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What Is Innovation?

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What Is Innovation?

The latest buzz word doing the rounds in Africa is ‘innovation’. But what does it really mean? Get the definition wrong, and you’ve got the concept wrong. Professor Atuahene-Gima shows you how to get it right.

Africa is changing for the better. New political and economic improvements have led to new industries, companies and other initiatives which many of us believe could lead to better things for Africa and its people.

In the midst of all these positive changes, CEOs and senior executives face critical challenges that require new thinking and new ways of competition. Old models and frameworks of management and leadership need to change.

Many of the African CEOs I have interacted with, like many of their counterparts elsewhere, believe that to compete successfully in the new African environment requires innovation. When asked to give examples of companies known for their innovation, many quickly recall the usual culprits – Apple, 3M, IBM, etc. Yet, when asked to explain what innovation is all about, and what needs to be done to ensure innovation in their organisations, many of them struggle.

Indeed, this malaise is reminiscent of my experience in China several years ago. I started to research on innovation and new product development in China sometime in 1995 with a project in the Haidian district in Beijing. My objective was to find out, among other things, the degree to which CEOs and senior executives perceived innovation as an important ingredient for success of their firms in China’s emerging economy, and what strategies they intended to adopt to promote innovation in their organisations.

One of the key findings of the research was that although 95% of the respondents believed that ‘innovation is critical for the success of their firms’ only about 15% of them have considered articulating a working definition for innovation in their organisations.

Even fewer could point to strategies and processes designed to build innovation as an organisational competence. I suspect the same to be in the context of the emerging dynamics of Africa based on my conversations with several executives.

But before you can lead innovation in your organisation, and use innovation as a key platform for competition, you will need to first have a clear idea what you mean and how that definition will facilitate meaningful conversation in your organisation. To start though, it is important that we understand what innovation is not.

What is NOT innovation?

The common mistake many executives make is to refer to innovation in terms of research and development. Closely, related to this error is the use of say, the number of patents as an indication of successful innovation. Yet, we all know that patents are not necessarily useful until and unless they are turned into products, services and processes which are useful for the organisation and/or for customers. Innovation is not necessarily technology, new or high. Irrespective of the newness or highness of the technology, the key test for it being an innovation is the degree to which it provides a solution to an important organisational and/or customer problem. This is an important insight for companies in emerging economies where new, high technologies are likely to be obtained at very steep cost. Indeed, the love for new and high technologies often leads to blind pursuits that waste company resources.

It is for this reason that Huawei, the Chinese leading telecom equipment manufacturer, launched its customer-centric R&D process. One of the key tenets of this process is the mantra ‘we are not interested in high or sophisticated technologies but rather simple functionality’.

The message to R&D personnel was that technology is only a promise to a new business but not new business itself. Huawei will have a good business only when customers are able to use its technologies – in the form of products and services – to solve important problems to achieve their objectives. CEOs must see new or high technologies only as potential means for creating valuable solutions to problems but they are not innovations, in and of themselves. Creativity is not innovation. I have found in my consulting and other executive training forums that many senior executives have significant problems accepting this fact and in appreciating the difference between creativity and innovation. Creativity – as a process and ability to generate new ideas– is of course potentially important to organisational viability and must be encouraged. But notice the key qualifier, potentially.

One way to highlight the difference between creativity and innovation is to say that creativity is imagination; dreaming up new ideas. However, these new ideas must be turned into products and services that can stand the reality of the market place – are people prepared to pay for them?

So while creativity is about dreaming, innovation is about waking up to reality. This line of thought means that one can be creative but may not be innovative, but one cannot be innovative without first being creative.

Having described what innovation is not, we can now explore a definition of innovation that would provide you with opportunities to have meaningful conversations with everyone in your organisation.

What is innovation?

I have found it useful to encourage CEOs to look at innovation from two related perspectives. The first angle is what I call the Small “i” and the second is the Big “I”.

Small i. The ‘small i’ is about new and useful things to the company and/or customers in the sense that the organisation and customers may not have experienced the benefits offered before. Take a simple example, the introduction of a car in the early 1980s to many people in China who were used to the bicycle as the only major means of transport was an innovation because the car offered new benefits and solutions to important transportation problems for them. Yet, to many people outside China, the car was obviously not an innovation. The same can be said of a management or manufacturing process adopted by a company for the first time, irrespective of the fact that this process may have been used in other companies for many years.

When defined in this way, innovation in the form of ‘small i’ can come in the form of new manufacturing process or strategy, new marketing and branding approach, new financial approach, new reward systems, new customer experiences, new distribution methods, new business models, new supply chains, etc. My research in China has demonstrated convincingly that product innovation may be a necessary but not a sufficient strategy for market success. Product innovation requires accompanying and supporting innovations in marketing, branding, distribution, supply chain and manufacturing to become a market success.

Broader perspective

The lesson for CEOs in corporate Africa is that to lead innovation, you may want to promote a more broader perspective of the concept. Indeed, given the relative technological weaknesses of many companies in Africa compared with their foreign counterparts, the most viable avenues for innovation in Africa may be in the area of management innovations more so than technological innovations.

Several contextual market problems in Africa related to accessibility, affordability, awareness, and acceptability could be overcome by looking for solutions not in terms of new products per se, but rather in terms of management innovations.

Big I. The second view on innovation, what I call the Big I, is an organisational culture for creating new value across the entire spectrum of its activities. Innovation then becomes a mind-set and a value system of the entire organisation, providing the ecosystem that nourishes new ideas and processes that produce a continuous stream of useful new products, services and management innovations. This is what we mean when we describe a company such as Apple, Samsung, etc. as innovative. Today, few companies in Africa can boast of being innovative, in the sense of having built such a cultural mind-set and environment within which small innovations germinate. But the time to start is now!

Many of the companies we admire as innovative companies around the world started the process of building an innovation culture many, many years ago. Thus, it is only by taking a long term view, by persevering and by exerting great effort can we one day see African companies among the most innovative companies in the world. Many companies in China have started on this arduous but exciting journey and it is time we started to hit the road in Africa.

As a leader in corporate Africa, your key remit is to take your organisation into a fruitful and successful future. Innovation must be the most important item on your agenda now. Your success in promoting innovation will depend on several thing, but for starters, it is important that you are very, very clear about what you mean by innovation in your organisation in order to begin what is going to be an exciting conversation.

 *Professor Atuahene-Gima is founder & president, International Foundation for Africa Innovation (iFAI), Professor of Marketing & Innovation, China Europe International Business School (CEIBS) and executive director, CEIBS Africa

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