THE CEO’S PERSPECTIVE: WHY INNOVATION IS NO LONGER A DEFINITE ANSWER IN THE TECH INDUSTRY

There is a general belief and consensus that innovation is the key driving force behind success in a technology-driven world. The truth is that innovation is the DNA of the technology industry but is not the definite answer. There is a large degree of homogeneity due to factors such as open source markets, standardization and product imitation that quickly obliterate the innovation factor. Whilst strategic leaders such as CEOs, Talent Directors and CFOs should not disregard innovation, they should invest more in business strategy execution.

In the world of commerce, innovation can be expressed as finding commercial sense or opportunity to unique ideas. Innovation is about how to make money on the way by which products, services and business processes are conceived, designed, marketed and distributed to the final consumer! Innovation is often associated with improvement, change, idea harnessing, creativity and enhancement of what a business offers. In the world of tech, when the touch screen was introduced on smartphones, it was regarded as an innovation. Let us examine some other real world examples below.

·        When Safaricom, introduced M-Pesa in Kenya, it was regarded as innovation.

·        When Vodafone Egypt, awarded its customers free airtime in 2018 each time Eqyptian soccer star scored a goal, it was innovation and creativity.

·        When Verizone introduced the MY Verizone App so as to enhance customer experience, it was the smell of innovation.

·        When T-Mobile and Sprint applied for a merger to the US regulations with the interest of a better 5G service, industry pundits a strategy to become more competitive. In that guise of being more competitive there was an issue of product and service improvement to meet customer needs better and that is innovation.

·        When What’s App came into the customer hands, instant messaging was revolutionized. People could communicate faster, cheaply and move information more quickly.

As we examine these cases, we will realise that innovation is the DNA of the technology industry. Those who do not innovate will definitely get chocked in the race. Those who innovate might still not win the race within the technology space. Nevertheless, such innovation is always copied or benchmarked from somewhere else. “How many tech firms release or invent any new and original idea?” If you either stammer on this question or say that it is impossible or uneconomical to do so, then you will realise that what I am proposing holds water. I work in HR and I am actively involved in Recruitment and Selection. I have seen most people who love to call themselves innovative, inspiring, competent and team players whilst in actual fact; they are a direct opposite of that.

As we discuss about innovation in a technology driven world, we should bear in mind that there are many famous innovation failures that failed to meet customer expectations in the world. Windows Vista by Microsoft, the Touchpad by Hewlett Packard and The Facebook Phone by HTC are examples of such failures.

Homogeneity within a market is a situation where market players become the same in terms of their operations and product offering. This then reduces business differentiation that is being brought in as a result of innovation. This is what happens in the technology space! There is generally a lot of homogeneity of products and services which then makes it difficult for companies to then lure customers to them through unique product offering.

Some would then argue that when new initiatives are no longer the differentiator within the industry, then they cease to be innovation. That is what happens in the modern day technology based industry! New initiatives quickly lose the ability to differentiate industry players and hence they cease to make much difference as everyone quickly adopts the same technology. Within the telecoms industry, there are so many products that one cannot claim patents on. For example within the telecoms industry, everyone offers mobile financial services, LTE, internet bundles, voice and SMS. Yet some firms are more profitable concerns than others. Off course one may then patent a certain design that is related a certain product but it is a huddle to do so.

Reasons behind industry homogeneity in the Technology driven environment

1.    The rise of powerful suppliers and vendors

In the technology industry, innovation cannot be a differentiator due to the fact that it is imported into the company from larger suppliers such as Huawei, ZTE, Erikson, Microsoft, Oracle, Siemens and Nokia. These large suppliers are generally not exclusive to who they do business with. They can deal with anyone who wishes to do business with them. This is why the technology that MTN uses in South Africa may be the same technology as that one that is used by Safaricom in Kenya. It is not shocking to go to a certain country and realise that all of them use the same technology from Nokia and yet one firm is able to make more profit than another!

Within the In the smartphone industry, data by website, GlobalStats statcounter, indicates that in the first quota of 2018, the Android OS dominated the Smartphone operating system market by 77.32%, followed by the Apple iOs which had 19.4%. Adopting the Android operating system to a struggling smartphone maker like what Nokia did through HMD Global might be an innovation but, it will not guarantee success. So if everyone uses the same innovation, then why do others become more profitable than others?

Almost every player uses the Android operating system and thus using innovation (android operating system) will not guarantee success because everyone will be using that same platform. Thus such an innovation will not guarantee success for the technology firm. Anyone who chooses to ignore innovation will definitely find it difficult to compete within the technology space. Those who chose to innovate may still lose the plot! Blackberry is one good example of an innovator who still failed to win the war within the smartphone industry and yet they were regarded as highly innovative. 

