<![CDATA[InvestingInAfrica.org - Blog]]>Mon, 13 May 2024 22:27:44 -0700Weebly<![CDATA[Assessing the prospects of innovation concepts, with an example from the Democratic Republic of the Congo]]>Wed, 17 Apr 2024 16:39:50 GMThttp://investinginafrica.org/blog1/assessing-the-prospects-of-innovation-concepts-with-an-example-from-the-democratic-republic-of-the-congoSuppose that a manager has identified a promising concept that describes roughly how a potential product or service would work and how many resources would be required. Before progressing to develop it further, they check whether the concept will be economically viable. This blog post will describe how they can use a cashflow model to check viability, and will apply it to assess the introduction of a small supermarket in the city of Bandundu, in the west of the Democratic Republic of the Congo (D.R.C).
 
Step 1: Estimate the time period for valuation
Estimate the time in years for the innovation’s development, and for its sales (for a commercial organisation) or use (for an organisation which considers the social value of the innovation). For example, the development time may be two years and the sales period may be five years.
 
Step 2: Estimate the costs in each year
Estimate the costs that the organisation will have to pay in each year. The costs may include machinery, labour, or materials, and they could be incurred during development, preparation for production, production, or sales.
 
Step 3: Estimate the value generated in each year
Estimate the value that the innovation will generate in each year. If the innovator is a commercial organisation, this is the value of sales. If the innovator considers the social value of the innovation, this is the social value in financial terms for the innovation’s users or other people. Social value is anything about the innovation that people consider valuable, even if they do not pay for it. For example, if the innovation feeds people, that is social value whether or not they pay for it.
 
If social value is not paid for, then its financial value must be estimated. If there are equivalent products or services on the market, their price can be used as an approximation of the social value. The price will usually underestimate it.
 
Step 4: Estimate the net value created in each year
Estimate the net value generated in each year by subtracting the costs from the value generated.
 
Step 5: Select the discount rate d
When a person or organisation has to wait for value, it is usually considered to be worth less than the same value created today. After all, if today’s value is financial (or is social value that can be converted into financial value), they could invest it and receive more value in future. The value today of a value V that emerges T years in future can be measured as V / (1 + d)^T, where d is the “discount rate”. When d is larger, today’s value is smaller.
 
The innovator should select the discount rate depending on their circumstances. It increases if the innovator has better alternative opportunities, or if there is higher risk that the value will not emerge, or if inflation is high. In richer countries with low inflation, a typical discount rate for a large company may be around 15 percent.
 
Step 6: Estimate the discounted net value created in each year
Estimate the discounted net value generated in each year by replacing V with the estimated net value in the expression V / (1 + d)^T.
 
Step 7: Estimate the discounted net value at the start of the innovation project
Estimate the starting discounted net value by adding the estimated discounted net values for all the years.
 
Step 8: Estimate the discounted net value with the highest costs possible
Estimate the highest costs that could possibly be paid in each year. Then estimate the discounted net value as in step 7 with the values from step 3 and the discount rate from step 5, unless there is a good reason to adjust them. “Possibly” here means about a one-in-twenty chance of happening.
 
Step 9: Estimate the discounted net value with the lowest annual values possible
Estimate the lowest values that could possibly be generated in each year, and estimate the discounted net value with the costs from step 2 and the discount rate from step 5 unless there is a good reason to adjust them.
 
Step 10: Estimate the discounted net value with the highest discount rate possible
Select the highest discount rate that could possibly be appropriate, and estimate the discounted net value with the costs from step 2 and the values from step 3 unless there is a good reason to adjust them.
 
Step 11: Assess the value of the concept
The estimated discounted net value should be positive if the concept is to be developed. The estimated discounted net values with the highest costs, the lowest annual values, and the highest discount rate should be considered as well. If they are negative, the innovator should ask whether he or she can afford to pay those losses.
 
Example: Assessing the establishment of a small supermarket in Bandundu, Kwilu province
An innovator is considering whether to establish a small supermarket in the city of Bandundu, and follows the procedure outlined to assess its value. The innovator would rent an empty shop, and buy equipment including shelving, a refrigerator, and a till. Every year, they would buy food to sell in the shop.
 
Step 1: Estimate the time period for valuation
The time period is 10 years, which is how long the innovator expects to operate the store.
 
Step 2: Estimate the costs in each year
The costs in year 1 are broken into parts: rent (estimated at 50 million Congolese Francs), equipment (18 million Francs), and food (190 million Francs). The sum of costs in year 1 is 258 million Francs. In future years, the innovator will pay rent and food costs, which are expected to grow at 20 percent every year. So the sum of costs in year 2 is (50 million + 190 million) x 1.20 = 288 million Francs, and it will grow by 20 percent each subsequent year.
 
The costs are shown in row 1 of table 1. Table 1 is also available as a pdf download at the end of the blog.
 
Step 3: Estimate the value generated in each year
The value generated in each year is estimated to equal the cost of food plus 30 percent. In year 1, it is expected to be 190 million Francs x 1.30 = 247 million Francs.
The values are shown in row 2 of table 1.
 
Step 4: Estimate the net value created in each year
The net values are shown in row 3 of table 1.
 
Step 5: Select the discount rate d
The discount rate is set at 30 percent. The rate is quite high because there are some elevated risks in the business environment linked to security and infrastructure challenges.
 
Step 6: Estimate the discounted net value created in each year
The discounted net values are shown in row 4 of table 1.
 
Step 7: Estimate the discounted net value at the start of the innovation project
The discounted net value at the start of the project is shown below table 1.
 
Step 8: Estimate the discounted net value with the highest costs possible
The highest costs possible are estimated at 50 percent higher than the costs assumed in step 2. This percent is the highest increase in food prices in Bandundu when militia activity disrupted food supply to the city in early 2024 (link). These price increases seem to be a reasonable approximation for the effects of other disruptions linked to conflict or other causes of transport interruption (link).
 
The increased costs could be partially passed on to consumers through higher prices. The values can therefore be increased, but by less than the costs. The values would become only 25 percent higher than the increased food costs.
 
The revised figures are shown in rows 5 to 8 and below table 1.
 
Step 9: Estimate the discounted net value with the lowest annual values possible
The lowest annual values possible are assumed to be 15 percent higher than food costs, for example occurring if there is strong competition among supermarkets.
 
The revised figures are shown in rows 9 to 12 and below table 1.
 
Step 10: Estimate the discounted net value with the highest discount rate possible
The highest discount rate possible is assumed to be 40 percent. It could be appropriate if the security situation worsens leading to high risks to operations and consumer demand.
 
The revised figures are shown in rows 13 to 16 and below table 1.
 
Step 11: Assess the value of the concept
The main estimate of the concept’s discounted net value at the project start is positive, at 26 million Francs. However, with the highest costs or lowest values possible in each year, the starting discounted net value is negative and large. The innovator considers that the risk of these losses is too much, and decides not continue with concept in its proposed form. Nevertheless, they note that losses could be reduced or removed by reducing the cost of renting the shop, or keeping their income high when they face competition. They therefore try to improve the concept by looking for cheaper shops and improved customer experience to encourage loyalty.
 
A blank copy of table 1 is available as a pdf download at the end of the article, for use in other innovation projects.
iia170424_table1_en.pdf
File Size: 365 kb
File Type: pdf
Download File

iia170424_table1_blank_copy_en.pdf
File Size: 350 kb
File Type: pdf
Download File

]]>
<![CDATA[Selecting concepts in the innovation process]]>Fri, 27 Oct 2023 20:40:46 GMThttp://investinginafrica.org/blog1/selecting-concepts-in-the-innovation-processA manager has thought of an idea for a product or service, and identified the consumer needs – the things that consumers would like the product or service to do. The manager has collected many concepts for the whole product or service, or for parts of it, that could possibly meet those needs. She would now like to choose a small number of concepts to examine in more detail, with a view to developing an actual product or service. This blog post describes a method that the manager can use to select the best concepts for further examination.
 
The method works in six steps. In the first step, the features to look for in a concept are identified. In the second step, the presence of the features is assessed in each of the concepts. The third step revises the concepts, and the fourth step assesses the revised concepts. The fifth step compares concepts using the results from the fourth step, and selects the best among them using the results of the comparison. In the sixth step, concepts are combined if they describe parts of the product or service, rather than its entirety. Figure 1 shows the sequence as a flowchart, which is also available as a pdf download at the end of the post.
 
An example from the Democratic Republic of Congo will be used to illustrate the approach.

Figure 1: Flowchart for concept selection

Method for selecting concepts for further examination
Step 1: Identification of features to look for in a concept
Many features to look for in a concept can be obtained from consumer needs (grouped together as described in this blog post (link)). Each need group states something that consumers would like the product or service to do. The corresponding feature is that the concept would do it if it was developed. Up to twenty features can be found from the consumer need groups.
 
When a concept describes how part of a product or service works, rather than the whole of it, then not all the consumer needs will be relevant. The manager can decide which need groups are relevant for that part, and use only those as features when considering that concept.
 
Other important features connect the concept with the organisation’s ability to develop and deliver it. One such feature is that the cost can be paid easily by the organisation, and others are that the organisation’s employees have sufficient skills for the activities and have sufficient time to work on them. Another consideration is that the concept fits well with the organisation’s other work – for example, it should not place demands on the organisation’s resources which hinder its basic non-innovation operations.
 
Step 2: Assessment of the presence of the features in each of the concepts
The next step finds out how many features are present in each of the concepts. The manager takes the list of concepts and chooses any one of them. She takes the list of features as well, and for each feature she asks whether it is present in the concept. If it is, she writes a tick. Otherwise, she writes a cross. For instance, if one feature is “the cost of development can easily be paid by the organisation”, and that is true for the concept, the manager writes a tick. After working through the list of features, the manager adds up the number of ticks, and the total is the number of features that are present in the concept. The manager repeats for all of the concepts.
 
Step 3: Revision of the concepts
The previous step assessed the presence of important features in the concepts. In step 3, the manager chooses any one of the concepts, and considers the features that it does not have. The manager tries to think of ways to revise the concept so that it could obtain at least some of those features. To think of revisions, she may use some of the same techniques as she used to generate the concepts. These techniques, such as the nominal group method, were described in the last blog post (link). The manager may also combine different concepts in order to identify new concepts that have more features than its precursor concepts. The manager repeats for the other concepts. It may not be possible to revise some or all of the concepts.
 
Step 4: Assessment of the presence of the features in each of the revised concepts
This step repeats step 2, but for the revised concepts.
 
Step 5: Comparison and selection of concepts
The comparison and selection of concepts uses the assessments of the concepts (both original and revised) from steps 2 and 4. The comparison can be made by looking at the number of important features that are present in each concept, and selecting the concepts with the highest number. This approach is quick and easy, but a manager may want to consider some other elements of the assessment before making their decision. For example, the manager may consider certain features to be very important, and so may strongly prefer that any concept has them. In the case of a concept for a bus service, the presence of the feature “the service provides connections between the major population centres” may be highly desirable. A concept without these very important features could be rejected, or concepts with them could be favoured over other concepts without them but with the same number of other features.
 
It is possible that no concepts will be acceptable. The manager can then return to concept generation (described in this link) to find alternatives. If the new concepts are not acceptable either, then the manager can loop again, or discontinue the innovation process.
 
If the concepts describe the whole of a product or service, then the manager can select up to three concepts for further examination. When more than three concepts have similar assessments, the manager can use her judgement to select the best three. If the concepts describe parts of a product or service, then up to two concepts can be selected for each part, and the manager can progress to step 6.
 
Step 6: Combination of concepts for parts
Step 6 applies when the concepts describe parts of a product or service, rather than a whole one. In the step, the manager chooses a combination of concepts that work well together to give a concept that describes the whole product or service, using their own judgement or the judgement of their team to select the best combination. The manager then performs the same action twice more, each time selecting a different combination of concepts, if possible. At the end of this step, the manager has up to three concepts describing the whole product or service.
 
Example: selecting concepts for fire insurance of market traders
Fire is a serious risk for sellers in markets in the DRC, with large fires able to destroy an entire market, taking the sellers’ stalls and merchandise and severely compromising their ability to earn a living (link, link, link). An insurance company is planning to launch an insurance policy for sellers that pays them in the event of a fire. The company’s manager has discovered that the sellers have the need groups in table 1.
 
Table 1: Sellers’ need groups for an insurance policy against fire damage
  • The policy pays compensation quickly
  • The policy pays compensation to replace the stalls and benches
  • The policy pays compensation for fire-damaged or fire-destroyed products
  • The policy pays compensation for products stolen during a fire
  • The policy helps to obtain equipment and material to reconstruct stalls
  • The policy provides a substitute workspace after a fire
  • The policy helps the policyholders liaise with governmental authorities to obtain a substitute workspace
  • The policy helps the policyholders liaise with governmental authorities to reduce fire risk
  • The policy helps the policyholders take measures to improve safety
  • The policy provides firefighters who respond quickly
Note: The need groups are based on the link, and the link.
 
The manager has identified the concepts listed in table 2. Each concept describes part of the policy, rather than the whole, and tries to satisfy one of the need groups. For each need group, there are two concepts.
 
Table 2: Concepts for an insurance policy against fire damage
 
The manager then follows the procedure described above, with details below.
 
Step 1: Identification of features to look for in a concept
The first set of features are the need groups, and are listed in table 1. As each concept in table 2 describes how part of a product or service satisfies one of the need groups, it is suitable to use that need group as a feature to assess that concept.
 
