Daring to win with innovation
WOLFGANG JAKOB, CEO of T-Systems SA, explains why innovative firms are the ones that survive cut-throat competitive forces…
he only sure thing these days is change. Tastes, trends, technology and timing can alter at the drop of a hat. Product lifecycles have shrunk, company lifecycles have been compressed and there is no such thing as a guaranteed market or job security.
To make it in a highly competitive and flexible environment, companies and individuals have to be watchful and learn on the run; they have to find better ways of doing things, all the time. It is hardly surprising that strategists say the capacity to innovate is the only sustainable competitive advantage.
Much of the pressure to innovate, and the capacity to do so at a rapid rate, is due to globalisation. This planet-wide interconnectedness is proving to be both a blessing and a curse to businesses, regions and countries.
Free trade, mobile capital, and technological and communications advances have brought almost endless possibilities. Market vistas have opened up, input costs are dropping and the production process can be cut up and allocated to the cheapest countries.
But globalisation has also extended the risk of being ousted from the market. South African firms who venture into the export market can attest to the hostility of global competition. However, domestic firms selling to the local market are also finding it increasingly difficult to hold their own against imported competition.
Competing successfully, on a sustainable basis, requires the ability to second-guess technological leaps and their implications for product development and market tastes. Any advantage that firms may have in meeting market needs is likely to be short-lived, though, and has to be topped before the competition cribs the idea.
Firms have to adapt quickly to macro-level shifts, too. Global trends, such as political crises, currency moves or commodity-price swings, can topple one set of market leaders in favour of another. For instance, South African firms compete globally with the handicap of an overvalued rand. Overcoming this obstacle to price-competitiveness and capturing the attention of potential buyers takes some serious lateral thinking.
Innovation is the critical challenge for businesses in an era where they are differentiated by their ability to adapt dynamically to marketplace changes and to meet changing customer needs on the fly.
This kind of creative thinking need not generate a “Eureka” moment to be of value. Forging ahead is not only about technological leapfrogging; rather, staying in the race could be a matter of behaving in an innovative fashion all the time and moving along bit-by-bit, but continuously.
Incremental advances in business models, product types, production processes or sales approaches could be what sustains the competitive edge. It is about defining a business benefit and then making it work in new ways. It is about finding ways to do things smarter, better and faster, often with the existing infrastructure.
Innovative behaviour can never be in over-supply. That much is clear from the fact that companies devote enormous budgets to research and development, in the hope that the outcome will be profitable innovations.
Those companies that can afford to dedicate resources to innovation departments may act as leaders in technology or product design, or in finding other new ways of doing business.
But the thing about the brave new world is that the market leaders need not necessarily be the big, monopolistic companies of yesteryear. Today it may be a matter of brains and agility, rather than brawn that does the trick. Besides, the advantages of being first to the market, or first with the new idea, are short-lived.
Theorists call the company with brains a learning organisation. Such a firm is one that is permeated with a culture of learning, so that each employee has the desire and capacity to do better or differently, continually. It is no longer enough to have one department or leader who does all the thinking and learning, or one corporate bigwig who guides the company to success.
When innovation becomes a culture, it becomes a sustainable route to global competitiveness. But the incentives built into these competitive forces do not guarantee innovations that will bring sustainability in the broader sense.
It is up to corporate and national institutions to ensure that innovations do not merely drive short-term profitability, at the expense of the structure and health of communities, or the environment, or the long-term sustainability of the global marketplace.