Tuesday, April 17, 2012

From "Me too" to Market Leadership

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.

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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