The second set of features relate to the organisation’s ability to develop and deliver the concept. They are: the cost of development can be paid easily by the organisation; the cost of running the insurance can be paid easily by the organisation, including in the event of a major fire; the organisation’s employees have sufficient skills for the activities; the organisation’s employees have sufficient time to work on them; and the concept fits well with the organisation’s other work.
 
Step 2: Assessment of the presence of the features in each of the concepts
The manager starts this step by taking concept 1: following the report of a fire, the company immediately sends an inspector to investigate and assess the damage, and the company pays the amount assessed.
 
For assessing this concept, the relevant features are: the policy pays compensation quickly; the cost of development can be paid easily by the organisation; the cost of running the insurance can be paid easily by the organisation, including in the event of a major fire; the organisation’s employees have sufficient skills for the activities; the organisation’s employees have sufficient time to work on them; and the concept fits well with the organisation’s other work.
 
The manager assesses the concept as follows:
  • Yes, with this concept the policy pays compensation quickly.
  • Yes, the cost of development can be paid easily by the organisation. The development does not require much expense, although some calculations and design will be required.
  • No, the cost of running the insurance cannot be paid easily by the organisation in the event of a major fire. The cash amount required may be larger than the amount that the company has available at short notice.
  • Yes, the organisation’s employees have sufficient skills for the activities. The employees are experienced in settling insurance claims.
  • Yes, the organisation’s employees have sufficient time to work on the activities. There will be some initial time pressure following a major fire, which may require some overtime, but the demands should not be excessive.
  • Yes, the concept fits well with the organisation’s other work. The company specialises in insurance, and as several major fires are unlikely to happen at the same time, a fund can be held to settle claims as they arrive from any policy that the company has issued.
So the manager gives concept 1 five ticks.
 
The manager repeats for concept 2, which she gives six ticks. She does the assessment for all the other concepts in table 2.
 
Step 3: Revision of the concepts
The manager looks at the concepts. She decides that concept 8, “the company does not pay the replacement cost of the stolen products”, can be revised to ensure that it has the feature “the policy pays compensation for products stolen during a fire”. The concept changes to “the company pays the replacement cost of the stolen products, minus a fixed amount (‘an excess’) to encourage the policyholder to avoid losses”.
 
Step 4: Assessment of the presence of the features in each of the revised concepts
The manager assesses the revised concept 8 from step 3, and gives it six ticks.
 
Step 5: Comparison and selection of concepts
The manager compares concepts using their assessed number of features, and uses her judgement to select a single concept for each part of the policy when they have the same number of features. Table 3 shows the concepts that the manager has selected, and the parts that they describe.
 
Table 3: Selected concepts and the policy parts that they describe
 Step 6: Combination of concepts for parts
Only one concept is selected for each part of the policy, so there is only one possible combination for a concept describing the whole policy. The concept is described in Table 3, and is selected for further examination and development.
flowchart_concept_selection.pdf
File Size: 100 kb
File Type: pdf
Download File

]]>
<![CDATA[Concept generation in the innovation process]]>Mon, 05 Jun 2023 15:38:30 GMThttp://investinginafrica.org/blog1/concept-generation-in-the-innovation-processSuppose that a manager has a broad idea for a new or improved product or service, and has collected a list of consumer need groups – those things that consumers would like the product or service to do. The next step for the manager is to provide some more detail about how the product or service will meet some or all of the consumer needs. They can do this by generating concepts, which are rough descriptions of how the product or service works and of the resources used. This blog post describes methods for concept generation, with examples drawn from organisations and situations in the Democratic Republic of the Congo (D.R.C.). The sections discuss the division of concept generation into manageable pieces, the generation of concepts by an individual or team in an organisation, and the generation of concepts from people outside an organisation, namely product and service users, other organisations, and experts.
 
Dividing the task
Often a proposed product or service is complicated: it may have to do many things, or be technically complex. In that case, before starting on concept generation it is sensible to divide the task into smaller subtasks of generating concepts of how its parts work. The concepts from each of the subtasks can subsequently be combined into concepts for the whole product or service, and the best combination selected. The division is useful because concepts for product and service parts are often easier for people to understand and assess, and they may be easier to find because there will frequently be more previous examples of a part of a product or service than a whole one.

The division into subtasks can be made in various ways. One way is to generate separate concepts for each of group of consumer needs. This approach would work well if there are many needs or if the concepts of each need are largely independent of the concepts for other needs. For example, the Kinshasa hotel in the last blog post wanted to innovate its reception service and had 16 need groups, such as “the reception staff calculate bills correctly” and “the reception staff give guests a pleasant welcome”. There are many needs here, and their concepts are independent of the concepts for other needs – the technology, actions, and skills required to calculate bills correctly and to greet guests are largely distinct. As a result, the hotel would benefit from generating concepts for each of its needs separately.

Another way of dividing the task of concept generation is to generate separately the concepts for each part of the operations or technology that delivers the product or service. This approach would work well if the operations or technology are complicated. For example, computer software often has to interact with a user, represent user instructions in its internal models, and act on those instructions; these stages present a natural division, and a software designer could generate concepts for each of these parts or possibly for further subdivisions if the stages are still technically demanding. The parts may not be fully known initially, and an innovation manager may make their best guess of the parts based on their own assessment or on products and services that are already available. The manager can revise their assessment during the subsequent concept generation, if it seems appropriate, and generate concepts for this revised list of parts.
 
Generating concepts internally
Concepts can be generated either internally, by the innovation manager and any member of their innovation team, or externally. Let us look at internal generation first. Brainstorming in a team is one method, where the whole team sits together and its members suggest concepts as they think of them, without immediately worrying about their quality. However, brainstorming can be inefficient because some members may be unable or unwilling to express themselves as freely as other members. Another method, nominal groups, avoids these sources of inefficiencies while maintaining effective aspects of brainstorming. In it, the innovation manager and the team members initially work in very small groups of between one to three people. The groups are told whether the aim is to generate concepts for the whole product or service, or for some part of it.

Each group then thinks of as many concepts as they can, describing how the product, service, or part would work and what resources would be required. The group members should sit together (or on their own, for one-member groups), and write down or record ideas as they think of them. The group should be told to generate concepts until they cannot think of any others, and to avoid assessing concepts during generation so that concepts are presented more quickly and with less inhibition. Once the group has generated ideas through this base approach, they can use an alternative method that may generate a wider range of ideas: the group lists five of their organisation’s important characteristics, such as detailed knowledge of local market conditions or a limited access to resources, and then for each characteristic the group tries to think of a concept that uses the characteristic in some way.

The information about the concepts should initially be sufficient to show the general operation of the product, service, or part of them, as well as what approximate resources would be required. The numerical details are not required, such as the dimensions of a product or the quantity of resources, and nor are technical details of the operation if they are already known or established elsewhere. Typically, initial concepts can be described in a paragraph or less, or shown in a quick sketch.

As an example of internal concept generation, consider an individual, Richard, who works alone in a large city, asking tourists whether they would like any services done and performing those services if possible. Richard has an idea for an innovation: a formal sightseeing tour on foot, where Richard advertises the tour in advance, collects payment in advance, and then guides a group of tourists around the major sights of his city. Richard has spoken to tourists about their needs for the tour, and summarised the needs using the method outlined in the last blogpost. Some are that the tour guide gives interesting information about the places visited, the tour is safe, and the tourists do not have to walk too much. The needs could be delivered largely independently of each other – Richard could give interesting information during a safe or unsafe tour, for example – and so he decides to generate concepts separately for each need.

Richard uses nominal groups to generate ideas. He is working alone, so is in a group of one. For each need, he thinks of concepts that describe how he could work to satisfy the need and what resources would be required. He writes down any ideas that he thinks of, without judging them, until he can’t think of any more. For the need “the tour guide gives interesting information about the places visited”, he thinks of many concepts, including: 1) he presents historical information about buildings, 2) he presents information about exciting events that happened at the places, and 3) he presents information about celebrity connections to the places.

Richard then decides to generate a wider range of ideas. He identifies five of his important characteristics as a tour guide: he is comfortable presenting to people, he is familiar with tourist preferences, he is an expert in the area, he works alone, and he has little money. For each characteristic, he tries to think of a concept that uses the characteristic in some way. For the characteristic “he is comfortable presenting to people”, he thinks of two concepts: 1) he presents the information while dressed in clothes connected to the place in some way, and 2) he includes songs in his presentation.
 
Generating concepts externally
This section looks at how concepts may be generated from three external sources: users, other organisations, and experts.
 
Generating concepts from users
Concepts can be generated from users by looking for concepts described in their comments about similar products or services, or shown in the ways they use those products or services. Users can be a good source of concepts because they may already have found a way of meeting their needs relating to the idea. People who use related products or services a lot may be particularly good sources of concepts because of their familiarity with them and their motivation to improve them. Concepts from users may also be valuable when they have a high level of technical knowledge relevant to the operation of the product or services, for example when they are engineers working with a purchased machine.

When concepts are being collected from users, many pieces of data may have to be examined, as few users may have concepts to share. The collection can be done by asking users when they purchase the product or service how they have used similar ones in the past. Their responses may indicate a novel use that could be a product or service concept. Alternatively, users can be observed or questioned when they use similar products or services. Observation can be helpful when they have made novel uses of the products or services, but are unable or unwilling to describe them. Another potential source of user concepts are online reviews of related products or services, which have occasional suggestions for changes to operation or technology that could be used as concepts. A large number of reviews may have to be considered, but the collection is quick.

As an example, consider the energy company Société nationale d’électricité (Snel), which supplies electricity to Kisangani in the East of the D.R.C. Power cuts by Snel have created difficulties for its customers, and some of them, such as industrial companies, have introduced a solution to the problem, by adopting a type of electricity generator called “Njaffa” (link). This is a small generator that uses fuel oil to drive a motor, with a cooling mechanism connected to a barrel of water. The generators are either purchased or rented from local suppliers. If Snel is looking to innovate so that its supply becomes more reliable, then these concepts – both the Njaffa technology and the approach of working with local energy suppliers – could be useful, perhaps in modified form or in combination with other concepts.
 
Generating concepts from other organisations
Other organisations can be a useful source of concepts. Other organisations may have found ways of meeting some or all the users’ needs, or solving operational or technological aspects of the delivery of those needs. Concepts from other organisations may be particularly valuable when the organisations are working in areas that have some relation to the proposed product or service – for example, organisations working in the area of conflict resolution may be valuable sources of concepts for a service to broker truces between fighting groups.

One way of generating concepts from other organisations is by examination of their products and services, to identify technologies and operations that could work, perhaps with adaptation, to deliver the proposed product or service. The identification of technologies and operations can often be done by observing the product or service as it works, or reading descriptions of its use. Technologies can also often be identified by disassembling a product, and in the case of some products such as electronic goods or computer software, this may be the most efficient approach. Another way of identifying some technologies is from patent records. In many countries, organisations deposit a patent record – a publicly available record of the technologies within their products – and so obtain a protection against competition from products using similar technologies, for a period of time. Examination of these national or foreign records can be a source of concepts for the innovation manager. Although the manager may not be able to directly base their concepts on the technologies during the period of protection, they may be able to use the technologies as a starting point to think of a different concept. Once the period of protection expires, the manager can directly base their concepts on the technologies.

There is an alternative way of generating concepts from other organisations, by discussion and collaboration with their current or former employees. The current employees of other organisations are sometimes willing to share their concepts, either in an exchange that requires the innovation manager to share something with the other organisations, or by an offer that does not require the innovation manager to share or do anything in response (although in this latter form of sharing, there is often an expectation that the innovation manager will develop the concepts in a way that benefits the other organisations). If the other organisations’ current employees are not willing to share their concepts, then the innovation manager may try to hire some of the employees, and then ask them to share their concepts. The employees’ ability to share their concepts may be restricted by the contracts from their former employment.

Often, there will be a small number of major concepts that can be identified from other organisations, and a large number of relatively minor variations on these major concepts. For example, a restaurant may sell food and drink to customer standing at a counter, or sell it to customers seated at a table. These two major concepts have many minor variations such as the size of the table, the clothes of the staff, and the speed of service. An innovator collecting concepts for how to serve customers should aim to identify all major concepts and to note the forms of the minor variations, so that it would be enough to say that the table size varies without describing every size in detail. Concepts can be collected from a fixed group of organisations, such as all large organisations in an industry, or until concepts repeat over many successive organisations.

Consider the example of a hotel manager who wants to improve the reception service at their up-market hotel in Kinshasa, Democratic Republic of the Congo. The needs for the reception service were identified and summarised in the last blogpost, and include “the reception staff calculate bills correctly”. The manager discusses with her employees who used to work for other hotels what approaches those hotels have used for recording and paying bills. The manager identifies three major concepts from these discussions: the use of written records, the use of a spreadsheet, and the use of hotel management software. Minor variations in the concepts occur in the equipment used to store the information, the place of storage, the process of data entry and retrieval, the way that records about the stay and records about payment are linked, the way calculations are made, and the people who can use the billing system. The manager then decides to build on one of the concepts by reading written reports of different hotel management software in the trade press and online, to identify additional, more detailed concepts.
 
Generating concepts from experts
Experts may also be a valuable source of concepts. They are people with a high level of knowledge or skill in areas connected to the proposed product or service. Their expertise may be broad – for example, they may be an agricultural expert who provides concepts to farmers – or it may be connected to a specific part of the product or service, as when a scientist provides concepts about technology to a household goods designer. Experts may be particularly useful when identifying concepts that are very new and have not yet been applied in a product or service, or when an innovation project is very technically demanding.

There are a number of ways that an innovation manager can get concepts from experts. One way is to examine their writing, which could be in the general press, trade publications, or academic literature. Another way is to attend their public events, where they may present concepts or ideas, or discuss them with their audience. A manager could also meet an expert in person, by setting up a meeting where the manager describes their innovation challenge and the expert suggests ways of responding to it. The manager could go further and hire an expert, either as an employee or consultant.

