An Institutional Commitment to Innovation – Inspiring the Innovation Generation
In a world in which the nature of global conflict has shifted from a military and political focus to an economic one, the importance of international competitiveness is becoming an increasingly important metric for the survival and prosperity of nations. In order to prosper and create an increasingly higher quality of life for their citizens, countries must be able to compete. The renowned Harvard academic, Michael Porter, has studied the notion of competitiveness on the organisational as well as national level, and has come to the conclusion that, “A nation’s competitiveness depends on the capacity of its industries to innovate.” The link between competitiveness and innovation is evident.
It is essential that the country’s future corps of engineers and scientists must have a thorough understanding of not only the technical and creative aspects of innovation, but also grasp the fuller context of the broader innovation process. Successful innovations have two components, i.e.
Invention + Market Exploitation = Innovation
Something new is created in the invention component. Very often this is manifested in a combination of existing ideas, sometimes with a modification or variation on a theme. There must, however, also be a successful market acceptance of the invention. This component is typically associated with the adoption, diffusion and commercialisation of the innovation. One of the major differences between inventions and innovations is that whereas inventions create new knowledge, innovations create new wealth. It would be a serious mistake to focus exclusively on the inventive component.
Mastering the process of innovation, particularly in the fields of technological and scientific endeavour, inherently implies not only an understanding and application of technical knowledge and skills, but also a mastery of the discipline of the management of technology, specifically the management of innovation. A number of recent studies have shown that there is an increasing recognition of the importance of the management of innovation. At the same time, there is also a frustration as the lack of skills in this area become evident.
In 1999, the company Arthur D Little undertook a study that involved 700 companies worldwide, as well as a number of Wall Street analysts. It came to the conclusion that Wall Street places a higher premium on innovation than on any other approach to generating bottom- and top-line growth, and that more than a change of leadership, more than a merger or an acquisition, more than a renewed commitment to cost reduction, investors consistently reward - and pay a premium for – innovation. They call this phenomenon the innovation premium. More than 90% of respondents reported that the importance of innovation has increased significantly over the last 10 years, and more than 84% of the senior management respondents reported that innovation was a significant strategic issue for their business. However, more than 49% reported progress in developing and applying systematic measurement and management practices to innovation, but they cited a considerable gap in the effectiveness of current practices. Given the value of the innovation premium, the researchers were surprised to find that fully 85% of the 700 companies surveyed were dissatisfied with the way they managed innovation.
Similar studies were published in 2005 by the Boston Consulting Group (BCG) and McKinsey. The BCG study polled 960 executives in 68 countries, in all major industries. The study found that 74% of companies will increase investment in innovation in 2005 (up from 64% in 2004); 66% say that innovation was one of their company’s top three strategic priorities for 2005, with 19% saying it is the single most important initiative. BCG came to the conclusion that, “It would be hard to find another strategic imperative that shows up so consistently on so many companies’ list of top priorities.”
But there is a catch - 50% were not satisfied with the financial return on their innovation investments. The study found that 50%+ are “not sure” or “disagreed” that their companies had the right organizational structures to foster innovation, whereas 50%- “did not know” or “disagreed” that “their senior management team shared a common perspective on how to manage innovation and assess its success”. The McKinsey study polled more than 9,300 executives in 190 countries, again across a spectrum of industries. Of these, 81% indicated that a “faster pace of technological innovation” was important or very important to global business, and 71% indicated that it could have a positive impact on profitability over the next five years. Asked what the most important capability for growth was, 41% indicated the “ability to innovate”.
There are a number of common threads that run through the three studies (even though one was published in 1999 and the other two in 2005). Innovation has become and is recognised as a critically important business process, and companies rate it as a very high strategic priority. There is also a clear link between competitiveness and innovation. Even though there is a growing realizing about the importance of innovation, companies realise that they don’t understand enough about innovation and don’t have the necessary innovation management skills. This is identified as a serious issue, and one that needs to be attended to on a strategic as well as operational level. There is a recognition that companies’ survival and prosperity will to a significant extent be a function of their ability to innovate.
The University of Pretoria is committed towards fostering and promoting a climate of innovation in the belief that innovation is a significant contributor towards competitiveness, growth and prosperity. The University has branded its student body as the Innovation Generation, to exemplify the high premium that it places on innovation and on instilling the spirit of innovation in its students. Mindful that it has a responsibility as a trustee for a quality future, the University is shaping the country’s engineering future. The University boasts the largest school of engineering in the country and a significant proportion of the country’s future engineers are educated in the faculty. It is fitting, therefore, that a journal focusing in innovation should originate from the University of Pretoria’s Faculty of Engineering, Built Environment and Information Technology.
Professor Calie Pistorius, Vice-Chancellor and Principal, University of Pretoria. Chairperson, National Advisory Council on Innovation (NACI)