The past year has seen only marginal growth in innovation by South African companies. According to Accenture’s <a href="https://cdn.cnbcafrica.com/wp-content/uploads/2017/11/02101508/AccentureInnovationIndex_Analysis.pdf" target="_blank" rel="noopener">Innovation Index 2017</a> released at the Accenture Innovation Conference recently, the country has seen a moderate increase in innovation, scoring additional two points from 2016 to reach 52 points in 2017. Over a three-year period, the score has only increased by six points. This growth is, however, not advancing at the pace required to translate into stable economic growth.
The index suggests that South African companies are not spending their allocated budgets on innovation due to economic uncertainties. On average, companies are putting aside 45 percent of their annual revenue for innovation developments, yet actual spending is cautious and conservative at 36 percent.
“In a rapidly digitising business environment where new players are disrupting traditional revenue streams across all industry sectors, it is now more important than ever for companies to be stepping up their innovation game,” said William Mzimba, Chief Executive of Accenture South Africa and Chairman of Accenture Africa. “Digital innovation is reshaping industries by disrupting traditional business and operating models. But it is also having a profound impact on society, presenting both challenges and opportunities for businesses and policy-makers on the African continent. Innovation champions know this and their approach is seeing them achieve almost double the innovation ROI of the rest of the market,” said Mzimba.
According to Yusof Seedat, Director at Accenture Research, key is to establish the most effective way to drive the innovation agenda in these challenging times. “The good news, however, is that pockets of excellence do exist. There is a clear distinction between Innovation Leaders – companies that are successfully managing to execute across the various stages of the innovation value chain scoring 65 points and above on the Index (27 percent of the total sample), and the rest of the market – those that are struggling to move beyond their innovation strategy and not achieving their true potential in terms of innovation,” said Seedat.
<div id="attachment_34446" style="width: 510px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-34446" class=" wp-image-34446" src="https://www.forbesafrica.com/wp-content/uploads/2017/11/Accenture-Innovation-Index-supplement-e1510925211182-300x200.jpg" alt="" width="500" height="333" />The Accenture Innovation Index supplement (Photo supplied)</div>
The innovation value chain
Accenture measured innovation maturity across five stages: Innovation Strategy, Ideation, Absorption, Execution as well as Benefits and Impact. Throughout the stages, Accenture found that as companies mature their innovation capability, their focus shifts from just developing ideas towards a more comprehensive innovation value chain. Early innovation initiatives focused almost exclusively on brainstorming and ideation. This has recently been augmented with a concerted effort to ensure that relevant ideas are well executed.
“Interestingly, ‘absorption’ emerged as a key stage between ‘ideas’ and ‘execution’. Idea absorption
indicates a company’s ability to successfully filter, prioritise and channel the best ideas to the execution stage. This stage is a crucial linking stage between two very different innovation skills: the creative ideation space and the clinical execution space.” said Seedat.
The index shows that companies are aware of the need to innovate: they score high at the strategy stage (83 points) which entails creating the plans and vision set to innovate. However, they score lower on all other aspects, from ideation (44 points) to absorption, at 53 points, execution at 59 points and, finally, achieving the desired benefits at 37 points.
“Companies are struggling to seamlessly translate their innovation strategy to well-executed innovations that realise maximum benefits. Our findings point to several areas creating this anomaly – from weak innovative cultures and poor organisational processes that do not fully support the innovation vision of organisations, to inadequate information dissemination and collaboration, and narrowly focused innovation policies,” noted Seedat.
Where it all begins: Innovation Strategy
Institutionalising structured innovation capability is necessary to fuel growth, the report notes. This is a responsibility that extends far beyond the office of the CEO, however – organisations’ entire top teams have to be on board. Key is that these individuals do not all have to be creative masterminds; more important is their ability to draw out the skills of others to build an innovation culture.
At the Strategy stage, innovation is indeed on the radars of SA’s most forward-thinking businesses – 90 percent of Innovation Leaders have instilled an innovation culture, according to the report. In these companies, innovation is seen as an important part of employees’ daily jobs. This stands in contrast to 65 percent of the rest of the market.
Moreover, Leaders recognise that cultivating innovation means hiring intelligently. When it comes to skills, only 56 percent of companies in the rest of the market recruit those with specific skill sets to support innovation-related activities, as opposed to 100 percent of Innovation Leaders.
Powering strategic decision making with data is also a key innovation enabler for leaders with 80 percent saying they see the full potential of business intelligence and analytics to drive innovation and inform strategy compared to 35 percent of the rest of the market.
Homing in on innovation: The Ideation stage
Innovation Leaders scored 67 for Ideation – the stage during which strategy is turned into actual concepts – leading the rest of the market (at 36 points) by a large margin.
A factor setting Innovation Leaders apart is collaboration within and outside the organisation, the report shows. Eighty percent of Innovation Leaders have digital platforms in place for employees to interact and share ideas, versus 37 percent of the rest. Further, a mere 44 percent of rest-of-market organisations encourage or make use of cross-teaming and collaboration between different stakeholders, as opposed to 85 percent of Innovation Leaders.
Absorption: Separating the best from the rest
The third stage of the value chain, Absorption, measures companies’ ability to sort through, prioritise and align around the good ideas generated during ideation. Low absorption limits companies’ ability to execute and stymies innovation efforts over the long term. Innovation Leaders score 77 for this metric, with the rest of the market coming in at 44. The country’s most innovative companies are fast movers: 80 percent of Innovation Leaders are more adept at taking a year or less from initial prototype development to full commercialisation, the report found.
Putting innovation into practice: Execution and Impact
At the Execution stage, 85 percent of Innovation Leaders are focusing on disruptive innovations, leading the rest of the market by 32 points overall, at 82 to 50. Yet it is in terms of Benefits &amp; Impact that the gulf between Innovation Leaders and the rest of the market is most pronounced. Leaders scored 65 points at this stage, while the rest of the market trailed at 25. Measurement is one key element: the Index shows that 73 percent of Innovation Leaders implement performance indicators encompassing workflows and business processes critical to the success of innovative development. A mere 38 percent of the rest of the market follow suit.
Leaders also continuously monitor, evaluate and look for improvements. They do this by assessing changes in the ratios of innovation outputs to inputs, the mix of different types of innovation investments and their related risks. They also know the value of customer feedback. Ninety percent of Innovation Leaders get feedback from customers through online and offline channels, versus 43 percent of the rest of South African businesses. “Despite challenges associated in measuring innovation, leaders find ways of measuring and monitoring innovation performance across the value chain stages.” concluded Seedat.
Innovation in 2018 and beyond
Innovation has to become a more central part of South Africa’s economic growth model and the need to foster a business climate and culture conducive to breed innovation is vital. For South African companies, innovation follow-through – by implementing innovation strategy – will prove critical in the coming years, the Index notes. To gear up for 2018 and beyond, the Index encourages all SA companies to take note of how Innovation Leaders enable, measure and drive success.
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About Accenture 
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialised skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 425,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at <a href="http://www.accenture.com/" target="_blank" rel="noopener">www.accenture.com</a>.
Contact:
Jonathan Mahapa
Accenture
+ 27 11 208 3947
<a href="mailto:jonathan.mahapa@accenture.com" target="_blank" rel="noopener">jonathan.mahapa@accenture.com</a>