Concepts provided by experts may be numerous and diverse in content. A manager may want to collect them from just a few experts, in order to identify the most prominent and promising concepts, particularly in respect of newly emerging technologies that have not yet been applied to consumer products or services.

An example of concept generation from experts is provided by SRK Consulting in the D.R.C. A large mining company operating in the country wanted to introduce a discussion process with local communities, as part of a government-mandated scheme for social development. The company contacted SRK to plan and deliver the process. SRK was able to bring knowledge of local mining, languages, traditions, and partners to identify a suitable concept and then realise it (link).
]]>
<![CDATA[Discovery of consumer needs]]>Tue, 20 Sep 2022 21:34:46 GMThttp://investinginafrica.org/blog1/discovery-of-consumer-needsWhen a manager has an idea for an innovation, they may only know the most basic parts of the proposed product or service: its area or market of use, and its job in broad terms. The manager still has to decide what features it should have, and it is these features that distinguish it in the market and determine whether a consumer will buy it rather than a competitor’s product or service. The features should satisfy consumers’ needs, which are what consumers want the product or service to do. This blog post describes how a manager can find consumer needs and express them in a way that helps to develop a product or service that satisfies them.
 
To discover consumer needs, a manager can take a series of actions. The manager starts by collecting data from consumers about their preferences for products or services that are similar to the proposed one. Then the manager writes the consumers’ data in terms of what the proposed product or service does, which gives a list of consumer needs. Next, the manager groups similar needs, and finally the manager establishes the importance of needs [1].
 
The actions will be shown in a series of steps using the example of a hotel manager finding out what guests want from a reception service. An improved reception service was identified in the last blog post as a potentially successful idea for an up-market hotel in Kinshasa, Democratic Republic of the Congo.
 
Actions to discover consumer needs
Collection of consumer data
The discovery of consumer needs starts with the collection of data from consumers describing their preferences for products or services that are similar to the proposed one. The collection aims to get responses that reflect a wide range of consumer needs, and can be used to design a product or service that at least some consumers like. There are several questions for a manager to consider when deciding how to collect the data: who provides the information? How is the information collected? What is asked?
 
Who provides the information?
The manager should collect information from groups of consumers in every major segment that is part of the market for the proposed product or service. An example of these groups for a Kinshasa hotel could be business travellers, holidaymakers, domestic travellers, and international travellers. Some of these groups may overlap; for example, business travellers who are also international travellers. The manager should collect information from consumers in each group until the information from additional consumers is much the same as information already provided by other consumers.
 
The manager can also collect information from extreme users, who use the product or service in an unusual way. For example, an extreme user in a hotel could be someone who lives there permanently. The manager can additionally collect information from lead users, who have needs for new types of product or service earlier than other users. For example, a lead user in a hotel could be someone who requires the fastest internet connection available, or someone who uses hotels often and so experiences needs sooner than less frequent guests. The manager can identify extreme and lead users prior to the information collection, or can identify them when collecting information from general users and then question them in more detail.
 
The aim of the collection is to find many of the different needs that may be expressed. If the expressed needs differ substantially across the groups in each major segment of the market, then one reasonable method is to collect from within each group to ensure that all needs are represented. A more precise alternative method is to divide people into small groups based on their detailed characteristics, estimate which groups are likely to have similar needs relating to the product or service, and then combine these small groups with similar needs into larger groups for the purpose of information collection. A manager who is seeking precision may also collect information from people who use their product or service in any way, even if they are not the end consumers. For example, a hotel manager may also collect information from travel agents, not just from hotel guests.
 
How is the information collected?
There are various ways to collect the information. Collection may be done passively with little interaction between the manager and the consumer. One way this can be done is by observing consumers using the product or service. For example, a manager could observe hotel guests using a reception service, and find that they are waiting for a long time. The implied consumer need is that they want to wait for a short time, if at all. In another method of passive collection, a manager experiences the same product or service as the consumers, and records their opinions of the experience. For example, a manager could stay as a hotel guest, and note their opinions of the reception service. A further method of passive collection is to collect data about the consumer needs expressed on the internet. For many goods and services, there are so many reviews available on the internet that it can be a reasonable source of information.
 
Collection may also be done actively, where the manager and consumer interact to some degree. One way is to give or send potential consumers a written survey for them to complete. Another way is to use a focus group where consumers are gathered together and asked questions, and they can interact with each other when responding. A focus group collects information from many people at once, so can speed up information collection. It can also encourage people to express themselves more freely by reducing the impact of the person collecting the data on people’s responses. A further way of active collection is to conduct individual interviews. Interviews are easier to conduct than a focus group, and can be more flexible in the way they are done, with the potential to be cheaper as a result.
 
A focus group or interview session is more likely to be successful if the manager follows some guidelines aimed at ensuring that consumers express many of their preferences about the proposed product or service. The manager can keep the consumers focussed on this topic by clearly stating it at the start of session and as the session progresses. If the discussion strays from the topic, for example to consider the technology that will be used inside a product, the manager can direct the discussion back to the consumer preferences. The manager can provide sample products or services that are similar to the proposed product or service, or they can provide descriptions of them. The similar products or services can be very close to the proposed product or service, or a little more different. The manager can also provide descriptions or samples of the proposed product or service. Further, the manager can describe scenarios in which the product or service is used, both familiar ones and less familiar ones. These products, services, descriptions, and scenarios aim to remind the consumers about the product and service, and the situations in which it could be used. Different products and services as well as less familiar scenarios can encourage discussion of a wider range of needs, and when unusual needs are expressed, the manager can ask for further details and discuss the product or service or the scenario further until no additional unusual needs are expressed.
 
Some further guidelines can help the manager collect the needs that the consumers have generated. The manager can ask the consumers directly to describe their needs, or to show how they would use a similar product or service. The manager may also observe any non-verbal communication that expresses needs, such as apparent like or dislike of a feature.
 
Table 1 shows the collection methods and reasons to select them, and table 2 summarises the guidelines for interviews and focus groups.

Table 1: Collection methods and reasons to select them

Table 2:  Guidelines for focus groups and interviews
 
What is asked?
The questions aim to find out consumers’ preferences when they are buying the proposed product or service, or using it. The manager should ask consumers what they want when they purchase a similar product or service. The manager should also ask consumers what they like and dislike about the proposed product or service, or similar ones, and what they would add or remove to make it or them better. Additionally, the manager should ask how consumers use similar product or services.
 
The manager should also ask questions about consumers’ use of similar products or services. These questions will help to identify extreme and lead users.
 
When a passive collection method from table 1 is used, such as observation of consumers, the manager probably won’t be able to get exact answers to all the questions. Instead, the questions are a guide for the sort of information that should be collected, as far as possible. For example, the manager should aim to assess the features that are important when a consumer is using a product or service, as an indicator of things that consumers consider important when using and buying it.
 
Table 3 presents questions to ask.

Table 3: Questions for finding consumer needs relating to the proposed product or service
 
The expression of the consumers’ data as needs
The manager now has data that expresses consumer preferences, but for development it would be useful to express those preferences in terms of needs - product or service characteristics that are what consumers want the product or service to do. So the manager should write each piece of consumer data as a need, and the manager should not mention any particular technology or method used to perform the task. For example, a hotel guest may say that they don’t like to queue at the reception, and the manager could write this as “the reception responds quickly to guests”, but not as “the reception responds quickly to guests by having three members of staff on duty at all times”.
 
Grouping of similar needs
The manager may have identified hundreds of needs. To bring them into a form that can be used for comparing proposals for innovative products or services, the needs are grouped next. The manager starts by combining identical needs into a single need. The manager then identifies needs that are similar to each other, and gathers them into a group. The aim is to form around 10 to 20 groups, with a label for each group that summarises the needs in it. This stage may be done by a team of people to help increase the accuracy of the grouping.
 
Establishment of the importance of groups of needs
The development of products and services has trade-offs ; a manager usually cannot develop a product that fully satisfies all consumer needs at a reasonable cost. If the relative importance of the needs are identified, the manager can focus on the most important ones during development. So the manager establishes the importance of groups of needs to consumers. The manager or their team may decide on the importance themselves if they can assess accurately, for example by adapting and completing the general survey in appendix 1 on behalf of a typical consumer. If the manager or their team cannot decide on the importance, they can ask consumers, for example by sending them the survey in appendix 1. The importance of a group is then the average value of the numeric responses. A survey works best when very many consumers are surveyed, but it is still effective if only 20 consumers are surveyed.
 
Flowchart of the steps for discovery of consumer needs
The flowchart in figure 1 summarises the above steps for discovery of consumer needs. The flowchart is also available as a pdf download at the end of the post.

Figure 1: Flowchart for the discovery of consumer needs

Example: discovery of guest needs for a hotel reception service
The example in this section shows the discovery of guest needs for an up-market hotel reception service in Kinshasa. It follows the stages in the flowchart from figure 1.
 
1. Manager wants a list of consumer needs assessed for importance
I will act as the manager.
 
2. Identify groups of people in each of the major segments of the product’s or service’s market. Include people who use it often or in an unusual way, if possible
Groups of people in major segments for an up-market hotel in Kinshasa are business travellers, holidaymakers, and international travellers. Congolese travellers may also be in a major segment, although the people in the D.R.C. with sufficiently high disposable income for an expensive hotel may already have a residence in Kinshasa.
 
3. Use table 1 to select the collection method
I consult table 1, and choose collection of internet reviews because I want low cost and easy access. I use the travel site hotels.com, which has a very large number of hotel reviews. Reviews relating to up-market hotels in Kinshasa will be examined to find what guests to these hotels want from their receptions. Reviews for hotels in Paris, France will also be examined, because the different country context may lead to expression of a wider range of opinions, and because they include opinions from people who have not been guests at Kinshasa hotels but who could become guests in future.
 
Hotels.com contains information identifying a guest’s nationality, and many reviews contain information identifying whether their trip was for business or tourism. It is convenient to collect reviews from business travellers, holidaymakers, and international travellers at the same time. Of the hotels.com reviews for the hotels that we examine, none are posted by guests identified as Congolese nationals.
 
4. Use table 2 to identify questions to ask
The questions to be asked are in table 2. As I collect internet reviews rather than interviews or consumer surveys, the questions act as a guide for the sort of information to be collected, such as the features of receptions that guests like, or the features that influence their decision to use the hotel in future.
 
5. Select one of the groups not yet examined
The group selected is business travellers.
 
6. Collect information from a person in the group, and
7. Have more than five people provided information? and
8. Is the information from additional people the same as information already provided by other people?
9. Have all the groups of people been examined?
Information is collected from individuals until the information from additional people is much the same as information already provided by other people. Because the online information from each individual is a paragraph or less, their reviews may not state all of their needs. So I checked the reviews of hundreds of guests to get fuller information, and stopped only when tens of additional guests didn’t have any new information to add.
 
Over two hundred pieces of consumer data were collected, describing what guests like and dislike about hotel receptions. Example responses are “the credit card machine was not working when I checked out”, “the staff were very attentive”, and “it took two hours for someone to fix the leaking bathroom”.
 
10. Write each piece of collected data as a need, which describes something the product or service does
In the next step, I wrote each piece of collected data as a guest need, describing something that the reception does. Example needs are “the reception allows people to pay bills using their credit cards”, “the reception is attentive to guests”, and “the reception responds quickly to plumbing problems”.
 
11. Combine identical needs into a single need
12. Form about 10 to 20 groups each with similar needs in it
13. Give each group a label that summarises the needs in it
I combined identical needs into a single need; for example, many people had a preference for friendly reception staff. I then grouped similar needs, forming 16 groups, and then gave each group a label describing its contents. For example, the needs “the reception has a list of available items if guests want them”, “the reception provides information about facilities available”, and “the reception can provide guests with information about the area” are grouped together, and given the label “the reception staff can supply information about the hotel and region”.
 
14. Can the manager assess the importance of the need groups to consumers?
15. Use appendix 1 as a survey template
16. Assess the importance of the need groups to consumers
In the final step, I assess the importance of the need groups to guests. I do this myself, using my own knowledge and assumptions about guests. The results are shown in table 4, which completes the assessment of guest needs.

Table 4: Assessment of the importance of need groups to consumers
 
17. Manager has a list of groups of consumer needs assessed for importance
All done.
 
Footnotes:
[1] The actions are like those in Ulrich, K.T., Eppinger, S.D., Yang, M.C. (2019), Product Design and Development. 7th edition. McGraw Hill, and in Griffin, A., Hauser, J.R. (1993). The Voice of the Customer. Marketing Science 12(1), 1-27.]

Appendix 1: Survey for features of product or service X
Suppose you are using product or service X, and you see that it has the features listed below.
Please read the following descriptions, and tick the box that best describes each feature.
  1. The feature makes X worse
  2. The feature does not make X better or worse
  3. The feature makes X slightly better
  4. The feature makes X much better
  5. The feature is essential for X
Thank you!
flowchart_discovery_needs_n.pdf
File Size: 517 kb
File Type: pdf
Download File

]]>
<![CDATA[Identifying ideas with potential for successful development]]>Thu, 31 Mar 2022 19:01:34 GMThttp://investinginafrica.org/blog1/identifying-ideas-with-potential-for-successful-developmentA manager has found some ideas for new products or services, and would like to use them to develop actual products or services. Their first step is to identify those ideas that their organisation could potentially develop and supply successfully, and this blog post will discuss their characteristics that can be used for identification. A flowchart will be presented, which the manager can use to identify a potentially successful idea by answering a series of questions about the idea and organisation. The flowchart will be applied to ideas for innovation by an up-market hotel in Kinshasa, capital of the Democratic Republic of the Congo.
 
