Other parts of this series:
- Half of South African companies admit they aren’t ready for disruption. Here’s what disruption looks like
- “Industry Disruption” can mean anything. Here is a framework to help you pin it down.
- Most SA companies plan to spend 50% of their investments on innovation. Will it work?
- Innovation leaders do these 7 things to stay ahead of the pack
- The execution-focused roadmap that high-growth companies are using has lessons for South Africa
In South Africa we’re (rightly) proud of our innovative spirit. We have had world-wide impact in many fields: healthcare, telecommunications and even materials technology.
“’n Boer maak ‘n plan” is practically our national motto.
But it turns out South Africa’s confidence in always being able to innovate might be misplaced.
I collaborated recently on an Accenture research paper that focused on innovation in South Africa. We have done well as a nation up to now, but the open economy, faster pace of change and advances in technology mean it’s time to step up our game if we are to compete globally once again.
The statistics are telling. Some 85% of South African companies are vulnerable to disruption. That’s seven out of eight companies. For the rest of the world it’s seven out of ten companies who are vulnerable to disruption.
According to our research, SA execs are aware of the threat, but aren’t prepared for it.
The cause of industry disruption is innovation. Ironically, innovation is also the cure.
South African companies are using traditional approaches to competing in their industries.
Globally, one in seven businesses are innovating and using digital technologies to grow and reshape their businesses into new businesses. For South Africa it’s half that — only one in 15 companies are doing the same.
There are four phases to disruption.
1. Vulnerable — three in five companies, or 62%. In addition to our famed inventiveness, South Africans have a significant cultural history of a “laager” mentality. When threatened, we tend to protect ourselves by closing ranks.
2. Volatile — another one in four or five companies, or 23%. This is when old sources of industry strength become weaknesses as large disruptors enter to unlock new sources of value. The famed example is the metered taxi industry, which suffered a double whammy. It had high barriers to entry — it was tough to enter the market, and it operated using centralised call centres. And then came the e-hailing systems, which turned the taxi companies’ previous strength of a centralised dispatch centre into a weakness, because suddenly everybody with the app on their phone was a dispatcher.
3. Viable — one South African company in seven (15%). New industries try to sustain high rates of innovation as new disruptors constantly emerge. The opportunity is to grow the core business by offering additional products and services in existing markets as well as expanding the footprint to new market sectors and geographies.
Uber has done this reasonably well, expanding its business into new territories and also introducing new services such as Uber Eats. It is also experimenting with disrupting its own business model by aggressively pursuing driverless vehicles. Uber can also be seen to be in a Volatile phase — its strength of a decentralized gig workforce has caused it problems with protests in South Africa and elsewhere against working conditions. And it is vulnerable to disruption itself with other companies competing with it on its driverless technology.
4. Durable — less than one company in ten. If you’re lucky enough to be achieving consistent performance and demonstrating resilience while disruptors are a distant threat, now is your chance to experiment with new business ideas.
Every second South African company admits it is not ready for disruption. It also says it isn’t happy with its innovation efforts.
Accenture has the ability to support South African companies as they re-evaluate their innovation infrastructure. We have accompanied many of them in their journey to develop new products and services and disrupt their industries. We have the research and the experience to bring the South African economy in line with the rest of the world — and even exceed it.
For more information you can read the full report here: Winning in the age of disruption: Accenture innovation maturity index in South Africa 2020
And please contact me anytime for a chat about your innovation strategy.