How we can develop a business culture that fosters innovation?
The 5th Global Forum on Innovation & Technology Entrepreneurship was held last week in South Africa by the World Bank’s infoDev program, focusing on how to harness innovation for social and economic growth. It considered whether innovation and enterprise development could enable economic growth, job creation and the development of human capital. BiD Network Regional Developers, Anneke Evers and Rika Fontana, were in attendance and these are some of their takeaways from the three day conference.
1. Fear Factor – Overcoming & Innovating
The subject of ‘fear’ was a recurring theme throughout the first day. One of the biggest impediments to innovation is ‘fear’ – the ‘fear’ of failure in business stops many entrepreneurs before they’ve even got going.
Conditioning aspiring entrepreneurs to overcome both fear and failure will be an important part of nurturing innovators, as speaker Richard Branson reminded us, ‘failure is a step towards success.’
Innovation is a key determinant in shaping the economy as it sets ideas in motion and develops new industries, products and often requires a highly skilled labor force. At times it may be a lonely, thankless task but innovators truly are the visionaries that propel societies forward.
Andile Ngcaba finished by stating; ‘Africa is the cradle of modern humanity and where innovation first began, you are genetically modified to innovate,’ reminding us not to fight against our nature, but rather to embrace it.
2. Smart Government Policy – Developing an Entrepreneurial Ecosystem
If we want to create a nurturing environment for innovation, we need to realize innovation occurs as a result of mindset and a supporting ecosystem existing. Policy makers, then, play an important role in creating the nurturing ecosystems in and around innovation.
While policy makers are important in establishing the right conditions for entrepreneurs, the organizations who will follow these plans through need to be involved in the dialogue. As Barbara James Founder and CEO of Henshaw Capital Partners, stated; ‘what we need to all do, is to engage more with the legislators, and the institutions that define the framework and sector.’ All concerned partners need to be involved in the conversation to ensure the right institutions and legislation are in place to ensure entrepreneurs have access to the resources they require to start, grow and find finance.
Furthermore, it is undisputed that governments should support innovation, but they should also realize their strengths and weaknesses. While governments are very good at funding incubation centers, they are less adept at up-scaling businesses. The up-scaling of business can be managed if an entrepreneurial ecosystem is established around innovation.
3. Local hero, then international heavyweight
‘We talk a lot about ecosystems, but let’s look at an ecosystem not on a country level, but on a much more localized way, 3miles.’ – Thomas Debass, Deputy Special Representative for Global Partnerships in the Office of the Secretary of State’s Global Partnership Initiative
Start-ups need to demand and create an enabling environment in their local community. If we are going to bring the start-up spirit to remote areas, it is necessary to develop ‘provincial innovation system’, according to Derek Hanekom, South Africa’s minister for science and technology.
Developing networks in your local community is imperative to the growth of your business, identifying local resources that can accelerate the realization of your goals. As Rika Fontana noted, it is necessary to ‘be strong local, then go global’. Opportunities for networking, both local and global, are increasingly becoming more available online but if further inroads are to be made in remote areas of emerging markets, more local content needs to be produced.
There are over 2,000 languages in Africa, yet seldom content or apps have been created in these languages. If we wish to drive local innovation, we need to drive local content.
4. Maximizing Mobile
Innovation in emerging markets has already breathed new life into the simple cell phone, with monetary transactions and even website orders now operated from a simple handset. As new technology makes its way to emerging markets, it is interesting to see how entrepreneurs will overcome impediments to their widespread application.
The development of apps provides one such example. Innovation of apps is slightly more tricky than a cell phone, as Steve Esselaar points out, only 30% of those at the Base of the Pyramid have a feature phone – let alone are able to use apps. Furthermore, the lack of widespread credit card usage by individuals has inhibited the growth of app development startups, with Tanzania providing an example.
However, this has not stopped the innovation developed by intrepid entrepreneurs as they developed a solution with more and more mobile providers in Africa now allowing airtime as an app payment option.
5. Finance – Taking a risk
‘People do not invest in technology, they invest in people.’- Andile Ngcaba, Founder of Convergence Partners.
Andile Ngcaba joked that at present there are four ‘Fs’ which account for the main sources of funding for entrepreneurs; Family, Friends, Fools & Fathers-in-law.
So the question is how do we direct investment to these innovative start-ups?
Janamitra Devan – Vice President of Finance and Private Sector Development at the World Bank argued that; “We need availability of capital as well as audacity of capital.” It’s not just about making the funds available but actually having investors who are willing to take a risk on the ‘next big thing. All too often lenders in emerging markets act more like banks than venture capitalists, they too need to overcome their ‘fear’.
While venture capital does seem to be the future of financing innovative enterprises in emerging markets, these still seem to miss the opportunities in SMEs. Seed funding could be a solution in this regard, providing smaller amounts to launch small businesses in many emerging economies. While crowdfunding gives aspiring entrepreneurs another option if they are turned away by traditional finance providers.
BiD Network’s Anneke Evers believes it is not so much a question of availability for SME finance, but rather information on how & where to find it. This is where organizations like BiD Network provide a solution.
‘Just giving money to someone doesn’t do much, you have to help the entrepreneurs on how to use it.’ – Murat Aktihanoglu.
Venture capitals sometimes find the quality of businesses are not to their standards and thus decide not to invest. Many SMEs fall into this structural gap, but it isn’t that it is a bad idea – it just requires a little polish. This is where incubation can contribute to developing a business culture that supports innovation.
‘The problem is not the Money, but a structural ecosystem for Entrepreneurs to get Money and Education for their Businesses to scale.’ – Mariéme Jamme
We need to upscale the number of deals financed by venture capital. This is where BiD Network provides an invaluable service, preparing emerging market entrepreneurs for finance through incubation, business mentoring and coaching them in business proposal writing and pitching to investors.
7. Turning Ideas into Innovations – Key Quotes
‘Key for progress is to turn today’s imaginative assets into tomorrow’s innovative growth’. – Janamitra Devan, Vice President of Finance and Private Sector Development, World Bank
‘The best way to support innovative entrepreneurs: Understand the love of the innovator, and what drives them if you really want to finance.’ – Dr. Iqbal Sirve, Chairman of Sekunjalo Group
‘Our role as investors is to invest in that innovation in a way to make it affordable while generating enough wealth to re-invest in other inventions.’ – Dr. Iqbal Sirve, Chairman of Sekunjalo Group
If we are to develop a business culture that fosters innovation in emerging markets, it is necessary we address many of the issues discussed at Global Forum 2013. The provision of mentoring and investment – such as that offered by BiD Network – to aspiring entrepreneurs can offer a plug for the structural finance gap which many innovative SMEs fall into, while smart policy and legislation is necessary to lay the foundations for any entrepreneurial ecosystem to emerge. However the most resounding conclusion of the Global Forum is that we are all in this together. If we are going to induce innovation in emerging markets, it will require partnerships and dialogue between government, civil society, the private sector and academia.