Organisational strategy for innovation
An idea should suggest a product or service that is consistent with any innovation strategy that the organisation has. An innovation strategy is a set of organisational policies that apply to all the organisation’s innovation activities. For example, an innovation strategy may state the industrial subsector in which the organisation should innovate, and an idea that proposes a product or service outside that subsector is not potentially successful. As another example, an innovation strategy may state that the organisation should only look for small changes in its products, and an idea that proposes large changes is not potentially successful.
 
Ability to develop and supply the product or service
An idea should suggest a product or service that the organisation has the ability to develop and supply to customers or clients. There are several major requirements here. One is that the organisation’s employees and management have sufficient skills for development and supply of the proposed product or service, or can get them. For example, an organisation’s employees may have skills in customer service, but no skills in computing, so an idea that proposes the development of a new internal computing system is not potentially successful unless the organisation is willing to hire external expertise or buy an existing system.
Another major requirement for an idea is that the organisation has sufficient equipment and material for the development and supply of the proposed product or service, or can get them. Equipment is any asset that is used but not consumed in the development and supply, and material is any asset that is both used and consumed. For example, if an organisation has no manufacturing facilities, an idea that proposes that the organisation develops and builds a new physical product is not potentially successful.
A further major requirement for an idea is that the organisation has sufficient finance, or can get it. Finance pays employees, and it buys and pays for the maintenance of equipment and material. For example, an organisation may have limited finance, so an idea that proposes an expensive development process is not potentially successful.
These three requirements are individually necessary. An idea is not potentially successful if the organisation does not have all of sufficient skills, sufficient equipment and material, and sufficient finance to develop and supply the proposed product or service.
 
Value creation
An idea should propose a product or service that will create value for the organisation. Creation of value means that the value of the product or service is higher than the cost of its production. For a company, creation of value would mean that the product or service makes a profit, while for not-for-profit organisations, creation of value would mean that the product or service is an effective way of serving its clients. If the manager wanted to calculate the exact value that the product or service would create, they would have to do some numerical estimation, but for an initial evaluation of ideas, that isn’t necessary. Instead, a few requirements of the proposed product or service can indicate creation of value.
The first requirement is that many people want the proposed product or service. If most people don’t want the product or service, its value to the organisation is likely to be low. The second requirement is that few or no other organisations will provide the same product or service. Sometimes the organisation can take measures to prevent such competition, by keeping its production methods secret, or by forming a strong brand on the product or service, or taking out a patent. If the organisation has many competitors, the value of the product or service to the organisation is again likely to be low. The third requirement is that the organisation can develop and supply the product or service cheaply.
An idea is not potentially successful if most people don’t want the proposed product or service, if many other organisations will provide it, and if it is expensive to develop or supply. If one or two of these statements is true, there is uncertainty about its potential.
 
Flowchart for identification of potentially successful ideas
Figure 1 presents a flowchart summarising the discussion. It gives a series of questions about an idea that are answered in order, with the answers determining whether the idea is potentially successful, not potentially successful, or has uncertain potential. The flowchart is also available as a pdf download at the end of the post.
Once the manager has assessed the ideas, they may keep the ideas that are potentially successful, discard the ideas that are not potentially successful, and decide whether to keep any of the ideas that have uncertain potential success. If there any many ideas that are potentially successful, the manager may discard all ideas of uncertain potential success.

Figure 1: Questions to identify potentially successful ideas

Example: Identification of potentially successful ideas for an up-market hotel in Kinshasa
The following example identifies potentially successful ideas for innovation by an anonymous up-market hotel in Kinshasa, using the flowchart in figure 1. Information about the hotel and its market is taken from its website and from www.hotels.com. The set of initial ideas examined is taken from my last blog post:  a fitness centre open 24 hours each day, a garden, a free area shuttle, free childcare, free supervised activities for children, a playground, greater staff efficiency, reduced noise, improved room service, improved reservation service, improved reception service, and better value discounts on rooms. I’ll examine the first idea in detail, and summarise the results for the other ideas.
 
Idea 1: a fitness centre open 24 hours each day
  Idea is consistent with strategy?
Yes. The management company’s stated strategy for the hotel includes 24-hour service.
 
  Employees have enough skills?
Yes. If the centre is staffed, the daytime employees can be offered night shifts too, or other people can be hired and trained if necessary.
 
  Organisation has enough equipment?
Yes. The current centre has all required equipment.
 
  Organisation has enough finance?
Yes. The organisation invests in much larger projects than this, and its expenditures and income far exceed the likely spending on this innovation.
 
  Many people want the product?
No. It seems likely that there would be few holidaymakers or businesspeople who would want to work out in the middle of the night.
 
  Little or no competition?
Yes. There are few other upmarket hotels, and only one offers a 24-hour fitness centre, according to the reports on www.hotels.com. It is possible that independent fitness centres are open 24 hours a day, but they are not strong competitors, as hotel guests would have to travel late at night to get to them.
 
Figure 2 shows the responses to the questions, and the path down the flowchart. The potential success of the idea is uncertain.

Figure 2: Assessment of the idea “a fitness centre open 24 hours each day”

The flowchart was applied to the other ideas as well, and their potential success is shown in table 1. The assessment used my limited knowledge of the hotel, and a hotel manager’s assessment may be different.
 
Table 1: Innovation ideas for the up-market hotel in Kinshasa, classified by their potential success
The ideas that are not potentially successful can be discarded, and a manager can decide whether to discard any of the ideas with uncertain potential success.
flowchart_identify_ideas.pdf
File Size: 395 kb
File Type: pdf
Download File

]]>
<![CDATA[Collecting information to generate ideas for innovation]]>Mon, 07 Mar 2022 12:26:22 GMThttp://investinginafrica.org/blog1/collecting-information-to-generate-ideas-for-innovationLet’s say that a manager wants to better serve their organisation’s customers or clients, but they are not quite sure how to do it; they need ideas. They know that customers or clients, competitors, and other sources can provide valuable information that the manager could use to generate ideas. They face a problem, though, which is how to collect relevant information from these sources.
This blog post shows how information can be collected quite easily. There is a simple form at the end of the blog post to help collect information, summarising the post’s content. The content is applied to information collection by an up-market hotel in Kinshasa, capital of the Democratic Republic of Congo, to illustrate how it works in practice.
 
What type of information should be collected?
A manager wants ideas for their innovation, and one way of getting them is just to directly ask people what ideas they have. People can be very creative and their ideas can point to a large range of possible innovation. The ideas are immediately available after collection, and the manager doesn’t have to do any other work to get them.
There is another way of getting ideas, which is to collect information on products and services, and then use them to generate ideas for future innovations. Products and services are often well-known, particularly those that have been sold in a market, so it is easy to collect information about them, for example from sales websites with customer reviews. As the products and services have already been introduced, they show what innovations are possible, and suggest what may be possible for future innovations. They can also be used to identify trends in innovations, and areas where no innovations have been produced.
Table 1 in the form at the end of the blog post shows the two types of information with reasons for selecting them. If a manager thinks the reasons justify their use, they can tick the box below the information type. A manager may want to use both information types.
 
What collection method should be used?
A manager can collect information by interviewing people who have it. The interviewer can explain their questions to the people interviewed, so that they understand what they are answering, and can give a fuller answer to the intended questions. The interviewer can also adapt or extend the questions if the interviewed people give interesting answers.
A manager can also collect information in writing. The manager may send written questions to people, or collect previously written information. Collection of written information can be easier and less time consuming than interviews. Another advantage of collection of written information is that people’s responses are not affected by the presence of an interviewer. Their presence may make interviewed people more likely to give responses to please the interviewer.
Table 2 in the form at the end of the blog post shows the two methods of information collection, by interview and in writing. The reasons for choosing them are shown too. A manager may think that the reasons are relevant for their own work, and tick the box for the collection method. A manager may choose to use both collection methods.
 
Questions to ask
A manager can find ideas more quickly and easily if they chose well the questions they ask. The most suitable questions depend on the type of information collected, either innovation ideas or information about products and services.
If the manager wants to collect innovation ideas, the manager can ask people what products or services they would like to see sold or provided in the organisation’s industry, and then ask people what products or services they would like the organisation to sell or provide. The two answers together help to show what people want and what people think the organisation can provide.
If the manager instead wants to collect information about products and services, the manager can also ask (or find out) what products and services are available in the organisation’s industrial sector, and what their main features are. The aim is to get sufficient information so that the manager can see if a new innovation could be a valuable novelty. The manager can also ask people what they like and don’t like about the organisation’s current products and services, and then ask what they like about the current products and services of the organisation’s competitors. This information can show possible future innovations that add more liked things and that remove or correct disliked things from current products and services.
Table 3 in the form at the end of this blog post lists the questions for each type of information.
 
Where should the information come from?
Managers should use sources that have good information about the organisation’s industry. Even a well-informed source won’t know everything about the industry, so a variety of sources should be used who together are familiar with the different parts of the industry.
 
How much information should be collected?
It would be good not to miss any ideas for innovation. In practice, the manager hasn’t got enough time or money to find every good idea, so they have to decide when they have enough information. One way is to stop collecting information when most newly collected information is the same as previously collected information.
 
Example: An up-market hotel in Kinshasa
The following discussion gives an example of idea collection using the form at the end of this article. The ideas are for innovation by an up-market hotel in Kinshasa. The hotel is kept anonymous.
 
What type of information should be collected?
I want to collect the information easily, and I also want to know what innovations can be successful in the market. Table 1 says that I should collect information about products and services.
 
What collection method should be used?
As just noted, I want to collect responses easily. It would be nice to get more detail on interesting answers, but a wide range of information is more important. Table 2 says that I should collect information in writing.
 
Questions to ask
I’m collecting information about products and services, and table 3 suggests questions to ask: what products and services are available in the organisation’s industrial sector? What are their important features? What do people like about our products and services? What do people dislike about our products and services? What do people like about our competitor’s products and services?
 
Where should the information come from?
The sources should together have good information about the parts of the organisation’s industry, which is up-market hotels in Kinshasa. I’ll use from the website hotels.com, which publishes details of the hotels and includes many reviews by visitors. It has a good range of information, and lets me answer all the questions. I’ll use the details to answer “what products and services are available in the organisation’s industrial sector?” and “what are their important features?”. I’ll use the reviews to answer “what do people like about our products and services?”, “what do people dislike about our products and services?”, and “what do people like about our competitor’s products and services?”.
 
How much information should be collected?
The information should be collected until most newly collected information is the same as previously collected information. I’ll follow that recommendation.
 
Answers to the questions
  What products and services are available in the organisation’s industrial sector?
There are a number of up-market hotels (3, 4, and 5 stars) in Kinshasa that operate in the same industrial sector as the hotel. There are also furnished apartments close to the city centre, although they are less expensive and have some very different features.
 
  What are their important features?
The hotel and the other up-market hotels share certain features: daily housekeeping, breakfast, restaurants and bar, an outdoor pool, tennis courts, free cradles, childcare, bath and shower, business facilities, and premium TV channels.
There are certain features that the hotel does not have, but one or more of the other hotels do. These features are a fitness centre open 24 hours each day, a garden, and a free area shuttle (although the hotel offers limousines). Some additional childcare services are offered by other hotels: free childcare (rather than purchased separately, which is done at the hotel), free supervised activities, and a playground.
These features suggest ideas for innovation: the hotel could introduce some of these features. The hotel still has to evaluate the merits of the ideas.
 
  What do people like about our products and services?
People say that staff are friendly and helpful, and rooms are comfortable and clean. The hotel is relaxing and safe, with excellent covid safety measures. Room and bathroom facilities are good. Food is delicious and copious, there is good Internet by regional standards, and the gym is also good.
 
  What do people dislike about our products and services?
People say that staff response is slow: in general, at check-in, in the restaurant, by the concierge, and in response to a fault in the rooms. People also say that the staff lack skills, including in speaking English (although French and Lingala are always spoken). People find that some of the procedures do not work well: support for payment cards, recording of reservations, supply of towels, and room inspection prior to client arrival.
These dislikes suggest ideas for innovation: improvements to staff response and training, and improvements to the operation of the procedures.
 
  What do people like about our competitor’s products and services?
The following list summarises what people like about various other up-market hotels in Kinshasa. People like clean and safe hotels in a convenient location. People like friendly, polite, helpful, and efficient staff, and they like clean, comfortable, quiet, cool, and spacious rooms. People like rooms to have hot showers with good water pressure, air conditioning, comfortable beds, and a kettle to make coffee. They also like good room service. They like a 24-hour gym, and they like reservations that work well, and reception service that is good. They like good value when the rooms are discounted.
The things that people like about other hotels can be compared with the things that people like about the hotel. Anything that is liked about other hotels but not about the hotel suggests an idea for innovation. These ideas are: greater staff efficiency, reduced noise, a 24-hour gym, improved room service, improvement in the reservation service, improvement in the reception service, and better value discounts on rooms.

Form: Collecting information to generate ideas for innovation
Table 1: What type of information should be collected?
Table 2: What collection method should be used?
Table 3: Questions to ask
Where should the information come from?
Together, the sources should together have good information about the parts of the organisation’s industry.
 
How much information should be collected?
Information should be collected until most newly collected information is the same as previously collected information.
form_-_collecting_information_to_generate_ideas_for_innovation.pdf
File Size: 728 kb
File Type: pdf
Download File

]]>
<![CDATA[Sources of ideas for innovations]]>Wed, 06 Oct 2021 16:56:15 GMThttp://investinginafrica.org/blog1/sources-of-ideas-for-innovationsIntroduction
Sometimes a person has clear idea for an innovative output, and they are very motivated to work on it: perhaps they are an entrepreneur setting up a new business, or a nurse introducing health care services in response to an emergency, or an engineer building the engine that they dreamed about as a child.
 
