Editor’s Note: We finally got our hands on Shiv Shivakumar’s speech title: Leadership and Innovation Principles for Africa, presented at the Open Innovation Africa Summit – OIAS. Thanks to our eyes and ears from the event – Seyi Eluwole. You can read up Day 1, Day 2, and Day 3 Recap here, as well as collection of photos from the summit.
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Thank you Jussi for the introduction and clarifying the expectations.
Good Morning ladies and gentlemen, thank you for being here this morning to discuss innovation and leadership, with reference to emerging economies and Africa. Its my privilege to open the day with my experience of innovation in relation to the Africa opportunity.
I will over the next ten minutes outline the Africa potential, the Africa consumer and demographics, the variables to create value in Africa and the role and principles of Innovation in addressing markets like Africa.
Most countries in Africa became independent in the last fifty years. For most part of the 50 years, we have seen less than principled rulers. As a result, Africa was not on anyone’s growth plan. Africa was riddled by poor governance, poor infrastructure, opaque rules and systems. In the last fifty years, Africa has received more than 600 Billion $ of AID. Things have changed in the last decade with open elections, democracy, and improved infrastructure.
Africa has grown at more than 5 % in the last decade and is expected to maintain that rate for the next decade. Six of the top ten growth economies are in Africa, Foreign investment has multiplied six fold in the last few years. Africa comprises 54 countries with a total population of a billion people and a combined economy of 1.2 trillion $.
Africa is gifted with the most of natural resources, adding value to that gift is the challenge of innovation in africa. Take for example Diamonds from Botswana and Namibia are cut in India and set in Belgium. West Africa has 70 % of the world’s cocoa but accounts for just 5 % of the 75 Bln $ chocolate market, Uganda is leader in cotton but the milling takes place in China.
The African consumer is young, hungry and upwardly mobile. 43 % of the population is under 15 and 70 % of the population is under 30. The Ghana Economist GEORGE AYITTEY labeled the African consumer as the CHEETAH GENERATION : fast moving, hungry, eager to learn and apply skills.
Africa has a sizeable middle class, 331 million consumers, a good rich class and a substantial set, 61 % of the population living under 2 $ a day. If I look at growth economies in the last twenty years, no economy started with this level of spread. This is what I call the challenge of meeting the needs , wants and desires of this continent. India and China struggled to develop their middle class for a decade or more.
Next urbanization and the interaction due to urbanization helps raise aspirations, demand for quality products and services. Today, the urbanization in Africa at 38 % is higher than the urbanization in India(31.8%) or China(32%). While urbanization is high, most infrastructure is poor and hence the price of basic utilities is 3 to 4 times higher compared to other continents.
The challenge of infrastructure is an opportunity for technology and the ICT sector. Mobility has evolved in Africa in ways far different from the western world. Mobility has made information available to people relatively cheap to the ways of collecting information in the past. Mobility has made people more aware and hence more demanding of their rulers. Mobility has brought in many people of the informal economy into the formal economy. Mobility has empowered women, a key ingredient to drive country progress.
Africa provides concurrent innovation opportunities for goods and services. A company can look at the high end, the mid end and the low end as distinct opportunities with differing set of capabilities to serve. Overall, infrastructure needs to improve for Africa to be a strong innovative continent. Power, transport, Retail and the Financial sector are examples.
Innovation in a company is a combination of Strategy, Structure, people in the structure, process and the way the firm behaves and operates. Talking about innovation doesn’t make a company innovative. Good strategy is often marred by poor execution mainly through poor behavior.The company culture as displayed by its people and as felt by the eco system is a barometer. This depends on how the company collects information from consumers and customers, its urgency, speed and responsiveness.
Innovation and creativity are killed when senior managers do not show a sense of urgency to close things. Being deliberate and gathering all facts and information is a good, but relying solely on that to make decisions without bringing in personal intuition doesn’t help innovation. The Innovation sieve is about strategy, about opportunity about capabilities, about sustainable advantages and new capabilities.
The challenge of innovation today is managing the apparent bipolar demands of consumers and customers. Consumers want the best features at the lowest possible value and in the earliest possible time frame. Consumers’ patience with brands is waning thin, they want issues resolved yesterday. Africa presents an opportunity for companies to get product innovation, process innovation, biz model innovation and payments innovation going. These innovations will have an effect on developed economies in the next few years.
In summary, Africa has great natural resources, it needs to have innovation to manage the value of those resources. The African consumer is young, ambitious, fast and willing to learn. His or her expectations from brands and companies will be different. The demographics of Africa are different from the growth paths of the US, india or China on the urbanization, income spread and the concurrent three segments.
Innovation will evolve differently in Africa and ICT can help in a big way. The world will learn from African innovation this decade as Africa uses its ingenuity to overcome nay a physical infrastructure challenge with digital infrastructure.
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