BY DR SHAWN CUNNINGHAM
03 JANUARY 2024
The Technological Change and Innovation System Observatory project is now five years old. I want to offer a synopsis of the patterns we have repeatedly seen in the South African economy over the life of this project.
We have discovered impressive technological infrastructure and specialised technological support in every sub-sector we have worked with. However, only a few companies are aware of these competencies. The leading companies in every sub-sector have built internal capacity to compensate for public goods’ weaknesses. We hypothesise that the gap between the innovators in the industry and the innovation support available in institutions is caused by how these institutions are measured. Often, they are measured on how they support individual firms to solve problems or master new technology, not how their services or technology competencies enable new growth, improved competitiveness, or dynamism in whole sub-sectors.
We have discovered entrepreneurs, individuals and public officials working hard to pull together the private and public sectors and their support organisations. We call these industry innovation champions. While most of these champions find ways to support their passion to co-ordinate and motivate others, not all receive the support to continue doing their work. When these champions step back or give up, they often leave considerable gaps in their created networks. To give the public sector some credit, we also know of industry champions employed by a government department that often go (or went) way beyond the call of duty to drive change or industry upgrading.
In every sub-sector we have supported, we have noticed the diversity of innovation strategies of the companies we engage with. This diversity of strategies is visible in how they invest in technology, their people, and the development of new markets. In our experience, these companies are often so vastly different that the same sub-sector name hardly captures what is going on. For example, in the foundry sector, our local capacity ranges from world-class facilities to foundries using 40-year-old technology. Even if they have the same number of employees, use the same type of raw materials, and serve the same markets (e.g. mining equipment), they have little else in common. Many sector improvement strategies or service designs of publicly funded programmes do not consider how diverse the firm strategies are and are therefore unable to foster faster or broader innovation efforts.
When we started this project in 2018, we focused on the manufacturing sector’s technological disruptions. However, during COVID-19 we saw how vulnerable the public sector was to disruption. While the private sector responds quickly to technological or market disruptions, the public sector responds much more slowly. From now on, paying attention to how the public sector and institutions innovate under uncertain conditions and with pressure to save costs will be crucial. The challenge is that many publicly funded organisations are trying to fix the past instead of creating a future using technologies in smart ways.
A final observation about technological change is that by the time data can measure the technological changes, it is too late. Changes in the data are lagging indicators of change, while changes in attitudes are a leading indicator of change. We must pay much more attention to what strategic and innovation managers are exploring, investing, and mastering behind the scenes.
From now on, the Observatory will be paying more attention to how private and public sector managers evaluate the potential impact of emerging technologies and how they invest in building new competencies for innovation.