Most of the time, such clear ideas don’t exist. A person may want to innovate, but ideas either aren’t immediately presented to them, or the ideas may not be obviously better than others. The person needs a way to identify suitable ideas, and assess the ideas’ merits before investing time and money in their development. Indeed, even for someone with a clear idea for innovation, it is prudent to consider and assess alternative ideas as well. Their development may be a better use of the person’s time.
 
This blog post will look at sources of ideas for innovations, with examples from organisations in the Democratic Republic of Congo. Future posts will look at the collection and assessment of ideas.
 
Sources of ideas
Happily, there are many possible sources of ideas for innovative outputs. They include the innovator themselves, their organisation, the users or consumers of the innovator’s outputs, the innovator’s competitors or collaborators, and bodies such as lobby groups in the innovator’s field of work. Sometimes people in the sources may provide ideas freely, while in other sources the innovator may have to work harder to get the ideas from them.
 
This section will discuss the sources of ideas shown in table 1. It will discuss the type of ideas that the source may provide, the places within the sources to look for the ideas, and the likely focuses of the ideas. For the public sector, the section will also briefly describe the different institutions of this source that may provide distinct ideas.
 
Because the sources in the table are in frequent interaction with the innovator or their field of work, they are likely to provide ideas that are relevant to the innovator’s operations. As such, the innovator is more likely to have relevant skills and connections for the development of the ideas from these sources, compared with ideas from other sources. As a result, it makes sense for the innovator to focus their time and effort looking for ideas from the sources in the table. However, some people and organisations from the wider economy and society may also provide useful ideas. For example, the computer industry may provide good ideas for innovating business processes in other industries. An innovator can’t thoroughly scan the whole of society for ideas, so they would benefit from good general alertness to wider economic and social changes, and the resulting possibilities for innovation in their own work.
 
Table 1: Sources of ideas
  • People within the innovating organisation
  • Product and service users
  • Other organisations doing similar work to the innovator
  • Suppliers
  • Interest groups in the innovator’s field of work
  • Universities and research institutions working in the innovator’s field of work
  • Public sector institutions

People within the innovating organisation as a source of ideas
One source of ideas is the people within the innovating organisation. The people in it will be very familiar with its output and its production methods, and so are likely to have ideas for their improvement or development. People may have the ideas currently, or they may have had them in the past and recorded them in reports and publications.
 
An example of a person who provides ideas to their innovating organisation is Dieudonné Kayembe, the founder and CEO of Flechtech, a small technology company operating in the DRC. Kayembe was the source of an innovative idea for developing and selling a tablet computer. He had the initial idea when he was at university and implemented it after founding Flechtech ([1]). He had experience in the design and production of computers from his university course, and was already a prize winning innovator ([2], [1]). The idea was only initially specified in broad terms – the details of the design were subsequently developed over many years ([1]). Today, Flechtech has designed the tablet and built its software, adapting its construction for operation within the DRC, and is looking to commercialise it.
 
Video: Dieudonné Kayembe and his tablet computer
Note: The video is in French: for subtitles, please 1) press play, 2) hover over the player, 3) click the subtitles icon at the bottom of the player, 4) click the settings icon at the bottom of the player, 5) click the “subtitles/ CC” option, 6) click the “auto-translate” option, and 7) click the English option.
Producer: TV5MONDE Info (https://information.tv5monde.com/). Used under YouTube terms: https://www.youtube.com/t/terms

Product and service users as a source of ideas
Another source of ideas is the people and organisations who use the innovator’s products and services, or who may use them in future. They have detailed knowledge of their own preferences, and may have experience of the products and services. These two characteristics mean that they may have ideas for removing weaknesses from the products and services, developing strengths, and adding features that increase appeal to users. The ideas can be found by speaking to users or surveying them.
 
An example of product users who provide ideas is the clients of the firm Adi-Construct in the DRC. Adi-Construct is an architectural and building company which has managed many large construction projects, including roadworks, offices and industrial buildings, storage facilities, a laboratory, government buildings, schools, blocks of flats, and street lighting ([3]). Their clients provide ideas about the building’s purpose, form, implementation, and location, and Adi-Construct realises those ideas. Clients initially contact the company by e-mail, telephone, or social media ([4]), and they maintain contact with the company throughout the project ([5]).
 
Other organisations doing similar work as a source of ideas
An organisation or person can get ideas from other organisations doing similar work to the organisation, such as competitors. They have expertise in the same areas as the organisation, and experience the same pressures to generate new ideas. They are likely to generate ideas that can increase success in the organisation’s area of work, and an organisation that doesn’t follow or adapt to these ideas may lose its position in its industry. The ideas may be known by other organisations’ workers or written down in the organisations’ documents, or they may be the basis of active projects within the organisations. These ideas may be accessible by discussions or collaboration with the organisations, or by hiring or contact with its workers. Alternatively, ideas may be apparent from new goods and services provided by other organisations.
 
An example of an organisation getting ideas from another organisation is Congo Airways. It signed a memorandum of understanding with Kenya Airways, which is a loose commitment aiming to promote exchange of innovation, knowledge, experts, and best practices through technical cooperation. Both air carriers operate in passenger and freight transport, but have some differences in expertise, most evidently in regional specialisation with one company based in the DRC and the other in Kenya, which presents opportunities for use of complementary skills and knowledge, as well as for direct exchange of ideas. The loose form of the agreement supports informal shared investigation and contacts, to establish what ideas are viable and profitable prior to a more formal agreement ([6], [7], [8]).
 
Suppliers as a source of ideas
Another possible source of ideas is suppliers. Suppliers sell goods or services to an innovating organisation. They are familiar with potential inputs to the organisation’s innovation, and are also likely to be familiar with many possible uses of those inputs from their experience with the organisation and other organisations like it. They may also have some understanding of how their goods and services can be applied in the organisation’s specific circumstances. Together, these features of suppliers’ knowledge mean that the suppliers can provide ideas for changes to the organisation’s inputs, leading to innovative processes or products. Suppliers often actively seek sales, so they may use their marketing literature or personal contacts with the innovating organisation to propose ideas for innovation that promote those sales.
 
An example of a supplier that provides ideas for innovation is Essor Equipments, a Congolese company which sells medical equipment to health professionals. The company has operated since 1996 throughout the whole of the DRC, with a team consisting of pharmacists, biologists, and commercial experts ([9]). Because of their experience and knowledge, they can identify medical goods that their clients could use to innovate their own processes and services. Essor Equipments sells a wide range of medical goods, including bandages, clothing, diagnostic equipment, test tubes, furniture, and washing machines. They present their goods to potential clients on their website ([10]), with sales representatives as a source of more individualised ideas for goods.
 
Interest groups in the innovator’s field of work as a source of ideas
A source of ideas is interest groups in the innovator’s field of work. These are groups of people and organisations who have a shared interest in some part of the work that the innovator does, such as groups for managers or employees working in an industry, groups that promote public awareness of their members’ activities, groups for networking and support for people working in an industry, or groups that represent their members in dealing with government. The ideas generated within interest groups may relate primarily to the subject of interest, or they may be related both to the subject of interest and to the separate concerns of one or more of the members, which can create a wider set of ideas and possible partnerships. Ideas may arise in group activities such as meetings and conferences, or they may be presented in publications or communications to members. Individual members may have ideas that the members express through the interest group.
 
An example of an interest group that provides ideas is the Congo Business Network (CBN), an international network of professionals and entrepreneurs of D.R.Congolese origin. The CBN organises and sponsors major forums to discuss digital commerce and technology in the DRC ([11], [12], [13] (in French)). The forums bring together business people, political figures, consumers, and others, so these people can discuss challenges in the Congolese economy and propose ideas to solve them. The forums comprise of workshops, public speaking, and networking events, all facilitating the exchange of information and ideas.
 
Universities and research institutions as a source of ideas
Another source of ideas is universities and research institutions working in the innovator’s field of work. These are public or private organisations whose work is primarily focussed on the study and dissemination of advanced knowledge that relates to the innovator’s own work. Their expertise and familiarity with the knowledge will increase their awareness of its potential applications, and because the knowledge is advanced and probably not widely possessed, these potential applications may be innovative. Universities and research institutions may publish ideas in research documents, or they may present ideas through public presentations or teaching. They may also share their ideas with other organisations through partnerships or consultancy.
 
An example of a university that acts as a source of ideas is the University of Kisangani, which undertakes teaching, research, and consultancy across multiple academic areas. It publishes its research in articles ([14], [15]), presenting a source of ideas for innovators particularly in the DRC, as much of its research focuses on the country. The University’s Technological Centre also actively seeks work as consultants, in which its expertise is employed to identify clients’ problems, present ideas for solutions, and implement those solutions. It proposes ideas and implements solutions in computer maintenance, cyber security, network establishment and maintenance, and personalised training ([16]).

“We also propose technical solutions if you want to develop your IT system. We can: determine the client’s expectations and needs, analyse the current system, study solutions with our technical department, send the solutions to the client and advise the client about them, accompany you during the new system’s integration, …”
University of Kisangani Technological Centre ([16]), my translation from the French original.


Public sector institutions as a source of ideas

Public sector institutions can be a source of ideas for innovation. They have multiple roles, including setting and enforcing laws, providing services, controlling and running state-owned companies, implementing regulation, analysing information, and using military force. Examples of public sector institutions corresponding to each type of work are shown in table 2.
 
Table 2: Public sector institutions and their work
The institutions are experts in their areas, and may want assistance when working in them, and so can act as sources of related ideas. An innovator can find ideas in their public presentations and documents, by discussions with members of the institutions, and in their invitations to tender.
 
An example of a public sector institution that provides ideas for innovation is the DRC Ministry of Health. The Ministry releases invitations to tender for supply of medicines and equipment to health centres and hospitals, as well as the Ministry itself. For example, it released an invitation to tender in June 2021 for supply and installation of computer equipment for use in the national program against tuberculosis ([17] (in French)). The products may not be radical innovations for the supplier, because the Ministry can require the supplier to have experience of supply of similar goods, but there is still some scope for development of new products that meet the Ministry’s requirements. The invitation to tender are announced on commercial websites ([18], [19], [20]).

References
[13] and [17] are in French.
[1] https://www-7sur7-cd.translate.goog/2019/10/20/technologie-motema-1ere-tablette-made-rdc-de-dieudonne-kayembe-sera-bientot?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[2] https://myafricainfos-com.translate.goog/rdc-motema-la-tablette-de-dieudonne-kayembe-qui-va-tout-changer/?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui#.Xpi-15nTVPY
[3] https://www-adiconstruct-com.translate.goog/?real&_x_tr_sch=http&_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[4] https://www-adiconstruct-com.translate.goog/?conta&_x_tr_sch=http&_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[5] https://www-adiconstruct-com.translate.goog/?pfort&_x_tr_sch=http&_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[6] https://deskeco-com.translate.goog/2021/04/23/rdc-congo-airways-et-kenya-airways-signent-un-memorandum-dentente-pour-une-cooperation-technique?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[7] https://gfnsummit.com/2021/04/23/kenya-airways-and-congo-airways-sign-mou/
[8] https://businessnow.co.ke/kenya-airways-and-congo-airways-sign-strategic-cooperation-mou/
[9] https://essor--equipements-com.translate.goog/fr/content/19-a-propos?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[10] https://essor--equipements-com.translate.goog/fr/3-materiels?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[11] https://www.fmdrc-zambia.com/congo-business-network-to-focus-on-the-digital-ecosystem/
[12] https://deskeco-com.translate.goog/index.php/2020/02/15/rdc-les-entrepreneurs-de-congo-business-network-attendus-la-1ere-edition-du-salon-e?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[13] https://twitter.com/congobiznetwork/status/1369964098117656580
[14] https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=université+de+kisangani&btnG=
[15] https://www-unikis-ac-cd.translate.goog/centrerecherches?_x_tr_sch=http&_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[16] http://www.unikis.ac.cd/node/3
[17]
http://web.archive.org/web/20210628150920/https://www.bizcongo.com/appels-offres/march%C3%A9-de-fournitures
[18] https://www-bizcongo-com.translate.goog/appels-offres/tous?_x_tr_sl=fr&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[19] https://www-mediacongo-net.translate.goog/appels-titre--societe--page-1.html?_x_tr_sl=fr&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
[20] https://www-moncongo-com.translate.goog/tenders?_x_tr_sl=fr&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui
]]>
<![CDATA[What goes into an innovation strategy?]]>Mon, 08 Feb 2021 01:05:20 GMThttp://investinginafrica.org/blog1/what-goes-into-innovation-strategyIntroduction
An organisation’s managers can help to make profit and create social benefit from innovation by selecting a good innovation strategy. An innovation strategy is a set of actions that primarily influence innovation and are important for the organisation*. For example, developing only high technology products is part of innovation strategy, but selecting a team to develop a single product is not usually part of innovation strategy unless that product will have a major impact on the organisation. A good innovation strategy is one which supports the development and application of the organisation’s innovation.
 
Some actions are almost always part of a good innovation strategy. Actions that improve innovation context, such as the involvement of a wide range of employees in innovation, are helpful for most innovation processes, and were discussed in the last blog post ([2]). They work well in most organisations.
 
Other actions may possibly be part of a good innovation strategy, depending on the organisation and their situation. Their inclusion may depend on the organisation’s resources, experience, competitors, and customers, for example. This blog post discusses how to choose these possible actions for an organisation’s innovation strategy, using examples from the Democratic Republic of the Congo. The choices that we examine are shown in table 1.
 
