hardly come up with systemic models on how to induce widespread change in how business models are designed, created, changed or even shelved. At the moment the topic still seems to driven by dialogue in business schools, or by advocates of social responsibility.
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Innovation

Competitive advantage? Just how competitive are you.

I am working every day with businesses that are denying that the game has changed. Many believe it is just the government that is inventing new rules. This is true in some cases, but in most the government is also simply responding to global changes. The benefit of working outside of South Africa sometimes is that I get to see the domestic manufacturers from another angle. And the truth be told: South African firms are not as competitive as they would like to believe. Yes, there are exceptions, and we hail their achievements.

Tim Kastelle published an article today titled “here’s why you need to build your innovation capability“. When my eye caught the first sub heading I almost stopped reading. It shouts “Competitive advantage is dead. Or at least dying”. Blink. I believe in competitive advantage, and I believe that firms must figure out what it is that they have to do to remain competitive. I also know that once you found a gap in the market it takes hard work to remain competitive. Being a follower of his blog I plowed on.

Wait. Don’t let me spoil a good post. you have to read Tim’s argument for yourself. He argues that it is more important to become innovative than to have a competitive advantage. This is not a new argument in itself, but I like his angle on this. He then provides some simple steps that a manager can take to become more innovative even within a rigid organizational context where innovation may not necessarily be appreciated. His logic will also apply to not-for-profit organizations that don’t believe they compete even though they have to be able to compete for funding.

Reading this article also made me think of how we idolize some of the very famous firms now, but how we tend to forget how many great firms have dissolved here in South Africa and in other developing countries. It usually starts with a refocusing, then with selling off under-performing or non-core units. Then a merger of the remains with another firm with a “strategic fit”. Then, the end. They just slip from our conscious into the past.

Let me not close so depressing. Let me rather ask: how can you use the environment as an constraint that you have to consider in your business model and your innovation process?

If it constrains you it must constrain your competitors. Can getting around this give you an edge? In other words, can you put the constraint between you and your competitors?

Then ask: what are the constraints that are on the horizon, and how can I anticipate these constraints to get them between me and my competitors?

Thinking about this often might save you the anguish of trying to adapt while under pressure to also deliver.

I wonder how your answers will challenge your current view of how competitive you really are, and how innovative you are to respond to the changes in the environment.