South Africa Needs To Innovate Faster To Ensure Stable Economic Growth – Accenture’s Innovation Index 2017 Shows

Various consumer brands are facing overwhelming challenges. Slowing global sales are placing pressure on companies aiming to expand their footprint and achieve real sales growth in sub-Saharan Africa, a region boasting a growing middle class and strong economic growth.
Financial results of two of the world’s largest breweries, SABMiller and Anheuser-Busch InBev, show declining global sales, and many other companies are feeling the pinch as well. These consumer brands are affected by getting their products to the African consumer and inefficiencies in the supply chain is a thorn preventing them from succeeding on a continent with over a billion people.
Some other challenges could be that despite strong distribution strategies, products are simply not available and brand visibility is inconsistent due to stock exchange. South African food and clothing retailer, Woolworths Holdings, cited difficulties in their supply chain among other reasons for closing down three stores in the continent’s most populous nation, Nigeria, in 2013.
According to Jeremy Haysom, the Vice President of Business Development and Supply Chain Solutions for DHL in the Middle East and Africa, the greatest challenge facing consumer brands as they venture into Africa is establishing an efficient route to the consumer.
“With growing urbanization, city populations have shown exponential growth in recent years and are expected to grow by over 25% over the next 10 years. There has been an explosion in the number of supermarkets and convenience stores established in cities to serve the customer,” he says.
“While these stores are located in prime locations, the back-end of the supply chain serving this retail revolution is in its infancy. This results in inconsistent stock availability and regular outages, a lack of brand visibility and most importantly product availability.”
Retailers handle their own international supply chain, which is managed from a distribution center, quite well. But the problem lies at the back of shop where manufacturers have to manage their own deliveries into the retail outlets. This causes a number of issues, including multiple deliveries from multiple suppliers at any given time causing considerable congestion at the back of retail outlets.
“Unless there is collaboration between a retailer and a consumer manufacturer you will continue to see inefficiencies at the back of shop and you will continue to have the knock-on effect that has on congestion and other issues around these developing cities,” says Haysom.
He adds that this is a general challenge seen in sub-Saharan Africa, excluding South Africa. The South African market is mature and has ironed out many challenges and multiple deliveries into retail outlets do not occur anymore.
“You’ve got consolidation, collaboration between consumer manufacturers and retailers to ensure that multiple deliveries of one vehicle going to a retail outlet. Therefore pretty much the brand and the brand market can be taken onto the shelf, where you’d expect everything to arrive at the shop and there would be a certain high percentage of on-shelf availability in the retail store,” says Haysom.
“What you see outside of South Africa is different. Consumer manufacturers are having to undertake a part of the supply chain deliveries from their side onto a retail side and inefficiencies occur and on-shelf availability is affected.”
So what must be done in 2015 for retail to deliver on Africa’s promise? Haysom says there is little or no collaboration between the supermarket and the supplier which results in regular out-of-stock situations. Retailers, both multinationals and regional, need to invest in bolstering the back-end or supply chain serving this retail revolution. Consumer brand companies that are keen to translate Africa’s latent potential into real success need to recognize the relative immaturity of the African supermarket industry and put in place strategies that will successfully navigate inventory management.
In his book, Africa’s Future Darkness to Destiny &#8211; How The Past Is Shaping Africa’s Economic Evolution, Duncan Clarke says the state of Africa and its economies today marks the departure point for the future. We know the past has shaped the present: for the future, what do we really know? And those words couldn’t be any truer.
The key to winning in Africa is through the little things that are done in 2015 which will help retailers overcome supply chain inefficiencies.