Table 1. Choices about the innovation strategy
  • Choices affecting the organisation
    • Investing resources
    • Creating a specialised department
  • Choices affecting the innovation outputs
    • Selecting the economic or social sector of innovation
    • Selecting which parts of production to change
    • Selecting how radical the innovation is
    • Selecting the amount of innovation
  • Choices affecting relations with other organisations
    • Creating a new organisation
    • Partnering with other organisations
    • Sharing information
    • Being a first mover
 
Investing resources
A manager invests resources in innovation when they give people involved the permission to use things that the organisation controls. The things may be finance, material, managerial involvement, labour, skills, or time. Investment is part of innovation strategy when it involves substantial amounts of money or when it could have a significant effect on the organisation.
 
Investment matters because resources are essential to innovation. Finance pays wages, buys material, and funds product launches. Material is used in developing and testing ideas for innovative products. Managerial involvement provides direction and evaluation. Labour provides ideas, collects evidence, and analyses proposals. Skills improve the work of managers and labour. Time is necessary for completion of the innovation process.
 
When an organisation has access to resources, whether its own or those of another group such as a bank or partner, its manager has to decide if investing them in innovation rather than alternative uses leads to better outcomes. For businesses, reaching the highest profits is an important criterion for investment. Not-for-profit organisations may have many different criteria for evaluation, and a manager would have to compare outcomes against each criterion. For example, a health outcome from investment in innovation may be compared to an educational outcome from investment in existing operations. Clarity about the organisation’s goals is important when setting criteria for evaluation.
 
A manager who wants to compare the outcomes from investment in innovation and other uses should think what the other possible uses are, and the prospects for the other uses. One possible use is investment in the organisation’s various current operations. Another possible use is reducing the organisation’s debts or other liabilities.
 
Managers should also consider the difficulty of the work, the organisation’s ability to do the work, the willingness of staff and managers in the organisation to support the work, the presence of other work, and the demand for the results of the work now and in future. Usually, a manager will not know in advance what the effects of these influences will be, and will have to estimate them. The manager may sometimes prefer a lower risk option to a higher risk option, even if the higher risk option has better prospects.
 
An example of a strategic choice about resource investment is in the establishment of Activa Assurances RDC. This insurance company was established in the D.R.C. in 2016 by Groupe Activa, the Cameroonian multinational insurer ([3]). During its establishment, Groupe Activa invested more than ten million U.S. dollars, hired and trained senior staff, leased and equipped offices, and set up a network of local salespersons ([4]; [5]). Groupe Activa’s decision to invest was influenced by their ambition as a company, the D.R.C.’s size and demography, the D.R.C.’s economic dynamism, and the small size of the current insurance market in the country ([6]; [7]).
 
Creating a specialised department
A specialised department for innovation is a large, stable, and connected group within an organisation, whose members work primarily on innovation, and which performs or oversees much of the innovation in the organisation. It is an alternative to individuals and small groups innovating without a common connection, or temporary teams innovating.
 
A specialised department can help an organisation to innovate in a number of ways. It has a focus on innovation with few other responsibilities, as well as devoted resources and time. It brings innovators into constant and easy contact with each other. It provides an established and clear route through which the organisation’s plans for innovation can be implemented, and shows a prominent commitment to innovation that demonstrates to all employees its importance.
 
A manager may nevertheless decide not to set up a specialised department for innovation, as despite its advantages it has disadvantages, too. There is a risk that innovation will become an activity that is done only by the department, which would lose the skills and ideas of everyone outside the department. Additionally, the presence of a fixed group with its own workers, rules, and procedures may make it more difficult to establish temporary innovation teams in which these things are changed. What’s more, a department risks becoming closed to outside information and approaches, which would damage every stage of its innovation process. Finally, there are the costs of setting up and maintaining a separate department.
 
A manager deciding whether to set up a specialised department for innovation should consider the following factors. One factor is the importance of innovation to the organisation. If it is very important, then a specialised department may be a good idea since innovation can keep occurring in it even if the organisation has other urgent activities. Another factor is whether innovation can be separated into major projects, distinct from the daily work of the organisation. If it can’t – for example if most innovation is small improvements done by individuals - then a specialised department’s separation from the rest of the organisation may hinder innovation. A further factor is the availability of resources – a specialised department requires financial and human resources, so a organisation with fewer resources may prefer to invest them elsewhere.
 
An example of a strategic choice about department creation is in the establishment in 2019 of the Accelerator Laboratory by the United Nations Development Programme (UNDP) in the D.R.C. ([8]; [9]). The Laboratory addresses problems of ensuring people have security as well as essential goods and services if these are not guaranteed, when the problems of delivery are complex and change rapidly ([10]). The Laboratory uses recently developed techniques for innovation in this area: using people from outside the organisation as sources of information, solutions, and evaluation; using computers for evaluation; and running experiments to test solutions. The Laboratory is focussed on innovation, in contrast to the UNDP’s broader focus ([11]), and has dedicated resources ([12]). The UNDP judges the Laboratory’s approach to innovation to be important for its overall aims, and the German government judges that the Laboratory is worth funding. These factors make the Laboratory a viable and appealing choice for conducting some of the UNDP’s innovation in the D.R.C.
 
Selecting the economic or social sector of innovation
A manager has to select the economic sector for which their organisation will innovate, if their organisation is commercial. If the organisation is non-commercial, then the manager has to select the social sector in which to innovate, such as not-for-profit nursing or public transport. The selection is usually strategic because it affects all of the innovation that the organisation does, with large effects if innovation is important to it.
 
The economic or social sector in which the organisation innovates can affect the likelihood of a successful innovation. It can affect the ability of an organisation to innovate, as an organisation may be better suited to work in one sector than another. It can affect the ease with which an innovative output can be developed, as it influences the complexity of this output, for example by changing the technical content of products and processes. It also affects the demand for the output, for example with goods in fashionable sectors tending to have higher demand on average than in other sectors. All of these factors influence the likelihood of successful innovation.
 
A manager should consider and balance the effects on these three factors – organisational ability, ease of development, and demand for the output – when deciding the sector in which to innovate. Ideally, the organisation should choose a sector where it has a high level of ability to innovate, where it is easy to develop innovations, and where there is a high level of demand for the organisation’s innovative output. However, there will often be trade-offs between these factors. For instance, if it is easy to innovate in a sector, there will often be many competing innovators and a low level of demand for any one innovator’s products. A manager should chose the sector with the best combination of the factors for their organisation, perhaps by innovating in a more difficult sector in which the organisation has a high level of skill but face less competition.
 
When selecting a sector for innovation, a manager should also consider the following influences on selection. A sector with a high level of technical sophistication will present greater difficulties for innovation, and it will be less appealing to innovate in it. A sector with technical demands that closely match the organisation’s skills will increase the organisation’s ability to develop innovation in the sector, and it will be more appealing to innovate in it. A newer sector may have a higher demand for new products, making it more appealing for innovation.
 
An example of a strategic choice about the sector for innovation is in the industrial policy issued in 2020 by the government of the D.R.C. ([13]; [14]). The policy identifies the industrial and energy sectors as key areas that the government would like to develop. It plans to create a favourable policy environment which facilitates the private sector’s operation, and so support the government’s goal of poverty reduction ([15]).
 
Selecting which parts of production to change
Any part of an organisation’s production can be changed by innovation. If the change happens in the organisation’s broad production aims, then it is called a paradigm innovation. If it happens in the processes of production, then it is called a process innovation. If it happens in the organisation’s choice of who they sell to, then it is called a position innovation. If it happens in the goods and services, it is called product innovation. This classification of innovation into the “4Ps” (paradigm, process, position, product) was discussed in a previous blog post ([16]), and in the textbook [17]. The selection of which production parts to change by an organisation’s innovation is usually strategic, as the choice can affect a substantial share of the organisation’s operations or its goods and services.
 
The likelihood of a successful innovation is affected by the production part that changes. The reasons are similar to those for the effect of the economic or social sector in which innovation occurs. The organisation may be more skilled at innovating in some parts of production than others, some parts of production may be inherently easier to innovate than others, and demand or need for the output may change with the part of production. These factors then influence the likelihood that the innovation is a success.
 
When selecting which parts of production are innovated, a manager has to assess and balance the factors. One part may be preferred for innovation because the organisation can easily innovate in it, and another part may be preferred because of the high demand for innovative output in it. As with the selection of the sector for innovation, the manager should select the part which would be best overall for the organisation.
 
The manager should also consider the fit between the organisation’s skills and the requirements for innovation of the production part, and the level of technical sophistication required to innovate in it.
 
An example of a strategic choice of parts of production for innovation is in the decision by Trust Merchant Bank to expand its network of branches. Trust Merchant Bank offers banking services to individuals and companies in the D.R.C. ([18]), and has expanded its branch network over time ([19]; [20]). The expansion is a strategic choice to innovate its position by offering its services to more customers, and could also be considered a choice to innovate the process by which it provides the services. The strategic decision to innovate the bank’s position is influenced by its established skills in operating other bank branches in the D.R.C. and the demand for banking services in the country.
 
Selecting how radical the innovation is
Innovation is more radical if its output is very different from what the output replaces. When a manager selects how radical their organisation’s innovation is, it is usually a strategic choice, as by definition, the choice substantially affects the organisation’s innovative output and its reception by users. But it also substantially changes how innovation is done, as development of more radical innovative outputs faces much greater uncertainty.
 
Both very radical innovation and less radical innovation can create profits or social benefits. However, the form of the impact changes when the innovation becomes more radical. Very radical innovation can create profits and social benefits by making big improvements in current activities and goods, and then replacing them fully, or by creating an entirely new activity or good. Less radical innovation can create profits and social benefits by smaller improvements and replacements, which may accumulate into substantial changes.
 
A manager has to balance risk, reward, and technical challenge when selecting how radical their organisation’s innovation is. More radical innovation can offer large profits or social benefits, but it will usually require much more effort to identify and develop, since if it were easy to produce, other people would usually already have produced it. Indeed, there is no guarantee that more radical innovations can be identified, so that if a manager aims for radical innovation they may not succeed in getting it. Less radical innovation typically has lower risk and technical challenge, but also smaller rewards.
 
When selecting how radical their organisation’s innovation is, a manager should consider the following factors. If the organisation is able to tolerate a high risk of failure – perhaps because it has spare resources, or because the people involved accept risk in general – then the risk associated with radical innovation will be more acceptable. If the organisation accepts delays in obtaining good results, then the longer time-scales associated with radical innovation will be more acceptable. If the organisation has managers who are able to evaluate the progress of an extended innovation process, then the complexity of radical innovation will be more acceptable. If the organisation has people who are good at anticipating the future requirements of their organisation, then the uncertainty of radical innovation will be more acceptable. Similarly, if the organisation has access to extensive information and is able to use it, then the uncertainty and complexity of radical innovation will be more acceptable. If the organisation can easily test different ideas and potential innovative outputs – for example, if they can speak to many potential users about the ideas and outputs – then the uncertainty of radical innovation will be reduced, and it will be more acceptable. Finally, if the economic or social sector is new, then there are likely to be more opportunities for developing innovative outputs that differ signficantly from what they replace, and so radical innovation is more likely to be successful, and is therefore more acceptable.
 
The strategic choice of how radical to make innovation is illustrated by the innovations made by the Congolese drinks company, Bracongo. The drinks market is relatively familiar and stable, with limited scope for technological innovation. Bracongo’s product innovations are incremental, consisting of flavour introductions and brand introductions ([21]), with associated incremental process innovations, such as selling at new public events. However, in 2020 the company made a more radical process innovation. The appearance in the D.R.C. of the disease COVID-19 in early 2020 caused the government to place severe restrictions on social interactions, and to close restaurants, bars, and discos ([22]). The restrictions changed the drinks market substantially, and Bracongo responded strategically by more radical process innovations that make it easier to buy their products and drink them at home, with the introduction of a mobile phone app allowing online purchase and home delivery within 24 hours in Kinshasa ([23]), and the introduction of a call centre allowing purchases and home delivery, and providing information on sellers and product promotions ([24]).
 
Selecting the amount of innovation
The amount of innovation here measures how much innovation activity an organisation does. The activities include finding opportunities and ideas, assessing them, developing them, and benefiting from them. They were discussed in an earlier blog post ([25]). Selecting the amount of innovation is strategic because the amount affects the distribution of available resources for the whole organisation, as well as its business operations.
 
Large amounts of innovation activity can increase the quantity or quality of innovation outputs by the organisation. The activity will often directly result in improved or more numerous innovative outputs, which create profits or benefits when they are adopted. It can also have indirect effects on subsequent performance, as the organisation learns from the experience, so that innovation is easier in future.
 
A manager should balance the advantages of high levels of innovation activity against its disadvantages, however. One of the disadvantages is that the available resources for innovation will be used for a wider range of activity, and so the innovation may be done less well, and its quantity or quantity may fall. Another disadvantage is that as innovation increases, there may be less demand for its output, so that the profits or social benefits from extra innovation may be small.
 
When a manager balances the advantages and disadvantages of high levels of innovation in their organisation, and decides on the amount of innovation, they should consider the following factors. One factor is the quantity of resources invested in innovation, as more available resources can support more innovation. Another factor is whether activity can increase throughout the organisation’s innovation process, to avoid blockages in the process. For example, if the organisation generates many more ideas but can’t turn those ideas into products and services, then it won’t generate any additional innovative outputs. A further factor is the demand for innovation, as a higher level of demand can use more innovation output, raising the likelihood of successful innovation.
 
