Digital technologies have taken the world by storm with concepts like innovation, design thinking, and digital transformation. They’re more than just buzzwords—they promise growth within organizations, but some people are often confused about what innovation is and how to get there.
To start off, Rolan Marco Garcia, CEO and Head of Innovation and Strategy at Embiggen, defines innovation as being able to create and capture new value. Usually, this is done by creating better or more affordable products and services. At the same time, emerging economies like the Philippines have a need for economic and social development at the country level through commerce and urbanization such as e-commerce platforms and smart-city programs respectively. With the advancements in digital technologies and shifting consumer preferences, businesses face the pressure of staying competitive in their spaces.
Potential of emerging markets
As of 2018, more than 6 billion people or 86% of the world’s population live in an emerging market. There is so much potential for growth and development because of the sheer amount of human resources and business opportunities waiting to be tapped. Research by Back et al. show that emerging markets continue to grow much faster than developed economies. This just shows how important local firms are to the global economy.
Unfortunately, emerging markets are met with barriers towards capturing their growth; there remains an issue of lacking proper intermediaries that connect buyers and sellers (a problem known as “institutional voids”) created by the lack of market intermediaries, which then raises transactional costs and operating challenges. Examples of institutional voids could be manifested in the lack of government support or the lack of access to the latest technologies. Despite the desire for innovation, these hurdles could discourage firms to commit themselves to it.
Management consulting firms as the driver for innovation
Back et al. also argue that management consulting firms are effective drivers of growth and innovation within these emerging markets. They note that consultancy increases firms’ innovation input—characterized as research and development (R&D) expenditures which subsequently reduce their uncertainties.
However, it is surprising to see that the use of consultancy in emerging markets does not increase innovation outputs. These can be defined as the sales generated by new products and services, and can be characterized as the fruits of the innovation process. Other probable challenges are:
- Insufficient capabilities to convert their innovation inputs into outputs
- Being stuck at the theory level due to less advanced technology, making emerging markets unable to execute these ideas
- Lacking institutional support and protection
- The risk of failure despite investing time and resources
- Senior managers are unaware of the real value of innovation to their organizations.
In short, the unavailability of capabilities and access to latest technologies, as well as the lack of open-mindedness within organizations as well as varying levels of risk appetite in different markets are among the biggest obstacles to innovation.
Successful innovation readiness relies on two main factors: leadership and teaming. CEOs must have a clear innovation agenda that is able to trickle down into the rest of the organization. They must make innovation a priority and set the direction in which their team should go. On the other hand, collaboration among the organization’s different functions plays a key role in the implementation of innovation. The innovation process is seldomly done by a single person or team, rather it is a collective goal that each employee—regardless of their position or rank—must work towards.
With the experience and expertise of consultants, management consultancy can provide additional knowledge and insights, which would otherwise be unavailable if sourced by the organization internally. On top of that, consultancy can:
- Guide organizations in coming up with unique and innovative solutions to not only stay relevant in the market, but also to give them a competitive advantage
- Act as a substitute to fill in the institutional voids within emerging markets
- Ease a firm’s uncertainties towards innovations amidst volatile and uncertain times
Where does innovation start?
In a nutshell, it starts with top management.
Corporate leaders and senior managers must fully understand the value of innovation. Innovation is not simply digitizing or computerizing processes. It falls under a much bigger umbrella that ultimately is able to transform the organization as a whole. Fostering a culture and mentality of innovation openness is key so that they can create a vision that is heavily reliant on the innovation process.
This is why Embiggen offers training programs, specially designed to shape the mindset of leaders for them to properly understand innovation. The goal is to create an overarching strategy that trickles down even to the employees. This is the way to transform organizations.
Although it is risky, innovation is a worthwhile investment of resources. Contrary to popular belief, it is not based on a hunch; rather it is data-driven and involves various fields of thinking like foresight, technology, and entrepreneurship.
Food for thought
- How can my firm help contribute to the growth and development of the nation through innovation?
- Do I have an innovative mindset? What are ways I can develop this?
- Are the leaders and managers of my company open to innovation? How can I convince them if they are hesitant?
Embiggen empowers organizations wherever they are in their innovation journey. We work with progressive organizations by equipping them with the skills they need to innovate through our learning programs, and co-executing their innovation initiatives through corporate venture building and venture investing.
Explore how we can help you with your innovation journey. Book a discovery call with our innovation experts today.