1. Innovateto give your organisation
the competitive edge
What 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.
B
usiness 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 environment
2. infrastructure
3. macroeconomic environment
4. health and primary education
5. higher education and training
6. goods market efficiency
7. labour market efficiency
8. financial market development
9. technological readiness
10. market size
11. business sophistication
12. 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
40 www.wbsjournal.co.za
HUMAN CAPITAL
ImagecourtesyofWikipedia

2. 41
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.
Innovation
In 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
2014 • Issue 36