2.    Cheaper resource centres.

As Asian firms such as Huawei, Oppo and Samsung were quickly gaining higher ground at the expense of US and European firms because of cheaper wage rates in their home countries than their direct rivals. To help reduce the cost advantage that their Asian counterparts had, American firms such as Apple and Hewlett-Packard found a way out. They set up their production plants in China were labour costs were much cheaper than anyone else. Thus almost all the smartphones and Personal Computers are now being manufactured in China and labour flexibility as an innovation is no longer a key differentiator. Everyone is manufacturing in China and so the innovation of flexible cheaper resourcing is no longer a market differentiator. If a firm choose not to do so, then chances are high that it will fail and if it chose to do so, it is not guaranteed of success.

3.    Open source market

There has been the rise of markets and platforms were one can easily access resources at competitive rates than ever before. For example if a company within the technology space is on unique mobile applications that can be found on Play Store or Apple Store, a direct rival can easily get access to the same applications. This will then reduce the power of competitive advantage that is often associated with the applications.

4.    Nomadic employees

As the world continues to evolve, employees within the technology firms are no longer staying in one company for quite a long time. It is not surprising to find an employee who would have worked in six different companies within a space period of ten years. When such employees leave tech firms, they go away with critical insider knowledge that they get from their former workplaces. Such knowledge and trade secrets are then easily copied by a rival within the technology industry. This then reduces the power of uniqueness often brought in by innovation because the direct rivals will now be with knowledge of each other’s way of doing business.

5.    International standardisation

There are various platforms that ensure that all technology firms confirm to certain designs and architecture of their products and services. Such platforms include the International Standards Organisation and the World Mobile Congress that set the tone. Locally, regulatory bodies such as POTRAZ and the Zimbabwe Institution of Engineers that have their own standards and prescriptions that they want to be followed. If these standards are not followed, then certain penalties may come. This explains why within the technology industry, there is some sense of homogeneity that can be found.

6.    Difficult to patent ideas

There are some ideas that are convectional and difficult to patent within the technology industry. Such ideas are generally convectional ideas by which one cannot claim exclusive rights on. For example, nobody can claim exclusive rights on a touchscreen LCD on cell-phones! Nobody can claim exclusive rights on the use of an on-line store or the use of independent contractors or agent banking to do business. Nobody can claim exclusive rights on the mobile money business in South Africa. This on its own then makes the industry move towards homogeneity and eliminating the power of exclusiveness towards certain innovations. Those who would want to have a better appreciation of this issue can refer to the patent battle between Apple and Samsung that happened in the last few years!

The Key determinants to success within the technology industry

Having clearly shown to you how homogeneity and convergence of practices is quickly reducing the power of innovation within the technology industry, I shall show you what determines success. I repeat this again, innovation is the DNA of the technology industry! If one does not innovate, he or she will definitely lose the race. If they do innovate, they may still lose the race. The CEO of Nokia in his closing remarks tearfully said, “We did everything correct and yet we still lost the war!” I shall give you the key determinants of success within the technology industry.

A number of people and industry experts might give you the following determinants:

·        Quickly adapting to change.

·        Understanding customer needs.

·        Being customer centric.

·        Investment in learning and development opportunities for employees.

·        Research and development.

·        Investment in information technology infrastructure.

I do not really think that these are key the determinants of success within the technology industry. Rather we talk about speed of execution which will enable one to quickly adapt to change. The key to success is on strategy execution! So I shall just talk about five of those factors.

What determines key success if innovation is no longer a key determinant.

1.    Speed of execution

The first factor is speed of execution. Speed enables a firm to be flexible and agile. Speed enables a firm to be responsive to change and quickly execute ideas at faster pace and with precision than its rivals. Those who are able to win fast will win the war.

With reference to this year’s request by T-Mobile and Spring to merge in the USA market, these two large mobile firms stated that that if they do not do so they will not remain viable. They stated that they do not have enough resource capability and capacity to quickly mobilise resources to deploy 5G network technology at the same pace with AT & T and Verizone. In the auto industry for example, Tesla is leading the race for electric cars ahead of traditional auto giants such as BMW, General Motors and Toyota because of its unique speed of execution. The company quickly deploys its products with speed and precision! The reason why Apple and Samsung are leading in the smartphone market is that they are able to quickly deploy resources with greater flexibility.

For the purposes of this article, I shall not discuss on how to enhance the speed of execution because, I will end up shifting my focus from why I decided to write this article. As a hint I can just drop employee contract management and e-commerce.

2.    Leadership stability

Leadership stability and clear succession planning are key determinants for success within the telecoms industry. If company leadership is not stable and always changing within a short space period, such organisations usually lose the race. There are some companies that are always be found in the press for wrong reasons such as firing executive management or have not had a substantive executive over the past five years. If they do have the executive team, the team does not generally stay for a long time on the position. If you closely examine those companies’ profit margins, cash flows and revenues, you might realise that they generally do not make much profits over a historical or predictive time period. 