African Retail  Needs To grow up

With an 18% unemployment rate, Botswana is the largest producer—by value—of diamonds, the country’s main source of income, and one of Africa’s fastest growing economies. It has come a long way since its independence in 1966.
Botswana has recently been commended by the African Development Bank (AFDB) for maintaining good economic growth and healthy foreign reserves. The country’s fiscal discipline has raised it to middle income status.
With a GDP of $14.4 million, the International Monetary Fund (IMF) has projected GDP and inflation growth at 3.9% and 6.8%, respectively, for 2013 and 4.1% and 5.8% for 2014.
The country’s main exports are diamonds, copper, nickel and beef. The discovery of alluvial diamonds in the late 1950s has played a large role in the country’s development. Botswana has achieved what many countries in Africa have longed to with their natural resources; ensuring its citizens benefit from their country’s riches.
Debswana, an equal partnership between the government and diamond company De Beers, began in 1978. De Beers has moved its operations and $6 billion-a-year worth of sales to the country. De Beers’ sites have been moved to Gaborone and a new 10-year sorting, valuing and sales contract was secured. The government is looking to turn Botswana into a major international center. The subprime crisis that rocked the world shrunk the country’s diamond revenue.
The country’s rule for new mining investments is that 15% of the company needs to be offered to local investors on the same terms as foreign ones. If the locals do not take up the offer, the companies are free to commence with business as usual.
Pangolin Diamonds recently announced it had discovered one of the largest known kimberlite pipes—a rock formation in which diamonds are formed—in the world at its Tsabong North project.
Botswana cites low inflation, low corruption, a stable economy and investment protection as some of its attractive qualities when courting investors. Investment opportunities lie in manufacturing, information technology and tourism.
It takes 61 days and 10 procedures to start a business in Botswana, and ranks at 56 on the ease of doing business index. The country has increased the profit tax rate; corporate tax is 15%, value added tax (VAT) is 10% and the country has no foreign exchange controls.
Botswana was number 59 on FORBES’ ‘Best Countries for Business’ 2012 list. Credit ratings are stable, with an A- from Standard &amp; Poor’s and an A2 from Moody’s.
Botswana is a member of the Southern African Customs Union (SACU), Southern African Development Community (SADC), enjoys the benefits of the African Growth and Opportunity Act (AGOA) and the Interim Economic Partnership Agreement (IEPA) between SADC and the EU.
Near the Sir Seretse Khama International Airport lies the Botswana Innovation Hub. The country is hoping to attract domestic, regional and global companies. The hub will focus on the biotechnology, energy and environment, information and communications technology and ICT enabled services, as well as the mining technologies sectors.
With a history of having one of the highest infection rates in the world, and one of the most advanced HIV/Aids treatment programmes on the continent, a study by Botswana’s National AIDS Coordinating Agency has recorded a 71% decline in new HIV infections since 2001, thanks to increased knowledge and condom use.
Amid all the advances that Botswana has made, it is currently facing some controversy. A court battle against the government began in 2003 after the government began relocating the Kalahari Bushmen population to settlements.
London-based Survival International has called for a boycott on Botswana tourism as a stance against how the Bushmen are being treated by the government. There is concern over Spain’s king, Juan Carlos, being allowed to shoot elephants in the country while the Bushmen are prevented from hunting, a way of life for them. They are also prevented from digging for water in the reserve, but Wilderness Safaris was granted permission to dig boreholes for water, supplying a swimming pool. Botswana is facing a severe water shortage due to receding dam levels caused by drought.
The British lawyer defending the Bushmen’s rights has been barred from returning to Botswana.
On a governance front, the 2013 Ibrahim Index of African governance, compiled and published by the Mo Ibrahim Foundation, ranked Botswana second out of 52 countries.
The president is selected by the party that wins 29 of the 57 parliamentary seats through proportional representation system. Parliament rejected a call for the people to vote for the president in 2008. The ruling party, the Botswana Democratic Party, has been in power for the last 46 years.

Tag: Economic Growth

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South Africa Needs To Innovate Faster To Ensure Stable Economic Growth – Accenture’s Innovation Index 2017 Shows

African Retail Needs To grow up

A Diamond In The Rough