How
Nigerian businesses can leverage Innovation
For
market leadership and global competitiveness
If you walk
into a room full of business owners in Nigeria and ask what an iPod or a
Blackberry is, about 99% would say yes and almost all would even have one; this
is also true for iPhones and iPads. Something interesting about these products
is that the manufacturers never advertised them in Nigeria , until recently, yet
demand is huge. Secondly, these products never existed 10 years ago, so are
relatively new. Yet they have achieved phenomenal success in such a short time;
far and above more established brands.
So what has all this got to do with Nigerian businesses such as yours? Well, Everything, if you want to create companies with products with such global penetration and massive success as Windows OS, iPad, Plasma TV, products that history will remember and businesses that will create overwhelming wealth. If the second option is what you want, then you need to understand this secret formula, embrace innovation and learn how your company can benefit from it.
They have reshaped industries, created new markets, connected millions, generated revenue in multiple billions of dollars and lifted a potentially dying company into global dominance in that period. Google achieved the same phenomenal growth in less than 10 years. This very pattern is seen in several other industries such as consumer electronics and even fashion. What is remarkable about these strategic successes is that the products and services are never-seen-before new concepts contrary to the common wisdom of selling what the customer already knows and what is in demand.
So what has all this got to do with Nigerian businesses such as yours? Well, Everything, if you want to create companies with products with such global penetration and massive success as Windows OS, iPad, Plasma TV, products that history will remember and businesses that will create overwhelming wealth. If the second option is what you want, then you need to understand this secret formula, embrace innovation and learn how your company can benefit from it.
They have reshaped industries, created new markets, connected millions, generated revenue in multiple billions of dollars and lifted a potentially dying company into global dominance in that period. Google achieved the same phenomenal growth in less than 10 years. This very pattern is seen in several other industries such as consumer electronics and even fashion. What is remarkable about these strategic successes is that the products and services are never-seen-before new concepts contrary to the common wisdom of selling what the customer already knows and what is in demand.
Media
platforms all over the world have dedicated researches, interviews and columns in
efforts to understand the underlying secret to these success stories and case
studies after case studies have been written about it. The truth is that the
secret is not in a sense a secret as Apple has been consistent with this
success formula and if the company can replicate it on each of its new products
over time; it means it can also be done by any other companies. And indeed,
some companies have done likewise. The secret formula responsible for the
successes of these companies is encapsulated in one word, Innovation. These
companies mentioned, Apple, Google, Samsung etc, have been able to come up with
brilliant ideas, developed them into almost magical products and services, and
successfully scaled them up to mass market consumables and economic prosperity.
Through innovation, these companies and their “colleagues” have moves from
being another player in their industries to leaders and global brand icons.
So
what has all this got to do with Nigerian businesses? Well nothing or
everything depending on how you look at it. Nothing, if as a country or business
owners you want to continue to play fifth class with no significant impact on
the global economy or you want to continue to struggle in an overcrowded
marketplace. Everything, if you want to create companies with products with such
global penetration and massive success as Windows OS, iPad, Plasma TV, products
that history will remember and businesses that will create overwhelming wealth.
If the second option is what you want, then you need to understand this secret
formula, embrace innovation and learn how your company can benefit from it.
Why is Innovation and why now?
Why Now
There
is need for the next generation of Nigerian born businesses and entrepreneurs
who will come-up with great ideas and turn them into innovative local products
made in and by Nigerians and drive them to be massively successful both locally
and globally. We also need brands that can compete and lead in the global
market arena. We need Nigerian businesses that are ready to make impact in the
world. To achieve this, Nigeria businesses will have to break-away from the
culture of running “me-too” businesses and products and embrace innovation.
Another
reason for the call for Nigerian companies to embrace innovation is that if we
can successful create our own iPod or iPad that is successful in the global
market, we then have the greatest brand ambassador for the country in its
ongoing rebranding efforts. The whole world will start to take us seriously.
