Sowing seeds for business innovation

These are very uncertain times for many businesses. While the political environment is yet to provide consistent direction for human and economic development, infrastructure is crumbling and unemployment rates soar far above population rise. In the Nollywood-worthy politics of the moment we must never forget that the costs of not innovating – business collapse, lower economic growth – are steep.  According to Klaus Schwab, founder of the World Economic Forum, “the extent to which an economy can develop higher value-added products, processes and business models through innovation is a major determinant of long-term, sustained prosperity.”  Innovation is the heartbeat of the modern business and economy.

There are a number of interesting facts about innovation. First, there is no monopoly on innovation. Innovation is happening everywhere, from scientific inventions in developed markets, to the “frugal innovation” of radically affordable products and creative business models in emerging markets.  A good example from Nigeria is Tomato Jos which has built an innovative business around training small-holder farmers to grow excellent tomatoes and attract a fair price in the market.

A second fact about innovation is that it never happens by chance.  Clement Mok, long time product designer for Apple Inc, aptly describes innovation as a product of ‘design’. It may be the outcome of years of laboratory research or reflective practice at work, or action following friendly conversation, but never by chance. In his words, “People adopt ideas when social, personal and financial trends intersect – a confluence that may seem random but usually happens ‘by design’.” So those that tell young Nigerians that they can reap instantly where they have not sown in the sweat of hard work are taking them on a ride in the worst kind of “one chance” scam.  Innovation involves deliberative effort to design new and better ways of doing things, driven by hard work and persistence. Businesses that succeed, nations that succeed, have battle-scars from long years of grappling with their ideas, testing those ideas, often failing in the marketplace, recalibrating and stepping out again till they win the market.

Third, innovation is about people. The world’s most innovative companies from Google to Unilever draw extensively on the expertise and engagement of their employees. It is critical to have the right people in your business and to engage them effectively.

  Innovation channels

Innovation is a hot topic in business circles, popularized by the work of Clayton Christensen in his book, “The Innovator’s Dilemma”. He describes a type of innovation that creates a new market and value network, and over time disrupts an existing market and value network. A classic example is Nigeria’s first online higher institution, Beni-American University (BAU) established to revolutionize access to higher education in Nigeria. This emerging model presents an alternative to education within the four walls of a traditional brick-and-mortar university. Through this kind of business model innovation a business can be invented or reinvented with a highly competitive value proposition and capture a significant new market share.

For traditional businesses, there are several pathways to innovation, product innovation being the most common. This involves creating a new product or redesigning an old product to suit customer needs. For example, the brewer Guinness Nigeria introduced the Malta Guinness Herbs Lite to serve customers who might prefer a low sugar option. Other businesses may choose to focus on service innovation, introducing new customer service channels or service delivery systems or a technological function that would revamp their service delivery. For many service-based businesses, customer service is the product and so various forms of service innovation could improve profitability for such businesses. For instance, the online retailer Konga has drastically reduced the delivery times of customers’ orders through the ‘Fulfilled by Konga’ initiative which allows online sellers use Konga warehouses for swift delivery.  Another idea for innovation involves process innovation, introducing new or improved processes in terms of production method or delivery model. God is Good Motors, the long-distance mass transporter notably introduced efficiencies to its business process by enabling passengers manage travel online.

The common denominator to the various types of business innovation is that for every type of innovation, a particular problem is solved for the customer. Essentially, people innovate for people.

Barriers to innovation

There are real barriers to innovation which Ndidi Nwuneli discusses in her recent book, “Reaching Millions with Impact”. She writes that in the rugged African terrain innovators face challenges related to talent, infrastructural and financing gaps. One of the most pressing challenges businesses we engage at Lagos Business School face is the talent gap.  Due to poor educational infrastructure most businesses lack sufficiently qualified personnel to develop new or significantly improved products and the technical know-how to manage innovation processes within businesses. Therefore businesses and the public sector have a role to play in equipping Nigerian citizens to innovate.

Unlocking innovation

There are a number of ways to begin to build an ecosystem of innovation. One is to encourage hands-on observation and to constantly question the status quo. Continuing research on your target market and existing business approaches will enable you carefully design your innovation to address a need that has not already been met or tackled in your particular way, enabling you carve out a strategic niche. Two, network on ideas with mentors and fellow entrepreneurs since collaborative knowledge-sharing constitutes intellectual capital, the currency of business success.  Third, there is need to invest in research and development around your business project. Pilot business ideas on a small scale, work up to large scale, and deploy technology where appropriate.

To reap the fruits of innovation, our businesses must equip visionaries and tinkerers with the most advanced tools and knowledge money can buy. Certainly Nigeria is experiencing inclement political and economic weather today but tomorrow’s winners are those entrepreneurial businesses that plough the fields and sow seeds for innovation, not watching the sky fruitlessly, waiting for the storm clouds to disappear.

Dr.  Nwagwu, earned a doctorate at Harvard University and is Faculty at Lagos Business School. e-mail:[email protected]