Innovation through collaboration

According to the 2013 GE Innovative Barometer, 96 percent of Nigerian respondents considered innovation a strategic priority. Most (87 percent) also said that SMEs could be as innovative as large companies. Areas of innovation identified were improvement of products or services; new business processes and customizing products and services to local circumstances.

These concerns were either in line with or above the global average. Development of new business processes and models were higher than the global average. Two-thirds of those interviewed “believe that the development of new business models will drive performance of their business in the future”.

Understanding customers and how markets evolve; enhancing a culture of innovation; collaboration; attracting and retaining innovative people were identified as key abilities that have to be mastered to innovate successfully. Most respondents said mining of data within and outside the company as well as attracting funds for new ideas were crucial for innovating successfully. The level of response was also above the global average.

Respondents hinged successful innovation on collaboration. That is, through partnerships to enter new markets, improve products and reach the market on time. However, lack of intellectual property and distrust were identified as barriers to collaborative innovation.

Despite these barriers, the appetite for collaboration in Nigeria is above the global average. Nigerian executives are convinced that they can be more successful with innovation if they collaborate. Several companies are working at collaborating more within and outside the company and looking at ways to share revenue streams or losses generated from collaborative innovation initiatives.

To foster innovation, people, financial capital, goods and services must be able to move freely. However this isn’t the case: most trade within and across borders is limited by distance and trust. Though the world is less globalized than it was in 2007 inter-regional trade has increased the most in sub-Saharan Africa (SSA). And contrary to conventional wisdom distance isn’t dead. “Distance and borders still matter, even online” according to the DHL Global Connectedness Index, an index that measures the depth and breadth of countries’ trade, capital, information, and people flows. Improving connectedness or collaboration can accelerate growth through innovation.

Unfortunately, the Nigerian environment is perceived as inconducive for innovation. Beyond perception, public policy, funding and willingness of companies to fund innovation were identified as roadblocks to innovation.

How can Nigeria capture the benefits of connectedness? Can it leverage on its geographic and economic size vis-a-vis SSA to improve its breadth and depth of trade? How will Nigerian companies attract funds to innovate and partner with other companies as capital markets fragment and services trade stagnates? Collaborating, connecting and trading across regional borders are yet to be exploited.

Supportive public policies that directly target trade e.g. tariffs, customs clearance and improving the domestic business climate, can help expand regional trade. For instance policy innovation that targets imports e.g., tariffs on machinery, equipment, and infrastructure-related products can boost productivity through the adoption and adaption of technology by domestic companies. This has been identified as the first step to the internationalization of SMEs as they localize technologies, innovate and begin to export their products and services.

More international and local brands have discovered franchising as the route to enter or expand in the Nigerian market. With market savvy local partners, companies are willing to licence their brand through joint ventures/franchise. It’s the best way to mitigate risk e.g. frequent policy shifts and overhead costs. Which is why Lagos, with its concentration of legal firms and the recently established Lagos Court of Arbitration, can serve as a hub and help businesses overcome distrust and protect intellectual property.

By: BusinessDay