The co-innovation trend and the challenge in emerging markets

While the absence of mature intellectual property laws remains one of the deterrents holding back co-creation or co-innovation in Africa, it’s a compelling model for novelty, especially considering the many successful examples abroad.

A keen observer of mega trends, Professor Sang M Lee of the University of Nebraska underlines co-innovation for organisations that are looking to remain competitive in a globalised economy.

Lee is currently the University Eminent Scholar, Regents Distinguished Professor, and Executive Director of the Nebraska Productivity and Entrepreneurship Center. He is also president of the Pan-Pacific Business Association, an international scholarly society of over 4 000 members in 35 countries.

Early-stage ventures, as much as their established counterparts stand to benefit from co-innovation — think of the Apple and Microsoft relationship in the 80s, for example — but for the concept of collaboration in the name of innovation to bear fruit, the environment has to be conducive. Omidyar Network Africa’s managing director said of co-creation among startups in emerging markets:

Emerging market environments such as India, Africa and Latin America are not high trust environments. They are also not environments where you can protect your IP as you can in the US or Europe where the rules are enforced, there’s a track record of justice in the space and you have competent IP lawyers. Co-creation sounds great from a theoretical standpoint, but from a practical standpoint, it’s a really difficult thing to do in Africa.

Caution heeded, In a workshop organised by the Faculty of Management of the University of Johannesburg (UJ) entitled ‘Global Strategy and Co-Innovation’, Lee said that innovation had become the currency of global competition.

He defined the concept as “any new idea which was applied in a fundamentally different way to create value for the organisation and other stakeholders”. He noted how certain countries — such as China and the Scandinavian bloc, had proved to be exceptional pacesetters by incorporating innovation into national development strategies.

Lee observes a trend in businesses to favour innovation, and the rise of disruptive newness:

Corporate plans have evolved,” he said. “At first they centred around the question ‘how to do things right’; then ‘how to do right things’. Nowadays they focus on ‘how to do new things’. Likewise the corporate approach to innovation has shifted. The motivation was initially incremental, seeking a continuous improvement to existing business. We then moved towards radical innovation, where untried products and services were introduced. The advent of disruptive innovation then emerged, where new products disturbed the
market and changed the rules of competition.

At present much innovation is centred on the experience economy, with the accent on re-engineering the customer experience to surpass functionality, encompass implicit value and be memorable. This was witnessed, for example, when Nintendo’s Wii meshed video games with the field of physical participation.

“A key ingredient of innovation is to build a compelling experience with network effect for value creation,” said Lee.

IT, he stated, had revolutionised the process of innovating, making it possible to measure, experiment, share knowledge and replicate. Having moved through closed, collaborative and open stages, pioneering organisations were now engaged in co-innovation, co-creating in partnership with customers, suppliers, universities and researchers. Shared goals were central to the process. An example of co-innovation was the Nike + iPod Sport Kit, combining Nike running shoes with an Apple iPod-connected sensor which allows runners to track an athlete’s pace while working out to music.

Successful innovation, said Lee, should not be based on past successes, which diminished in the face of fast-paced change. “It is often better to forget proven business models,” he cautioned. Innovation was sometimes born out of failure, such as the highly successful Post-it note, which resulted from an attempt to make glue. Innovating involved exploration of new areas as opposed to exploitation of familiar ones.

He warned, too, of the need to be aware of the ultimate commoditisation of innovation and the ever-shortening life cycle of products, particularly notable in the field of smart phones and electronics where new models appear within months. Lee stated that emerging economies were no longer playing second fiddle as business gravitated to low-cost regions of the world. Emerging countries held 70% of foreign exchange reserves, 80% of the world’s population, were responsible for 40% of the world’s exports and 50% of GDP at purchasing power parity. In contrast, traditional powerhouses such as Japan and Europe were overwhelmed with financial problems.

Lee, who coined the term ‘convergenomics’ to describe the process of convergence in multiple business fields, including organisational, technological, industrial, explored the subject in a book of the same name released in 2010.

While in South Africa, the professor will also chair the 30th annual Pan Pacific Business Conference which takes place from 4 June until Thursday at the Sandton Convention Centre. The international meeting, again hosted by UJ’S Faculty of Management, represents the first time this association has met outside the Pacific Rim. Delegates from 18 countries are attending the event, themed ‘Forging the Legacies of Emerging Economies’.