3.    Corporate culture

Corporate culture is the fabric that binds people together. Companies with strong internal social relations and ways of doing things, generally excel more than those with weaker internal social relations and ways of doing business. If you follow the Forbes magazine most admired companies, there are higher chances that these companies have great cultures. These companies include Google, Apple and Nike. If you check the financials, these companies are just impressive!

4.    Strategic partnerships

These days, it is no longer shocking to see direct rivals working together on a certain project. It is also not surprising to see an auto manufacturing firm such as Toyota working with a consumer electronics firm such as Sharp or Samsung! These strategic partnerships help organisations to bring together their core capabilities and generate superior products or service. It is all about who do you work with to get pockets of money within this market. Recently, Uber is now working with Toyota on a car technology project.

5.    Knowledge workers

My first love in the business world is always people. I do not hide it and I openly say it loudly! ‘I love HR! People and strategy is my day job’ So I will talk about people. Nowadays, there is a highly skilled and educated workforce which the father of modern management science, Peter Drucker called knowledge workers. Knowledge workers are key source of competitive advantage within the technology industry. The ideas of knowledge workers help firms to innovate and generate intellectual capital. Thus having a powerful team of knowledge workers, may help you win big in the technology industry.

Conclusion

There are also huge innovation successes such as the I-Phone 6 by Apple, Netflix, Uber,. What is striking is why do some innovations succeed whilst others fail dismally? Some might point out various reasons such as poor focusing, failure to adapt to the environment, failure to anticipate customer needs, poor resource mobilization, etc. I do propose that innovation is the DNA of the technology industry but is not the definite answer because of convergence and homogeneity of ideas. Those who said that the earth was round were persecuted and regarded as flat. Interestingly in the sixth century B.C., Great Philosophers such as Pythagoras and Aristotole wrote that the Earth was a sphere. Yet their ideas were dislodged as untrue and deviant.

My ideas are not prescriptive or pointed towards anyone. My ideas are meant to share insights and I am not an authoritative source of reference. Do not copy paste my ideas without thinking critically. My views remain independent thinking that is open to debate and I acknowledge that. Nevertheless, take time to listen to the sound of the honey bird and you will definitely find honey!

The writer is called Farai Mugabe. He holds a Master’s degree in Strategy and Governance and a BSc. Human Resource Management (Honours) degree. He is a top graduate from Midlands State University and is currently working for a global construction firm. Farai was awarded two coveted academic awards by Midlands State University and these are, The MSU Book Prize and The T & H award for the best male student in the HR Management department.

He has worked in the following industries: The Telecoms, construction, health care, and education industries. On top of that Farai has worked in both the private sector and public sector and also had some first-level contact with the Mining and Non-Governmental Organisation (NGO) sectors.

He has a broad understanding of people and strategy and is one of the emerging talents in the HR industry. Farai is a results driven individual who has a strong passion for people and strategy issues. He is strong-willed and transformative in approach.  This article reaffirms his undying love for Strategy and people!

Centuries back, everyone believed that the earth was flat. Those who said that the earth was round or spherical were persecuted and regarded as deviant. Interestingly in the sixth century B.C., Great Philosophers such as Pythagoras and Aristotle wrote that the Earth was a sphere. Yet their ideas were dislodged and regarded as untrue and deviant. In Zimbabwe, Brian Chikumbutso who never studied Engineering in formal school invented an Electric plane, an electric car and a Greener Generator. Chikumbutso who is a Form 2 drop-out had his ideas were dispelled by many academic because they were said to be going against the laws of physics. So many people today believe that innovation is the secret behind running a successful technology business. Yet in real fact, the real deal is not on innovation. Those who argue that it innovation is not the real deal, might also face criticism.

Nevertheless those who might challenge what I am proposing might fail to answer this question, “How many tech firms release or invents any new and original idea?” If you either stammer on this question or say that it is impossible or uneconomical to do so, then you will realise that what I am proposing holds water.

 Innovation is the DNA of the technology industry but is might not be regarded as the sole strategic competency that guarantees success in a technology-driven company. The industry is always converging and becoming highly homogeneous and therefore eliminating product and service differentiation that is brought forth by innovation. Various factors, open source markets, standardisation and product imitation are quickly obliterating the innovation factor. Whilst strategic leaders such as CEOs, Talent Directors and CFOs should not disregard innovation, they should bear in mind that innovation is not the reason behind success within the technology space.

 In this article, Farai clearly on what really determines success within the technology space. clearly unpacks this issue in logical flow with a deep analysis. He writes in his personal capacity and this article was written for sharing insights and academic purposes only. Therefore he accepts no liability for any injuries, inconveniences or whatsoever that this article might cause. He can be reached on the following email address: [email protected]