Innovate to give your organisation the competitive edgeWhat is clear is a company or a nation state that is not innovating is out of the game. It is imperative that companies and governments take on the challenges of competitiveness and ever-changing technology by embracing new ideas, writes Douglas Bernhard.

Business executives and government policymakers everywhere are focused on two simple concepts:

competitiveness and innovation. As private and public sector leaders alike struggle to get to grips with the implications of competitiveness and innovation – especially insofar as they concern potential prosperity – most seem to share a (sometimes grudging) recognition that, at the very least, the implications are anything but simple.

What is clear is a company or a nation state which is not competitive – similar to a rugby

player who has been shown the red card by the referee – is out of the game. Equally, and unquestionably, an organisation or country that elects to pursue business as usual in the absence of an embedded innovation-rich culture is living on borrowed time.

Competitiveness The Geneva-based World Economic

Forum (WEF) defines national competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country” and, therefore, its growth potential. The scary part for many

political leaders, as well as their generally over-compensated CEO counterparts, is that national and corporate scorecards for competitiveness are now published in virtual real time. The Global Competitiveness Report, updated annually by the WEF, for example, ranks 148 economies along 12 key pillars of competitiveness. These are:1. institutions or institutional environment2. infrastructure3. macroeconomic environment4. health and primary education5. higher education and training6. goods market efficiency7. labour market efficiency8. financial market development9. technological readiness10. market size11. business sophistication12. innovation (both technological and

non-technological).Thus, whatever the politicians’ and officials’

excuses or promises, there is no longer anywhere to hide. The WEF’s conclusions are based on evidence and analysis, not polemics. Consider South Africa – ranked 53rd overall but 135th in health and primary education, 89th in higher education and training, 135th in labour market efficiency and 62nd in technological readiness. These are hardly indicators of future promise or prospects for superior economic performance. While this might not come as a surprise to South African business managers, who each day have little alternative but to deal with the frustrating consequences of a suboptimal

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business environment, it certainly raises an array of difficult questions. Considering that the embarrassingly low requirements for a National Senior Certificate (matric) pass range between 30% and 40%, one of the questions is inevitable: where will the next generation of skilled employees come from? But perhaps the most fundamental question points to the biggest challenge: what is to be done?

We can’t offer immediate remedies, although there exist scores of good ideas and proposals aimed at providing robust and workable solutions to overcome the many hurdles that South Africa faces. Let’s consider the country’s dysfunctional education system. How many private sector organisations are asking themselves what part they can, and should, play in participating in new initiatives designed to improve the competencies and prospects of the country’s most important human resource – its youth. Andrew McAffee, a professor at the Massachusetts Institute of Technology (MIT) and co-author of The Second Machine Age, says: “Long term, the only way to keep people employed and socially mobile is to create an education system that produces digital-age workers whose skills are complementary to machine intelligence.” And, we should add, whose skills are aligned to tomorrow’s, not yesterday’s, economic imperatives. Does this reflect your take on the subject? Or do you find it more convenient to shrug your shoulders and leave the responsibilities of education in the hands of the country’s underperforming Department of Basic Education?

Competitiveness, of course, involves much more than education. Early this year, PricewaterhouseCoopers, the multinational professional services firm, reported in its 17th Annual Global CEO Survey that chief executive officers surveyed in 2013 identified three transformative global trends: technological advances, demographic shifts and a shift in global economic power. Nevertheless, the majority of CEO respondents admitted their firms were not sufficiently prepared to capitalise on these trends. Is yours? The specific factors that seemed to be at the top of the list of concerns of South Africa’s industry bosses were, as Business Day put it recently, “inadequate infrastructure, the volatile exchange rate, the slowdown in high-growth markets and over-regulation.” I mean, consider that in January 2013, R14 would have bought you £1; today you need R18

Douglas Bernhardt is a lecturer at Wits Business School, where he teaches the MBA electives Competitive Intelligence, Industry and Competitor Analysis, and Strategy as Revolution. He can be contacted at douglas.bernhardt@gmail.com.

to buy the same £1. This is not a great performance, especially if you’re an importer or someone who travels extensively.

InnovationIn the past decade, breakthrough innovation

has come to serve as a familiar mantra – if not reality – of enterprises big and small. Companies from Amazon.com, the world’s biggest online retailer, to Zara, one of the world’s largest international fashion companies, do consistently put innovation into practice. But big is not necessarily better. Picture- and video-sharing and social networking site Instagram was acquired by Facebook in April 2012 for approximately US$1 billion in cash and stock, at a time when the company had only 13 employees and 30 million active users. What profit-boosting innovations has your company introduced in the past 12 months or so?

existing business processes or reinvent your basic business model, ready to compete for the future? Of course, you can continue to do what you’ve been doing, and in much the same way you always have, until a disruptive business model or technology innovation makes you and your company obsolete – think Kodak.

Another question (for executives at larger companies mainly): to what extent are your rank-and-file managers and staff invited to contribute to innovative – in other words, creativity with profit potential – ideas, plans and strategies? Or is your underlying organisational culture one that firmly clings to conventional notions of incremental improvement, not unlike the tedious ritual of changing window displays in a clothing shop?

At this year’s WEF in Davos, Switzerland, in January – where approximately 250 top political leaders and heads of international organisations networked with more than 1 500 members of the global business elite to discuss how they can work together more effectively in response to, and in anticipation of, a rapidly changing world – one of the key themes was “embracing disruptive innovation”. This involved exploring the question: what societal, economic and technological forces are reshaping the digital landscape? The question for you is: does this reflect a priority for your executive team? If not, the biggest disruption your company is destined to experience is when a competitor – from Asia, Europe, North America or, possibly, right on your doorstep – creates a business model, a new product platform or technology innovation that effectively throws a virtual grenade into your organisation’s activities and future plans.

There is little choice but for companies and governments to embrace the tough and constantly changing challenges of competi-tiveness and technology. But this can only happen if you’re willing to experiment with a profound culture shift, forget what worked in the past, and prepare to launch yourself and your organisation into the future.

Of course, you can continue to do what you’ve been doing, and in much the same way you always have, until a disruptive business model or technology innovation makes you and your company obsolete – think Kodak.

Another recent development is the rapid expansion of so-called accelerators – essentially “schools for start-ups” – which are “picking the teams and ideas that are most likely to succeed and serving them up to investors”, according to The Economist special report on tech start-ups. Not only that – they are also doing so in ways that “traditional” incubators, or indeed venture capital firms, never could. To what extent has your company tapped into, or otherwise supported, the profit-generating potential of accelerator-sponsored start-ups? Or does your firm assign the task of coming up with ideas for new wealth-creating products and services to its business development and R&D departments only?

The Economist magazine suggests: “Proliferating digital platforms will be at the heart of tomorrow’s economy and even government.” So, what is your company doing to develop, or buy into, new digital platforms designed either to enhance your

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