As it stands, 2023 is shaping up to be an interesting year for corporate South Africa. Hot on the heels of an ongoing energy crisis, rising inflation and interest rates, and sluggish economic growth – it comes as no surprise that business resilience, sustainability and continuity will be reoccurring objectives for many enterprises looking to weather the storm.
In the article below, Marissa Naidoo, Knowledge Transfer Manager for South Africa at Innovate UK KTN Global Alliance Africa, look at why businesses need to look to innovation partnerships to weather the economic storm.
Like poor market conditions, the issue of business sustainability is not a new concept in the boardroom. However, the idea has undergone significant changes in scope, scale and definition in recent years.
Over the past two decades, strategies around business sustainability have evolved, moving from a narrow focus on revenue growth and maximising profit, to a broader view that recognises a business’s personal success as intrinsically linked to that of the greater economy, society and environment (what is more commonly referred to as Environmental, Social & Governance – or ESG for short).
But while public sentiment around ESG has grown – and as world leaders gather in Davos this month to reaffirm their commitment to “building better businesses” – leaders of enterprise have a tendency to revert back to old ways.
According to a survey of Chief Executives and Financial Officers at some of the world’s largest companies, investments for improved sustainability and reduced environmental impact are often among the first and most likely to be cut by companies feeling the pinch in hard times.
Before we relegate all business executives as reprobates, it is worthwhile pointing out that this is not always the case and that many have found other ways to maintain the delicate balance between the interests of the company and the world around them – and more often than not, it involves a concept known as ‘open innovation’.
A close relative of ‘corporate innovation’, open innovation is the practice of sourcing new and innovative ideas from a variety of internal and external sources.
Whereas corporate innovation is a more closed-off process, the latter is quickly becoming a popular method for larger organisations, who – due to legacy systems and processes – are often unable to develop novel solutions to ongoing challenges in a way that short- to medium-term sustainability demands.
Instead of the secrecy and siloed mentality of traditional corporate research and development, open innovation fast-tracks problem-solving by inviting a wider pool of people, knowledge and resources to participate.
So, if the benefits of open innovation are clear, why are more corporates in South Africa not undertaking the process? The answer is relatively simple – they do not know how.
To explain this, it is worthwhile noting that the concept of open innovation has only been around since the early-2000s, emerging in the United States after the University of California, Berkley, professor and Silicon Valley veteran, Henry Chesbrough, first coined the term in his paper on ‘Open Innovation: The New Imperative for Creating and Profiting from Technology’. With everything from Starbucks to Circle K taking decades to travel across the Atlantic, it should come as no surprise that open innovation remains a relatively unknown and underexplored channel for South African executives.
However, it is also worthwhile pointing out that South African enterprises do not need to struggle alone in the dark in this regard (although loadshedding may still be a factor).
By its very nature, open innovation is a collaborative process and business leaders should therefore look to organisations well-versed in fostering innovation partnerships, to help them navigate the uncertainty that can come with the development of new intellectual property, or the sharing of potentially sensitive information with outsiders.
This has been the approach of many large corporations across South Africa and the continent, including Rand Water, Flamingo Horticulture, and Unilever.
Representing a diverse range of industries, these organisations have recently partnered with Innovate UK KTN, as part of the Global Alliance Africa project, which brokers open innovation partnerships between companies in South Africa, Kenya, Nigeria and the UK. After just a few months, these case studies are already bearing exciting results.
One of the world’s leading growers and suppliers of fresh produce, Flamingo Horticulture is locked in an ongoing battle against the False Codling Moth – a major pest of commercial farmers in Kenya that inflicts substantial financial losses every year.
Eager to introduce new methods for the identification and removal of the species, Flamingo Group International collaborated with Innovate UK KTN to run an ‘Innovation Exchange’ (iX) Challenge.
After several weeks of scouting, they formalised a relationship with Petiole, which developed an app to assist farm workers to efficiently detect moths and support their extraction. Flamingo Group International’s CSR & Sustainability Consultant, Martin de la Harpe, commented that: “Farmers in the region know that the False Codling Moth is a real challenge with real consequences for producers. Open innovation gave us access to a new set of resources and was a great opportunity to develop sustainable partnerships which we would not usually have access to.”
In an effort to reduce the amount of plastic waste produced by its products, Unilever partnered with Innovate UK KTN to identify new business models for the sale, consumption and disposal of its detergents. Through this process, they are now prototyping various product ‘re-use & re-fill’ station models for rural communities and are piloting a digital passport to track plastic packaging across the value chain, to ensure that all waste is properly processed, recycled, and accounted for.
They are on their way to finding solutions that are not only sustainable but also more affordable, locally made and better for consumers.
A most recent example can be found in Rand Water – the largest bulk water utility in Africa – which is currently working with Global Alliance Africa to find new ways of treating water residue amid droughts and water shortages in the Gauteng province. When asked to comment on the value that Rand Water sees in open innovation, the company’s Manager for Innovation and New Technologies, Mogan Padayachee, expressed that: “Businesses cannot expect to be impervious to outside forces, so they should also not expect to manage these forces independently. External collaboration is now a reality and demonstrates to be a profitable risk worth taking.”
Padayachee’s comment is most apt. The relevance of open innovation in the context of South Africa’s current socio-economic and environmental climate cannot – and should not – be ignored. In circumstances like these, where perceptions around the market are bleak, it is easy for enterprises to focus on their bottom line and defer notions of ESG to a “time better suited for long-term objectives.” But with the impact of climate change, poverty, and unemployment demonstrating that we now operate in an economy based on creating shared-value, and with avenues to open innovation ready and waiting at the boardroom door, 2023 should not be business as is often usual.
To apply to the Rand Water innovation challenges, go here.