2012 Annual Innovation Study South Africa This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Innovation Agency. This material was produced by Innovation Agency based on client interaction; it is not a complete record of the discussion.

In the highly competitive market that organisations in South Africa find themselves, a means of differentiation is of paramount importance. Innovation is seen as one of the primary drivers in achieving this differentiation. This study investigates a number of aspects surrounding the level of innovation being achieved by organisations, as perceived from a localised end-user perspective. The study also explores innovation from an organisational level; whether or not innovation is promoted within organisations; and how individuals deal with ideas they may have. Further analysis delves into why individuals share their ideas with certain people. This will provide insight into some of the critical success factors with regards to innovation management. The core purpose underpinning this initiative is a strategy for managing the information acquired and turning it into insights that empower customers and organisations in new ways.

This report provides insight on the study conducted during 2011 and 2012. This is an administered survey conducted during various programs and workshops offered by Innovation Agency. The survey was administered in a controlled manner. Survey questions were designed to be opened-ended in nature, and served to gauge individual perceptions around the level of innovation achieved by institutions from an end-user perspective. Respondents were not given information and/ or definitions of the survey questions. Data collected was grouped and analysed and keywords created as a means to graphically represent the results of study. The 2012 Innovation Study consisted of 388 respondees.

Innovation study questionnaire ���Which South African company is the most innovative? Why did you rate the company as the most innovative? Which international company is the most innovative? Why did you rate the company as the most innovative? What should companies focus on to become innovative? What is your definition of innovation? What did you use as your source of innovation? Have you ever participated in innovation programs before? What did you like about the approach of the innovation program? What did you dislike about the approach of the innovation program? Do you collaborate with people/ teams when developing new ideas? Is collaboration promoted within the organisation? How do you collaborate?

§  Respondent demographics

Female 42% Male  

58%  

Gender split 0%

5%

10%

15%

20%

25%

30%

35%

20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59

Age distribution

0%

5%

10%

15%

20%

25% Income distribution

Asian 19%

Black 20%

Coloured 11%

White 50%

Population group

Study respondents represented a widespread of individuals, from various backgrounds Respondent LSM in terms of income fell above LSM 7 and above

2012 Focus on innovative companies ������Most innovative South African company���Reason for rating the company innovative���Most innovative international company���Reason for rating the company innovative

§  Most innovative South African company

Capitec is the only bank that made the top 5 of the list, despite having customers that fall outside the study’s respondent LSM.

Many companies featured in the list comprise companies that are well known and hold significant market share in their respective industries.

The list contains a fair amount of service as well as product based companies.

0% 2% 4% 6% 8% 10% 12% 14% 16%

Shoprite Toyota Virgin

Coca cola Kulula

Naspers Sasol

Vodacom FNB

Outsurance Multichoice

SARS Discovery

Capitec Nando's

SABMiller Woolworths

§  Reason for rating the company innovative

The results indicate that customers see innovation as something tangible, through company products.

Marketing also plays a big role in creating customer perception.

“Technology” as a reason for rating South African companies innovative, did not rank high.

0% 5% 10% 15% 20% 25%

Convenient Cost effective

Simplicity Continuously improving

Invest in staff Leaders

Look for opportunities Processes

Diverse Innovative culture Targeted market

Customer centric Technology

Growth of business Customer service

Marketing Products

§  Most innovative international company

Apart from the Virgin group, the rest of the companies featured in this category do not belong in the financial services sector which is a contrast to the South African list where a financial services company made the top 3. The results may evidence the notion that innovation is generally associated with technology.

The top two customers have become well-known for their technology, particularly in the mobile devices space.

0% 10% 20% 30% 40% 50% 60%

Coca Cola

Dell

Hyundai

Mercedes Benz

Samsung

Siemens

Nokia

RIM

Toyota

Nike

BMW

Facebook

Microsoft

Virgin

Google

Apple

§  Company focus to become innovative

One of the challenges with implementing open innovation includes, not just soliciting innovation form customers, but also the ability to use acquired customer input in the innovation process of the organisation.

“Customer centricity” in this context is used to describe microeconomic factors.

“Understanding the market” in this context is used to describe macroeconomic factors.