An example of a strategic choice about the amount of innovation was made by the managers of the Grande Cimenterie du Katanga, or GCK. GCK is a company which started operating in 2012 to mine limestone and convert it to lime and cement ([26]), and by 2019 it produced 400 tonnes of lime per day ([27]). Its innovation strategy is to build a cement plant by 2020 or 2021, capable of producing over 3000 tonnes of cement per day ([28]; [29]), which would change the company’s processes, products, and market role. The decisions to build the plant and to set the amount it produces were influenced by the company’s available funds and raw materials, as well as the demand for its goods ([30]; [31]).
 
Creating a new organisation
An organisation may choose to create a new organisation to do all or part of its innovation. The new organisation will have its own finance and corporate aims, although it may be fully owned and controlled by the original organisation, and it may share personnel. Innovative output may be transferred, sold, or licensed back to the original organisation on the same terms as to other organisations, or on special terms. As establishing a new organisation for handling innovation may substantially affect the original organisation’s innovation, it is usually a strategic decision.
 
Creating a new organisation for innovation can help to promote the original organisation’s innovation. Some of the advantages for innovation of a new organisation are the same as for the creation of a specialised department, discussed above: a focus on innovation, the easy access of innovators to each other, and the prominent commitment to innovation. In addition, a new organisation can accept higher risks of innovation failure than innovators within the original organisation – it has separate finances, so if its innovation fails, the failure will not excessively damage the original organisation. Such damage could occur if innovators within the original organisation took similar risks.
 
A manager choosing whether to create a new organisation for innovation should consider the disadvantages as well. They include the costs of establishing the new organisation, and the risk that the original organisation will stop innovating entirely. Further, the separation between the two organisations can lead to less communication between them, and so the new organisation can be less responsive to the demands, preferences, and ideas of the original organisation.
 
A manager should also consider the following factors when deciding whether to set up a new organisation for innovation. One factor is whether the innovation is an integral part of the original organisation’s other operations, or whether it can be separated easily into the new organisation. Another factor is whether the innovation helps the original organisation’s other operations, or hinders them and so the transfer to a new organisation would make their work easier. A further factor is whether the innovation is too risky for the original organisation, and whether the risk may however be acceptable to the new organisation.
 
An example of a strategic choice to create a new organisation is from the conglomerate Groupe Achour. The conglomerate consists of distinct companies with the same owners, operating in food import and distribution, manufacturing, and construction ([32]). The conglomerate acquired or formed the companies so that it could innovate by starting operations in the sectors – for example, Cartomo was established in 2005 to manufacture packing cartons. The separation of the companies allows staff and managers to focus on their own sectors, and it is relatively easy because of the difference in their operations.
 
Partnering with other organisations
An organisation can innovate in a partnership with other organisations. The partnership can take various forms, which vary in the stage of innovation affected, the duration, the formalness, the aims, the control, the resources, and the division of benefits between the partners. The partnership is strategic if it covers a large amount of innovation, or if the innovation is significant to the organisations.
 
Partnership can help an organisation innovate in a number of ways. It can increase the resources available for innovation, and it can share the risk of innovating, which can help the organisation to participate in innovation since the effects of failure are not as severe. Partnership can also increase the number of ideas available because people from other organisations may have very different ideas from those of people working in a single organisation. People in other organisations may also have very different methods of analysing and developing the ideas, so the variety of methods available increases as well.
 
A manager who is deciding whether to partner their organisation with other organisations, and what form any partnership should take, should consider the advantages and disadvantages of each form of partnership. For example, when a partnership is formalised in a legal document, the organisations involved are more likely to fulfil their duties, but the partnership could be inflexible and may become unsuitable over time. As another example, a partnership that has more resources is more likely to be successful, but there are fewer resources for the organisations to use for their own purposes.
 
The organisation’s characteristics influence whether it should enter into a partnership. If the organisation has innovation goals that it cannot fulfil with its available resources, or if the development would be too risky for the organisation, then partnership can be a valuable way to access resources and mitigate risk. If the organisation has managers who are able to establish and maintain the partnership – for example, if they have connections with other organisations that could be used as a basis for partnership, or if they have experience with partnerships – then partnership may be easier to operate, and therefore more useful. Other organisational characteristics influence the form of the partnership. For example, if the organisation is rapidly changing its operations, a formal, long-term partnership may be unsuitable as its terms could become inappropriate quickly.
 
There are many examples of strategic partnership for innovation by Gécamines, the state-owned mining company operating in the D.R.C. It has formed partnerships to develop mines in the country with Glencore ([33]), Eurasian Resources Group ([34]), China Nonferrous Metal Mining ([35]), China Molybdenum ([36]), and Ivanhoe Mines ([37]), among others ([38]). The partnerships brought in investment and operating skills, although the Congolese government and the senior management of Gécamines has been concerned that the partnerships have not historically given many benefits to the country or company ([39]), due in part to the structure of the partnership agreements ([40]). The government is therefore seeking to restructure the agreements ([41]; [42]).
 
Sharing information
Managers may choose to share information about their organisation’s innovation with people outside the organisation. The sharing can work in many different ways. The people who receive the information may have a link with the organisation – for example, they may work for suppliers of products to the organisation or for producers of similar products to those of the organisation, or they may be users of the organisation’s products. They may also be otherwise unconnected with the organisation, such as people in universities or the general public. Information may be released in exchange for information from the people who receive the organisation’s information, or it may be released without any requirement for the receivers to reciprocate. When information is widely released, for example to the general public, information is not usually required in return, as it is difficult to require lots of people to share information, or even show that they received the organisation’s information. Sharing information about innovation is often a strategic choice, as the information is usually a valuable resource for the organisation, and transferring it to other people can have substantial effects on the organisation’s performance.
 
If a manager shares information about their organisation’s innovation, it can help the organisation’s innovation and performance in several ways. Firstly, releasing the information allows other people to contribute to the innovation, for example by suggesting ideas or developing products or processes that they sell or make available to the organisation. Secondly, it allows other people to develop their own innovations using the information, which can lead them to request the organisation’s assistance in the development, or value the organisation more highly and support the organisation’s innovation. Thirdly, if the information is exchanged for the different information held by someone else, then the different information can be used by the organisation to help its own innovation.
 
Sharing information has disadvantages too. There is a cost in preparing information for transfer – for example, the information may initially be known by the organisation’s workers but not written down or otherwise recorded, so workers would have to recognise what they know and what’s important, and then record it or explain it in an understandable way. Another possible disadvantage is that people who receive the information may use it to develop innovative outputs that users prefer to the organisation’s own innovative outputs. This is a particular problem for commercial companies, but even for not-for-profit operations, such an outcome can lead to loss of income and even closure of the operation. Managers have to examine both the advantages and disadvantages when considering whether to share information on innovation.
 
The skills of the organisation and of other people influence the decision as well. If the organisation does not have the skills to innovate easily, and if other people have relevant skills, then sharing information can be valuable way to innovate. Additionally, if the information can be transferred easily, and then used by the recipient – for example, if it can easily be written down – then sharing becomes more appealing as an option.
 
An example of a strategic choice to share information is from the Université Libre des Pays des Grands Lacs, a university in the Congolese city of Goma. One of the university’s groups, the Centre of Research and Intervention in Psychology and Education, is developing an operational plan for 2020 ([43]). As part of the development, it held a workshop attended by researchers and professionals from across the North Kivu province and neighbouring provinces, as well as by a senior politician responsible for the province’s education. The information sharing at the workshop resulted in the definition of norms and standards, as a step towards its full operational plan ([44]).
 
Being a first mover
A first mover in innovation is an organisation that is the first to introduce a particular new innovative output. The decision to be the first mover whenever possible is strategic if the organisation undertakes a large amount of innovation, as the decision means that the organisation must develop new outputs rather than imitate existing outputs, and, if the organisation is selling the output, must take the lead in setting prices rather than responding to them.
 
A first mover organisation creates social benefits for users by helping to start the adoption of the innovative output. The organisation can also create benefits for itself. During the period between the first adoption and the launch of a similar output by someone else, the organisation is the only provider, and can earn high levels of income from it. During the period, the organisation can establish a network of suppliers and buyers that give it an advantage even after other organisations start providing similar output. The organisation can also establish production standards and user expectations that are suited to its own production methods and materials, which can help it to produce in the long term. Further, the organisation can establish a good reputation and brand loyalty with users during the period.
 
A manager should consider if these advantages outweigh the potential disadvantages of being a first mover. The full development of a new innovative output can be more expensive than imitating an existing output. Also, the organisation cannot learn from other people’s experience with the product, and so the organisation may produce less efficiently and make a lower quality product. If the output has low quality, then users may form an unfavourable opinion of the output and the organisation.
 
The decision whether to be a first mover is affected by the following factors. One factor is whether the staff in the organisation can anticipate how successful the innovative output will be, and which processes will be best for producing it. If they can anticipate correctly, then the output is more likely to succeed despite the absence of experience with it. Another factor is whether the organisation has many development resources, as they facilitate the full development of new products, and so make innovating first more appealing relative to innovating later. A further factor is whether the innovative output will be adopted widely and quickly by users, because if so, the first mover can become established and benefit financially before alternative producers copy the output.
 
An example of a strategic choice to be a first mover is from the introduction of 4G mobile telecommunications in the D.R.C. in 2018. The Congolese Government granted licences to sell 4G services on May 9, with the company Vodacom buying a licence immediately and introducing a service for customers on May 11 ([45]). The companies Orange, Africell, and Airtel introduced their 4G services shortly after ([46]; [47]). There is a strong incentive to be the first mover in the Congolese 4G market, or to follow the first mover quickly. One reason is that there is high demand for mobile services in general ([48]), so early market entry is very likely to lead to a high volume of sales. Another reason is that there is a large fixed entry cost to the market ([49]), so it is an advantage to spread the cost widely by early market entry and sales to as many customers as possible. A third reason is that as a company’s market share rises, it is able to offer a larger network to additional customers, which can increase the value to customers of buying.
 
Footnotes
* Other writers can define innovation and strategy in slightly different ways. The common themes are that innovation concerns the creation and use of something new, and strategy concerns actions that are important or wide-ranging. For example, [1] defines innovation strategy as “a commitment to a set of coherent, mutually reinforcing policies or behaviours [that relate to innovation and] aimed at achieving a specific competitive goal” (my added italics).
 
