Innovation In Business; How to Thrive Despite the Threats

African entrepreneurs taking on Silicon Valley got their big break at this year’s MTN Business Aspiring Innovators Programme.

In its second year, the main event took place at the Gartner Symposium/ITxpo Africa 2016, arguably the world’s most important gathering of CIOs and senior IT executives.

According to Gartner, CEOs globally are expecting an 80% uplift in digital revenue by 2020; leadership in digital innovation was a key theme of this year’s Cape Town conference.

Startups are disrupting industries using new technology while traditional enterprises are defending market share by adopting innovative practices to drive new business models.

This year’s six successful startups in the programme had their own stands next to MTN Business on the floor of the Gartner Expo where they benefitted from increased exposure to delegates.

Sabelo Sibanda was one of these techpreneurs; he created the world’s second solar powered tablet PC (first in Africa) and is currently setting up a manufacturing plant in Port Elizabeth that will create jobs for 61 semi-skilled workers.

His latest product called Tuse is an app that sends and receives video calls between devices even if they are not connected.

Sabelo believes there has been real interest, 

“we’ve met every possible decision maker you could hope for, it’s a huge boost for a startup like ourselves”.

Last year’s winners included Wyzetalk, a provider of enterprise collaboration software that improves employee communication and helps drive innovation.

In addition to other criteria, companies entering the programme must be based in Africa and have fewer than 50 employees and less than R20 million revenue.

Most industries are being disrupted by digitally enabled startups who offer slick, frictionless services through a user friendly, usually mobile interface.

Uber and Airbnb have transformed the transportation and accommodation industries with asset-lite business models that aggregate micro-services in a well orchestrated globally distributed network.

Such dematerialisation is a hallmark of so-called exponential companies whose business models are so radical that traditionally large, highly profitable but asset-heavy companies are completely rethinking their entire business.

Innovation continues to drive this wave of disruption as firms grapple with new customer demands and shifting market forces.

The cost of failure to innovate is very high; digitised exponential forces are putting global brands out of business overnight.

Kodak invented digital photography in 1975 but failed to monetise the technology because it didn’t want to affect its film business.

In the mid 90s it was the 4 th most valuable brand in America with 140,000 employees but in early 2012 it filed for bankruptcy, having failed to innovate quickly enough.

Just a few months later, digital photo sharing app Instagram with just thirteen employees was valued at $500 million with 100 million customers.

Even digital cameras didn’t survive this dramatic shift in the industry; along with Kodak’s 35mm film they had also been dematerialised by the killer app.

Corporates Investing in Innovation and Cultural Transformation.

Eager to avoid the same fate, corporates are investing in innovation programmes and cultural transformation.

FNB runs a bank wide Innovators programme which rewards employees for implementing new ideas and annually a week long Codefest sees hundreds of developers build prototypes using the latest fintech during a 48 hour coding marathon.

Technology is a driver of innovation and companies are turning to new ways of working in IT such as Agile and Lean.

At last week’s Africa DevOps Day Conference, FirstRand Group CEO Johan Burger said that a skills evolution in the IT industry ensured next generation talent was attracted to the sector to help drive the country’s competitiveness.

Financial services companies are facing disruption from technology such as Blockchain which threatens a bank’s trusted 3 rd party role in payment transactions.

A wave of accelerators have been launched by banks in recent years to incubate new technology such as Barclays’ TechStars, Nedbank’s LaunchLab and RMB’s Alphacode.

Techpreneurs joining these programmes gain access to funding and networks while the banks who partner with them gain preferential access to new technology before it disrupts their business.

The telecommunications sector is also harnessing the current wave of innovation.

Revenue from traditional cash cows such as SMS push messaging has come under threat from “Over The Top” services like Whatsapp and Wechat.

Both apps were startups less than 6 years ago but already threaten the revenue streams of large-scale, established telco players.

Whatsapp had just 45 employees when Facebook bought it for $19Bn in 2014; a killer app that had transformed messaging into a social experience and a must-have service.

Such a staggering price tag was based on its exponential user numbers but its early stage growth was deceptively linear like any other small business; doubling a small number of users is still a small number.

However, it was fully digital, the user experience highly intuitive, the process frictionless and the service incredibly useful, so adoption grew exponentially.

The SA Innovation Summit earlier in September brought inventors and investors together through a series of events that included a CEO panel, investor matching sessions, a hackathon and a hall of fame.

The message was clear; innovation is crucial for startups but it’s hard work to get funding, build a business, create a market and survive through the cycle to achieve profitability and hopefully a lucrative exit.

Africa needs more entrepreneurs like Sabelo Sibanda who can meet these challenges, create jobs and businesses built on next generation technology which attracts and retains skills on the continent.

Events such as the SA Innovation Summit help African entrepreneurs with ideas and networks to help startups grow from their garage to the globe.

Initiatives such as the MTN Aspiring Innovators Programme showcase high potential, early stage businesses as they take their app from an interesting toy to a Billion dollar tool.

Africa’s killer app could be from these top six techpreneurs who continue to demonstrate that Africa’s latest tech and business innovation is world class.

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