Why Innovation
It
is a well known fact that very few Nigerian companies today manufacture their
products and services from idea-to-finished products locally and those who do,
none of such products are market leaders. If you take just a glance at shelves
of supermarkets or stores you will find more foreign products and brands than
local ones. As a matter of fact most of the products that are manufactured
here, and are winning awards, none of them were conceived here. Our “great”
companies just send scouts abroad to look for products that are selling well and
what you will see next is an advert saying “the most successful product in
Japan now in Nigeria”. Worse still, almost every company in every industry is
selling me-too products and offering similar services. As long as one company
has entered into that line of business and made a decent profit, be sure to
find that in the next couple of months its competitors will start importing or
manufacturing the same products or offering the same services. There is
absolutely no innovation even in the choice of products to sell let alone in
developing them. The question is can we become relevant in the world without
creating our own product/brand champions? How many of these business owners
actually understand what innovation is really all about? How many know exactly
how much their businesses and the country can benefit from innovation? And how
many are skilled at how to unleash its power to create breakthrough and
sustainable global relevance and wealth?
Another
important reason for innovation is that our businesses are crying soap in their
eyes in the midst of an ocean. Whereas our country is blessed with a huge
market in its 150 million population, businessmen all over the country are failing
to leverage their local advantages to expand their business and so are finding
it very difficult to compete with multi-nationals or imported products, capture
market growth, increase their revenue, expand their businesses and so forth.
Some are even venturing overseas to start new businesses but are failing.
To
make matter worse, the world today is a global village and competition is now
more global than ever before. Our government is opening up our markets for
foreign competition. So your product doesn’t only have to compete with local
rivals but with foreign more established firms who are more skilled at creating
innovations. These competitors come with more advanced manufacturing processes
for better quality, better cost structure that means cheaper products and more
successful global brands.
Reasons for “me-too” culture
There
are so many reasons most businesses prefer to sell “me-too” products. One is
that it requires no creative thinking and the risks are very minimal if any.
Other reasons include lack of global vision, myopic mindset of entrepreneurs
and the quest for quick, easy financial success and comfortable life for “me
and my family” by vast majority. Everyone wants to make it quick and is
comfortable with a house, a nice car and enough cash to be able to travel
abroad. There is no desire to do something audacious, something big in the
world or and many are too afraid and don’t have guts to take really big risks.
Another reason is the lack of creativity and taste for knowledge by established
and aspiring entrepreneurs. Innovation can only be created through a translated
idea which comes from superior insight or knowledge. To gain this insight, one
has to be vastly empowered with knowledge which comes from studying and you
have to dispel the notion that creativity is something that one is born with
because research and experience have shown that it can be taught and is
learnable. Most of our businessmen are either lazy to research and study or
would not invest the money required into research and development. So even the
ideas they come up with (occasionally) don’t survive the fiercely competitive global
market, so they give up and continue with me-too strategy. New entrants “learn”
from established companies to better stick to manufacturing the products that
are “selling” in the market.
Other
reasons for the low level of innovation entrepreneurs lie more with government
and institutions in the country. On the part of the government, there are no
incentives for businesses that are willing to go the innovation route, poor economic
viability of the Nigerian market, poor or nonexistent infrastructure and
production technologies and low access to finance.
Though
the country boasts of over 150 million people, only few people can afford
decently priced products. This greatly affects entrepreneurs who come up with
great products but no one to buy them. I remember a friend that started an
online business that would have ordinarily succeeded in the US but it failed
here mostly because of the market viability. On infrastructure and production
capacity the country scores almost zero.
One
cannot find local manufacturing companies to help you translate ideas into
world-class finished products; even to package corn successfully is difficult
or almost impossible.
Lastly,
great many Nigerians have good ideas but most don’t have the funding to take
the ideas to the next level while of course making the necessary mistakes.
Start-up funding venture capital or angel investment is almost nonexistent so
many entrepreneurs don’t have the funding to neither undertake audacious and
big ticket projects such like Facebook received or the technology to develop
them locally.
A reminder
That
said; let us remind ourselves that in many of the countries where innovation is
thriving there are also peculiar challenges. In developing the iPod, Apple
faced serious challenge with the record industry and downloadable pirated music
culture in America which were enough to cripple the project. Google and Microsoft
have faced various anti-trust law suits which are not very critical in Nigeria.
