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South African business leaders are putting innovation front and centre in their organisational strategies to help drive sustainable growth. This was one of the key findings in a new pilot study tracking South African public and private sector organisations’ innovation management capabilities.

The State of Innovation Report 2018 – 2019 was developed by the Creative Leadership Collective, a consortium of executives and senior managers tasked with driving innovation within South African organisations, and the University of Stellenbosch Business School (USB). Paul Steenkamp, co-founder of the Creative Leadership Collective and co-author of the study, says the current trend toward prioritising innovation comes at a critical time in the country’s history.

“To solve the problems we face as a country and continent, we can’t afford to do the wrong things right from an innovation perspective. We need to think and act differently, and leaders need to create a more empowering culture within their organisation. Encouragingly, South African public and private sector organisations have taken note: management commitment and support for innovation is perceived to be on the up.”

 SA businesses prioritising innovation despite lower maturity rates

The State of Innovation Report 2018 – 2019 includes five stages of innovation maturity, ranging from 1 (ad hoc innovation with no formal focus or follow-through) to 5 (optimised innovation that is scalable, driven by empowered employees).

”Our research found that none of the participating South African organisations were at stage 5, and only 8% were stage 4,” says Steenkamp. “Nearly 80% of South African firms are either at the Emerging or Defined stages of innovation, where there is some awareness and effort, or some degree of formalised strategic programmes linked to customer or business objectives. This is consistent with global trends: in the 2018 Benchmarking Innovation Impact Report, nearly 60% of global respondents placed themselves in the first two categories. Only 4.1% believed they had reached the highest stage of innovation maturity.”

“An organisation’s capacity to manage innovation tends to improve over time, but only when there is clear leadership to manage specific issues limiting innovation at the various stages of maturity,” says Steenkamp.

 Measuring innovation

The report uncovered the key metrics that participating South African organisations currently apply to measure the success of their innovation efforts. “Customer-related metrics emerged as the most important measure for South African innovation success. Two-thirds said they measure innovation by the growth in number of new customers buying their product or increasing the number of customers repeatedly using their products or services.

According to a Walker study, customer experience will overtake price and product as the key brand differentiator by 2020. “However, in the public sector, innovation priorities relate more closely to enabling public sector organisations to be better prepared for future challenges around food security, health, and water,” says Steenkamp.

 Improved collaboration, skills transfer

The United Nations Conference on Trade and Development (UNCTAD) notes in its Technology and Innovation Report 2018: Harnessing Frontier Technologies for Sustainable Development the importance of skills and education in taking advantage of so-called frontier technologies: artificial intelligence, Internet of Things and other emerging technologies that are driving much of the advances in the digital economy. “Organisations that are open to the learning process outperform those that are not. However, our research found a lack of collaboration between the private sector and institutions of higher learning,” says Steenkamp.

Study co-author Dr Awie Vlok of the USB said most managers would like to improve their innovation performance but lack the knowledge and skills to do this.

“Studies on innovation and leadership are not new but research on the competencies of leaders to bring about innovation is still new. Innovation thought leader, Prof Clayton Christensen from Harvard Business School, only referred to innovation as the new science of success in 2002 and in 2004 the McGraw-Hill group introduced the notion of the Innovation Economy. Scholarly interest has since increased, while popular media feature innovation celebrities and their perspectives.”

Despite the rapidly growing knowledge base, managers in Southern Africa require knowledge, skills and attitudes to deal with our challenges and context. This report conveys important insights into the views of those taking part in the survey, and future surveys will expand on these.”