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Yellowwood
Thinking outside the pie: innovation to transform African business
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The eyes of the world are on Africa as businesses search for new sources of growth. To retain our home ground advantage in this increasingly competitive context, we need to become better at innovation.

We need to be innovating in ways which are faster, more relevant, flexible, useful and meaningful than global competitors. The days of coasting along and slowly adapting global trends to our local markets are over.

An African model of innovation requires thinking beyond taking market share from competitors. We believe the innovation that will set African businesses on the path to sustained success needs to be more than ‘disruptive’ or ‘radical’ - it needs to be transformative; of categories, markets and lives. Crucially, in Africa, the most powerful and successful innovations will be those that release revenue back into the market in the form of jobs and entrepreneurial opportunities – those innovations will stabilise and grow markets, create brand loyalists from those you have helped while adding to the disposable income of your potential customers.

Most businesses have been thinking about market attractiveness all wrong. African markets are niche wealthy and mass poor, and those brands that have ventured into the ‘bottom of the pyramid’ have had their fingers burnt by trying to sell things to people who couldn’t really afford to buy them, expecting them to give something else up. When that fails, brands retreat back to the more lucrative upper-income segments.

But what if businesses asked how they could add to the incomes of their potential customers, rather than trying to use it up? Many of the most successful disruptive innovations on the continent have done just that. A good example is M-Pesa in Kenya, they have transformed the conduct of financial transactions through creating mobile money accessed through a mobile phone. This has created access to financial services to the unbanked population in Kenya, at a lower cost, because the bank doesn't have the burden of the cost related to physical infrastructure. An article published by CNBCA titled, M-Pesa has Completely Transformed Kenya's Economy reveals, “When M-Pesa was launched the average distance to the nearest bank was 9.2 kilometres. Eight years later the average distance to the nearest M-Pesa agent is a mere 1.4km.” M-Pesa has created thousands of resellers and small businesses across the continent, benefiting the economy and society.

More and more businesses are discovering the transformational potential of outsourcing non-core elements of their business to employees or entrepreneurs. UBER is a great example of disruptive innovation that empowers entrepreneurs and benefits society. Unilever’s Foundry is another fitting example that uses collaborative platforms to adopt start-ups and share ideas that drive sustainability in the Unilever growth model. Their objective is to build and cultivate strategic partners for the future, with Unilever as a partner of choice.

In our research, we identified a number of lessons for businesses to start innovating transformatively.

A few of these are to:

 

  • Partner with the ‘pirates’ in your industry. South Africa and Africa have enormous informal sectors – can you adopt their business models and work with them instead of against them?
  • Use existing distribution networks and intermediate technologies. Don’t build everything yourself or try to launch irrelevant high-technology.
  • Identify the bottlenecks in your category. What could you change to get non-users into the category?

 

Transformative innovation has the power to build world-leading African businesses. It creates real value for all the stakeholders of a business, and it upskills, empowers and contributes to prosperity on the continent – making it a better place to do business.

To download Yellowwood’s whitepaper, Transformative Innovation: An African Path to Success, 2013, please visit www.ywood.co.za.


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