Even more it is not as easy to find or come up with mind-blowing innovations,
say like in the US, because so many people are churning it out in their
millions every day so you have got to be really brilliant for your idea to see
the day light. The key here is that innovation is about overcoming great
impediments to achieve your objectives. A true winner and innovator is that person,
which despite the challenges, find a way to adapt circumstances or even turn
those challenges into advantages or opportunities. How then can Nigerian
businesses meet this challenge based on nature of our economy? How can your
leverage innovation to catapult your business into global stardom?
The Anatomy of Innovation
The
first step in your journey of innovation is to go back to the basics and
understand clearly what this thing called innovation is. So what is Innovation?
Innovation is different from an invention or an idea. An invention or an idea
is a provocative thought of something that will create value for mankind.
Innovation is the conversion of that invention into consumed value. For
instance, if I ask you the name of the company that invented mp3 music format,
you probably wouldn’t know, right? Well if I ask, like I did in the opening,
what an iPod is, most adults would know. Apple was not the company that
invented mp3, but it created a value from it that is consumed globally. That’s
innovation. It is about the practical implementation of knowledge, ideas or
discoveries that rely on excellent entrepreneurial abilities to create consumed
value. It is about coming up with really smart ideas of a value that has never
existed and developing them tangible new consumable, it could be a products or
services or solutions to a problem, and introducing them into the market, or
improving already existing ones to capture new customers or offer more value to
the same customer base. It could also be about your business or market approach
or new production method; the way you want to do business in the market place.
Innovation is also about solving a difficult problem (maybe in an industry or
consumer taste, preference or market trend) in such a way that it will lift the
standard of living of its stakeholders. Most importantly, innovation is also
about translating those smart ideas into something that consumers will love.
It
is very important to note that innovation is not just coming up with something
new. Every successful innovation most marry two things; it must be novel (create
that wow effect and be very appealing visually and otherwise) and it must create
mass market demand to be financially successful. The interesting thing about
innovation is that it opens up new markets and creates an opportunity for the
company to lead, ahead of its competitors, in its market or in a new one and
creates overwhelmingly escalated wealth for the company and the economy.
What can your business gain
from embracing innovation?
To
illustrate what companies stand to benefit from innovation, I would like to ask
how many companies or individual entrepreneurs would like to generate the kind
of money that Apple or Google makes or how many would like to be as globally
successful with products as ubiquitous as those of these companies to please raise
their hands, am sure most if not everyone wants that. The good news is that all
these are possible through innovation and here is the list. Through innovation,
your company will be able to:
Generate
and turn ideas developed as a result of superior market insights or even
intuition into novel new products and/or services that can command mass market
demand within and outside the country. Apple’s iPod and iPad is a good example
of new concepts turned into a great products and wealth within a few years
time.
Those
innovative products having created new value for consumers will open up new
markets for your company to exploit and lead or help the company gain market
share from competitors
Through
the successful new products or services and new markets created with robust
demand, the company will realize massive revenue and profits which will create
massive economic prosperity for it and the country
Create
profitable new business models or production methods, to offer its products or
services, that will compete with any company from anywhere in the world while creating
new sources of income and market growth. An example here is Dell Computers,
though a lot of manufacturers have been selling computer for decades, Dell came
to the market with a new approach to assembling and selling computers bypassing
middle men. Till date, the company has been thriving on this with several
thousands of new business model and processes innovations.
Engender
global relevance: because the innovations are world-class and globally
competitive, the company and country can become global players and force to be
reckoned with in the global market place.
Innovation
would also enable the company to unlock and exploit the value of existing
technologies, old products, brands, assets or businesses
Commercialization
or MONETIZATION of existing ideas, products or services in the local or global
market
The new global market leaders
from Nigeria
The
concept of creating new market spaces in which your business will lead is nothing
new, it is well enshrined in Blue-Ocean strategy but here, we would like to
discuss what practical approaches businesses can employ to unleash innovation
on their companies and turn theoretical knowledge into tangible business
benefits immediately.
Start
with a daring big vision for innovation for your business and products and
decide upfront the kind of impact you want to make in your industry, the
country and/or in the world. This will guide the kind of ideas you will permit
and coincidentally those are the kind of ideas you will come up with.
Develop
the mindset that anything is possible. Never accept that nothing is impossible.