0% 2% 4% 6% 8% 10% 12% 14% 16%

Leadership and management

Anticipate needs and changes

Continuously improving

Flexibility/ adapt to changes

Marketing

Look for opportunities

Keep it simple/ basic

Prodcuts

Challenge the status quo

Understanding the market

Customer service

Processes

Technology

Staff

Encourage innovation

Customer centricity

2012 Focus on innovation with organisations

Definition of innovation ���Participated in innovation programs before���Reason for liking the approach ���Reason for disliking the approach ���Source of innovation ���Do you collaborate���Collaboration promoted���How do you collaborate

§  Definition of innovation

When implementing innovation within organisations, one of the key aspects to be addressed must include the adoption of a single view of what the organisation defines as innovation.

Innovation is often defined within the confines of technology, however the results show innovation can be less tangible.

These were some of the responses to this question:

§  Radical ideas that change the way we do things

§  Ideas that are implemented that yield commerc i a l benefi t s fo r the organisation

§  Providing staff members the freedom to express themselves

§  The ability to add value to your customers

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Flexibility/ ability to adapt

Profitable

Being leaders

Re-invention

Finding solutions

Customer service

Technology enhancement

Simplicity

Products

Business model

Adding value

Improving the existing

Processes

Creativity

Out the ordinary

§  Source of innovation

One of the key challenges to soliciting innovation from customers includes managing the ideas to ensure that they are relevant to the organisation.���

The results may also be an indication of how reactive companies still are, and this may be the reason for placing high reliance on the customer for input. Many companies have yet to move into an era where current analytics are used as part input into more predictive models in order to solve problems.��� Customers and colleagues were by far the most widely used source of innovation.

The results do no indicate whether organisations actively solicit input from customers nor through what channels.

0% 5% 10% 15% 20% 25% 30%

Various technology sources

Other industries

Exhibits/ conference

Different company sources

Friends and family

Workshops and meetings

People in general

Market trends

Competitors

Personal observation

Various research sources

Suppliers

Literature

Internet

Colleagues

Customers

§  Do you collaborate

The response clearly shows that individuals are fami l iar with the concept of collaborating, however the results also indicate that collaborating is seen as a separate activity from the innovation process. The results may also be giving a view in terms of the innovation approach used by innovation, in terms of the level of participation and transparency.

The results may be an indication of a project based basis for the collaboration vs. collaborating for the purpose of innovation.

6% 1%

93%

No

Sometimes

Yes

§  Is collaboration promoted

This may be a sign of organisations steering away from the silo approach to doing business in an effort to simplify and streamline processes. The results, however, indicate that there is a distinct line between innovation and collaboration.

Many organisations look to have embraced the idea of collaboration through various effor ts like co-production and cross departmental sharing.

11%

13%

76%

No Partially Yes

§  How do you collaborate

The traditional methods of face to face and email communication still prevail within companies, despite the many alternatives available. Some institutions have also implemented a dedicated innovation/ idea management platforms to supplement their innovation journeys.

Notably, social networks as a medium have been rated ahead of the conventional telephonic communication.

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Colleagues

Focus groups

Informal - face to face

IM

Online portal

Various methods

People

Video conference

Different electronic mediums

Internet

Social networks

Telephonically

Workshops and training

Meetings

Email

Formal - face to face

§  Participated in innovation programs before

Innovation as a discipline is evolving from traditional R & D to a more transverse function; from the preserve of product development to now also include more incremental changes within organisations.

One of the s tumbl ing blocks to implementing successful innovation programmes includes measuring the success of the initiative.

Many individuals can identify innovative companies, etc. however, only a third of individuals have participated in innovation programmes. The results may be an indication of the limited reach and narrow focus of innovation efforts within the organisation.

33%

67%

Yes No

§  Reason for liking the approach

Technology can often be seen as the driver of innovation, however, technology merely en enabler in the entire journey.

Success to implementing innovation includes having a clear process from idea gener at ion to imp lementat ion to recognition, with clear tasks and dedicated teams to drive the innovation activity.

The freedom to explore and try new things was the top most reason given for liking the approach used on the innovation programs.

Less than half of the respondents who had participated in innovation programmes indicated that they did not like the approach used.

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Its potential

Solution orientated

Open to all

Process

Participating

Interactive

Challenging

Results of the program

Ideas generated

Collaborative

Approach used

Freedom given

§  Reason for disliking the approach

The reasons given in this category may speak to a lack of experience by organisations when initiating programs of this nature. Many of the reasons given are at execution level.

The results may also be an indication of how difficult it is for companies to change.

51% of the respondents who had participated indicated that they did not like the approach used.

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Imposed upon

No recognition

Rapidly done

Bad facilitation

Ideas generated

Lacked focus

Little support

Resistance met

Poorly structured

Timelines imposed

Results of the program

No continuation

Narrow focus

Process

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