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Monday, September 20, 2004
South Africa's Technological Innovation Imperative
So what drives growth? This apparently simple question has been the subject of debate for decades but there is no question that in the long run, an economy cannot grow unless technological progress occurs. The role that technological progress plays in driving growth is most evident in the way in which it contributes to competitiveness. Like increased competitiveness at the company level, which can translate into greater profitability, increasing country competitiveness generally results in substantial benefits such as increased per-capita income growth - the very target of many of South Africa's upliftment policies.

It is interesting to note that when country competitiveness is plotted against country innovation capacity, there is a distinct linear relationship - countries with a greater innovation capacity are also more competitive. So if growth is a function of competitiveness and if competitiveness is a function of innovation and technological progression, why is South Africa not increasing its innovation capacity to drive growth?

The value of innovation is underestimated.
Even when innovation activity is acknowledged to improve market position, the perception that "costs are too high" remains. It is more likely that the underlying reason why innovation is not a core part of company strategy is not that "the costs are too high" but that company decision makers don't know if innovation investment will yield suitable returns - the risk factor.

After all, would the costs of innovation ever be considered "too high" if each investment added an additional 30% to the bottom line? So, if companies had more certainty and access to resources, would they innovate more? What if market and demand risk could be better managed? Yet to accomplish this, companies and individuals engaging in a process that begins with an idea and ends in the market must understand and manage a myriad of technical, legal, financial, market and other business issues.

Finance must also be found to fund the process. Given this complexity, it is no wonder that technological innovation and the process of commercialization is so under-represented in our economy. Innovators, be they individuals or companies, need to be strongly supported as the consequence of poor innovation management is failure, which only serves to support the perception that innovation is "costly."

This is exactly why we need to improve innovation management and to develop a network of innovation support centres and technology and business incubators. Innovation support centres are "translators" of technological competence into marketable applications and market need into the supply of underlying technology competence and they focus on understanding the techno-market interface.

The result is a knowledge base that
a) helps to more accurately understand market and demand risks;
b) operates networks with technology developers, industrialists, legal practitioners, financial service providers, market researchers, financiers and the like to provide solutions.

If we want to grow faster on the back of increasing competitiveness, we need more innovation in our economy. Innovation needs to form the backbone of company strategy and not just be the focus of one-liners in business plans and mission statements.

While government support in the roll-out of innovation support centres is growing, the reality is that industry, academia, government and the labour movements need to form partnerships to drive an innovation mindset. One area of glaring weakness is in skills development where a true partnership between these stakeholders will result in the identification of the skills of tomorrow, provide the training necessary and offer jobs to those more adequately trained to meet those needs. We need to expand the size of our economic pie.

posted by Naina @ Permalink 9/20/2004 11:44:00 PM   1 comments  --- Google It! ---
At 8/08/2005 04:59:00 PM, Anonymous Edmund Katiti said...

I ma interested in knowing the kind of support the South African Government gives to Innovation Support Centres, and how many such Centres there are in South Africa. I am interested in setting up such a Centre in my country.

Edmund Katiti,
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