Innovators are incurable optimists. The worse that can happen with this
attitude is that you come up with another innovation which may not be what you
wanted but would beat what is in the market.
Empower
and infuse your workforce with creative and problem solving culture and
capability. And develop the organizational capability to harness ideas from
employees and customers.
Invest
money and study to understand your customers, industry, market and the global
economy and engage constantly with user groups. Your aim is to uncover changing
trends and consumer preferences and unmet needs, market and industry problems
and define opportunities. These insights will form the foundation for your
innovation efforts.
Dedicate
the time, human resources and incentives required for constant idea generation,
experimentation and prototyping.
Learn
how to turn your ideas into great products and services. you can established a
full fledge Innovation Department(including Research and Development) or engage the services of an
Innovation Consultancy to work with you.
Learn
the act of improvisation and problem solving. Learn that the winner is only the
one who solves the greatest problems. Develop the culture and lifestyle of
looking out for problems and finding solutions to them. Problems carry inside
them the seed of great innovations. So your aim is to find the solution to
every problem you might or will face.
Learn
to see commercial value of intangible assets. Even the frequent traffic in a
restaurant can be converted into a market for, say, a lifestyle magazine. So in
your products, environments, processes, consumer interactions, anything that
you can see people’s “eyeballs and ears”, there is commercial value and market.
Once
you have succeeded in generating a portfolio of good and successful ideas, try
them out at full-scale in controlled environments. Work with local champions to
provide feedback and make necessary adjustments. Collect data to measure the
impact of your ideas for real-world global roll-out.
Do
keep in mind what makes great innovations while developing your ideas, As said
earlier, an innovation that will be successful in long run combines two things;
high novelty quotient (the wow factor) and mass market appeal/huge potential
for financial returns amongst other variables.
Turning your
Innovation into Real Products or Services
The
next step once you have a great new product idea that you are certain have a
veritable and large enough demand it’s time to turn the idea into a real
product. Here the critical issue of local production infrastructure comes up. The
solutions is one of two approaches: one is to find local production alternatives
to make what you want or find local businesses that can make the products at
reasonable quality the option number two is to take the model or concept to
another country (with known competence in that area) where it can be made with
your own name on it. The second options give you the advantage to have a
world-class product made based on your idea; it is must still be the original innovation,
no compromises. The world’s most innovative companies still manufacture most of
their products in China.
Low cost
approach to financing Innovation
Lastly,
let us address the issue of finance. This is where most entrepreneurs find it
very difficult to do much and the vision dies. Now you have your great idea,
you know where and how to produce top quality products and you are very sure
the demand is sky high, so where do you find the money and confidence to put
out the money o finance it. To be sure innovation can be a risk business
practice for many because its new and haven’t been tested in the real world. So
some people find it hard to put-out the required funding for innovation. Though
it shouldn’t be so because with the right methodology such as the Innovation
Success Extrapolation Tool developed by Ignovation International, you can be
able to know how successful or otherwise your innovation-idea can be before
investment. However, there are tactics one can leverage to commercialize
innovation with little finance commitment.
I
will start with some advices I received from two top Nigerian business leaders
at two different events. One is that, for new entrepreneurs, if your idea is
really very good it will find the funding it requires, as long as you keep
trying to source for finance through the right channels. The second advice is
to start from where your financial capability can carry you or for established
companies with the resources at your disposal, until you are very certain of
massive market success, and grow from there. Nobody has nothing, everybody has
something to start with, so improvise and start somewhere and grow.
For those who believe that going big is the
only option you can try what I call value-chain financing. Value-chain
financing is all about mapping your products value chain and creating media and
marketing spaces for other sponsoring, advertising and partnering companies to
come in. A product’s value chain consists of those products and service that
customers buy after they buy your products or those things they buy before they
buy your products. The companies along those chains can provide good sources of
funding in exchange for a space to reach your customer base with their messages
or products, that is, if your audience is substantial enough and verifiable and
your innovation is news -worthy.
About the
author: This article was written by Victor E. Kalu. He is currently the Chief
Executive Officer of Ignovation International, a leading Innovation Consultancy
focused on the African Continent. You can reach him on pws_nigeria@yahoo.com
or 07061241887.
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