References
[21], [23], and [24] are in French. The others are in English.
[1] Pisano, G.P. 2015. You need an innovation strategy. Harvard Business Review. June. Available at https://www.innoscience.com.br/wp-content/uploads/2020/10/You-need-an-innovation-strategy-2.pdf
[2] http://investinginafrica.org/blog1/how-managers-can-improve-the-context-in-which-innovation-occurs-a-focus-on-organisations-in-the-drc
[3] https://translate.google.com/translate?sl=fr&tl=en&u=https://activa-cameroun.com/index.php/fr/le-groupe-activa/actualite-medias/echos-du-groupe-activa/400-lancement-de-la-filiale-activa-assurances-rdc
[4] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Factiva-cameroun.com%2Findex.php%2Ffr%2Fle-groupe-activa%2Factualite-medias%2Fechos-du-groupe-activa%2F400-lancement-de-la-filiale-activa-assurances-rdc
[5] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fdeskeco.com%2Fpresentation-de-la-societe-activa-assurance-rdc-a-kinshasa%2F
[6] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Factiva-cameroun.com%2Findex.php%2Ffr%2Fle-groupe-activa%2Factualite-medias%2Fechos-du-groupe-activa%2F400-lancement-de-la-filiale-activa-assurances-rdc
[7] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fdeskeco.com%2Fpresentation-de-la-societe-activa-assurance-rdc-a-kinshasa%2F
[8] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.cd.undp.org%2Fcontent%2Frdc%2Ffr%2Fhome%2Fpresscenter%2Farticles%2F2019%2Flancement-officiel-des-laboratoires-dacceleration-des-innovation.html
[9] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Factualite.cd%2Findex.php%2F2019%2F11%2F05%2Frdc-le-pnud-lance-officiellement-le-laboratoire-dacceleration-pour-repondre-aux-defis-de
[10] https://acceleratorlabs.undp.org/content/dam/acceleratorlabs/publications/UNDP_ACC_LAB_BrochureA5_English.pdf
[11] https://open.undp.org/our-approaches/hows
[12] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Factualite.cd%2Findex.php%2F2019%2F11%2F05%2Frdc-le-pnud-lance-officiellement-le-laboratoire-dacceleration-pour-repondre-aux-defis-de
[13] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.politico.cd%2Fencontinu%2F2020%2F03%2F01%2Flindustrialisation-va-permettre-a-la-rdc-de-diversifier-leconomie-dans-tous-les-secteurs-julien-paluku.html%2F54970%2F
[14] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Felection-net.com%2Fmise-en-place-de-la-politique-industrielle-merci-a-julien-paluku-dallier-les-idees-aux-faits-pepin-manjolo%2F
[15] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.mediacongo.net%2Farticle-actualite-58144_fpi_julien_paluku_veut_proscrire_des_credits_a_caractere_politique.html
[16] http://investinginafrica.org/blog1/what-types-of-innovation-do-congolese-companies-develop
[17] Tidd, J., Bessant, J. 2013. Managing Innovation. Integrating Technological, Market and Organizational Change. Fifth edition. Wiley: West Sussex, U.K., chapter “Innovation – What it is and Why it Matters”
[18] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.trustmerchantbank.com%2Fintroduction-to-tmb%2Fmission%2F
[19] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.trustmerchantbank.com%2Fintroduction-to-tmb%2Fmission%2F
[20] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.trustmerchantbank.com%2Fouverture-dune-nouvelle-agence-tmb-a-lemba-kinshasa%2F
[21] https://web.archive.org/web/20201201015314/bracongo.cd/nos-campagnes/
[22] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Factualite.cd%2F2020%2F03%2F18%2Fcovid-19-lieux-de-culte-ecoles-et-universites-fermes-la-rdc-prend-des-mesures
[23] https://web.archive.org/web/20201029160804/http://bracongo.cd/2020/05/05/yaka-achetez-directement-en-ligne-les-produits-bracongo/
[24] https://web.archive.org/web/20201029172516/http://bracongo.cd/2020/04/22/bracongo-professionnalise-son-service-client-par-la-mise-en-place-dun-centre-dappel/
[25] http://investinginafrica.org/blog1/innovation-as-a-process-the-example-of-traffic-robots-in-kinshasa
[26] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.radiookapi.net%2Feconomie%2F2012%2F04%2F02%2Fla-grande-cimenterie-du-katanga-ouvre-ses-portes-likasi%2F&sandbox=1
[27] https://www.africanequities.com/en/participations/read/gck
[28] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fpalmiermagazine.com%2Feconomie%2Fla-grande-cimenterie-du-katanga-projette-une-production-de-1-200-000-tonnes-de-ciment-par-an%2F29%2F11%2F2019%2F
[29] https://www.cemnet.com/News/story/167613/grande-cimenterie-du-katanga-plans-1-2mta-output-in-2020.html
[30] https://www.africanequities.com/en/participations/read/gck
[31] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fpalmiermagazine.com%2Feconomie%2Fla-grande-cimenterie-du-katanga-projette-une-production-de-1-200-000-tonnes-de-ciment-par-an%2F29%2F11%2F2019%2F
[32] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=http%3A%2F%2Fwww.sokin.cd%2Factivites.html
[33] https://www.metalbulletin.com/Article/3814812/HOTTER-ON-METALS-Gcamines-talks-tough-in-DRC.html
[34] https://www.bloomberg.com/news/articles/2018-12-10/congo-state-miner-renegotiates-erg-joint-venture-to-boost-income
[35] https://www.bloomberg.com/news/articles/2015-07-13/gecamines-signs-congo-deals-with-huayou-cobalt-china-nonferrous
[36] https://www.metalbulletin.com/Article/3814812/HOTTER-ON-METALS-Gcamines-talks-tough-in-DRC.html
[37] https://www.metalbulletin.com/Article/3814812/HOTTER-ON-METALS-Gcamines-talks-tough-in-DRC.html
[38] https://www.metalbulletin.com/Article/3814812/HOTTER-ON-METALS-Gcamines-talks-tough-in-DRC.html
[39] https://www.miningreview.com/central-africa/gecamines-new-direction-same-objectives/
[40] https://www.miningreview.com/central-africa/gecamines-new-direction-same-objectives/
[41] https://www.miningreview.com/central-africa/gecamines-new-direction-same-objectives/
[42] https://www.metalbulletin.com/Article/3814812/HOTTER-ON-METALS-Gcamines-talks-tough-in-DRC.html
[43] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fulpgl.net%2Fle-cripe-ulpgl-dote-dun-plan-doperation-et-de-recherche%2F
[44] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fulpgl.net%2Fle-cripe-ulpgl-dote-dun-plan-doperation-et-de-recherche%2F
[45] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fdeskeco.com%2Fvodacom-congo-est-le-premier-reseau-4g-de-la-rd-congo%2F
[46] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-fustigee-par-lucha-a-cause-de-la-mauvaise-qualite-des-services-vodacom-promet-des-eclaircissements
[47] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-la-vente-de-trois-licences-4g-a-rapporte-416-millions-usd-au-tresor-public-en-2018
[48] https://www.itu.int/en/ITU-D/Statistics/Documents/statistics/2019/Mobile_cellular_2000-2018_Dec2019.xls
[49] https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-la-vente-de-trois-licences-4g-a-rapporte-416-millions-usd-au-tresor-public-en-2018
]]>
<![CDATA[How managers can improve the context in which innovation occurs: a focus on organisations in the D.R.C.]]>Sat, 17 Aug 2019 21:44:56 GMThttp://investinginafrica.org/blog1/how-managers-can-improve-the-context-in-which-innovation-occurs-a-focus-on-organisations-in-the-drcInnovation is an important and widely practiced business activity, so it is helpful for managers to know what actions they can take to make it more efficient.  Some actions work mainly at individual stages of the innovation process.  Other actions, however, are effective throughout the innovation process, and favourably change the context in which innovation occurs.  Some of these actions are shown in table 1 and will be examined in this blog post.
 
Table 1. Actions favourably changing the context in which innovation occurs
  • Motivating people to innovate
  • Focussing on customer or end-user requirements
  • Establishing connections between innovators and other people, groups, and organisations
  • Involving a wide variety of people in innovation
  • Making innovation teams function well
  • Choosing a suitable structure between the management and innovators
  • Setting measures and objectives for the innovation process and conditions
  • Setting an innovation strategy that is suitable for the organisation
 
The blog post will pay particular attention to innovation in the Democratic Republic of the Congo (D.R.C.), using examples from the country and examining how conditions there change the actions that influence innovation.  Some of the conditions which we will look at were identified as major constraints on D.R.C. business operations in a World Bank survey in 2013 [1].  The conditions are resource constraints and high levels of political risk.  We will also consider how rapid market growth changes the actions, because the D.R.C. economy has grown rapidly in recent years.
 
Motivating people to innovate
Managers can help innovation by motivating people to take part.  One way they can do this is by encouraging change through their words, either informing people of the opportunity to innovate or directly encouraging them to innovate.  For example, the interim governor of the city of Kinshasa, Clément Bafiba, urged in March 2019 the creation of agricultural value chains, to make products from the DRC more competitive and to reduce dependence on foreign food [2].
 
Another way of motivating people to innovate is by providing the right rewards to them.  The rewards may be financial gain, improved skills, recognition, prestige, professional advancement, power, enjoyment of participation, and social benefits.  An example is the prize for financial innovation launched by the Central Bank of the Congo in 2019 [3], which provides prize-winning innovators with financial and technical support for their project.  Another example is the speech given by Benjamin Nzailu, the council president of the ONEC group of accountants in Kinshasa, which recognised the importance of the work done by young accountants to promote good governance [4].
 
In the D.R.C., companies report resource constraints as a frequent problem, and they may prefer motivation approaches which require fewer resources.  Specifically, they may avoid offering financial rewards paid before an innovation is successful.  Offering financial rewards dependent on an innovation’s performance may be one approach for working around resource constraints.  Alternatively, rewards for innovation could be made dependent on general company performance, an approach which recognises that innovation may not succeed even if it is well done.
 
Focussing on customer or end-user requirements
Managers can help innovation by keeping the organisation’s innovation effort focussed on the requirements of the customers or end-users.  One way managers can maintain focus is by including a clear statement of the requirements in the organisational goals, or by communicating who the customers are or what their requirements are.  For example Congo Science Challenge held in June 2019 has as its stated aim to promote productive exchange of ideas of a scientific or public interest nature [5, 6, 7, 8].
 
The D.R.C. market is rapidly growing, so it is even more important to maintain customer focus, as new markets and opportunities can emerge quickly, and current markets can change quickly too.  Managers may want to regularly brief their employees on market changes, and relay relevant new information as soon as they receive it.
 
Establishing connections between innovators and other people, groups, and organisations
Managers can also promote innovation by establishing formal and informal connections between innovators and other people, groups, and organisations.  The connections allow ideas to be exchanged, increasing the range of ideas available for employees to recognise and develop innovative products and processes.  The connections also help with the exploitation of opportunities by suitable partnerships and marketing.  For example, in the D.R.C. there are forums and networks to promote innovation in health and agriculture (for example with the non-governmental organisation CLEJUPS [9]), in markets (for example the Grand Market of Congolese agriculture and craft [10]), in scientific ideas (for example Congo Science Challenge [11]), and in company cooperation and finance (for example Afrobytes and the Congo Business Network [12]).
 
The D.R.C. market is rapidly growing, so it is even more important for a company to establish connections with consumers, potential consumers, and other organisations.  Connections help a company respond to the emergence of new markets and changes in existing ones.  A manager may actively maintain current connections and establish new ones, and ensure that there are frequent and regular flows of information along them.
 
Companies in the D.R.C. report political risk as a constraint on their operations, so connections with politicians or politically-aware people may be important as sources of information about potential political changes.  The companies will be better able to respond if they have early warning of potential changes.  There may also be increased business opportunities available to politically well-connected companies.  However, there may be disadvantages from direct connections with politicians, depending on the demands that the politicians make to the company.  When faced with political risk, wide general connections may also be useful, to provide opportunities for business protection and maintenance in the event of adverse political outcomes.
 
Involving a wide variety of people in innovation
Managers can also promote innovation by involving a wide variety of people in it.  People in a diverse group are likely to identify more opportunities for innovation, and have the skills and personal connections to develop products and processes in response to the opportunities.  An example of encouraging a wide variety of people to innovate is the pair of conferences organised in the D.R.C. in 2019, to find ways to use new technologies for communications relating to an outbreak of the disease Ebola.  The conferences were held in the west and east of the country, and invited participation from students studying medecine, journalism, communication, and computer science.  Students could also enter themselves directly into the conferences through a website [13, 14, 15, 16].
 
As the D.R.C. domestic market is rapidly growing, involving many people in the innovation process has additional importance.  The market growth will bring a large and quickly emerging set of commercial opportunities, and a large group of innovators would be more likely to have the skills and knowledge to respond to them than a small group.
 
Further, as D.R.C. companies are often concerned about resource constraints, involving a wide variety of employees in innovation has an extra advantage.  With constrained resources, access to external sources of knowledge or skills may be unaffordable, and using expertise within the company can bypass the problem.
 
Making innovation teams function well
Managers can help innovation by ensuring that an innovating team works well.  Managers can make teams work well by providing a clear aim, giving members clear roles, and ensuring that all members can contribute significantly to the team’s work.  An example of an innovating team with clear roles is the team which introduced traffic robots in Kinshasa [17, 18].  In the team, the leader took on responsibility for organisation and project selection, while other people in the team were responsible for technological proposal and development.
 
Choosing a suitable structure between the management and innovators
Managers can also help promote innovation by ensuring that the organisational structures connecting the management and innovators are suitable.  Managers often consider what control they should have over the innovators’ work, and whether the relation should be expressed in a formal relation.  What’s suitable will depend on the organisation and the innovation.  For example, the government of the D.R.C. chose a formal but decentralised relation with the organisations who are producing plans for development of the Inga 3 hydroelectric project in 2018 [19].  The formal written relation provides evidence to the organisations that the government will exclusively and seriously consider their plans, incentivising them to invest in the planning stage with less risk, and helping the project to move forward.  The decentralised relation allows the organisations to produce plans without detailed government constraints, which is advantageous because the technical expertise is with the organisations.
 
The concerns that D.R.C. companies have about political risk may alter their preferred contract structures when they are working for state entities.  Companies may be exposed to default on contracts or invalidation of the letter or spirit of the contracts.  They may therefore prefer highly formalised arrangements that specify a full set of remedies in the event of default, and a jurisdiction in which the claims are readily enforceable.
 
Setting measures and objectives for the innovation process and conditions
Managers can also help innovation by setting measures and objectives for the innovation process and conditions.  Measures describe one or more parts of the process and conditions.  The measures and objectives may relate to innovation inputs (such as investment in innovation, and connections with other organisations), innovation activities (such as the number of ideas generated, or the number of new products sold), and innovation outcomes (such as profit from new products).  An example is the objective of satisfactory planning for innovation in the Inga 3 hydroelectric project, which was set by the D.R.C. government in 2018 [20].  Other examples are the measures of development costs, development time, extent of technology introduction, and additional products made using the innovation (in the form of new copper production) in the Kamoa-Kakula mines, which were set by the company Ivanhoe Mines in 2019 [21, 22].
 
Rapid market growth in the D.R.C. increases the relevance of certain innovation measures and objectives.  Getting detailed and timely market information, and then innovating quickly, are both important for performing well in a rapidly growing market, so measures and objectives that reflect these activities are highly relevant.  For example, the time from first ideas to first sales of a product could be a suitable measure, and an objective could be to keep this time under a year.
 
The resource constraints that often concern companies in the D.R.C. also affect the choice of innovation measures and objectives.  Operating within a tight budget, raising finance, and accessing resources are important when a company faces resource constraints, and its innovation measures and objectives may give extra emphasis to these activities.
 
Setting an innovation strategy that is suitable for the organisation
Managers can help also to promote innovation by setting a strategy for innovation that is suitable for the organisation.  One way they can set a suitable strategy is by ensuring that the strategy is consistent with their organisation’s skills and interests, and is also consistent with market demands.  For example, the international clothes retailer Etam chose a strategy where they created a new business in Kinshasa in 2019 that does the same activities as its businesses in other countries, and that is in a growing market [23].
 
The rapid market growth in the D.R.C. influences strategic planning for companies in the country.  Future growth in the market alters demand for a company’s goods and services, affecting the company’s plans for development speed, type of good produced, and other aspects of its innovation process.
 
The resource constraints reported by many D.R.C companies should also affect their strategic planning.  The constraints mean that they have limited ability to access resources, and so their ability to fund and support future operations, which should be reflected in their plans.
 
Political risks are a concern of D.R.C. companies, and their strategic planning should reflect the concern.  Political events may affect the company, its partners, or its markets in various ways, and a company’s planning should consider potential outcomes and the best responses to make if they occur.
 
Another way that managers can set a suitable strategy is by balancing their organisation’s creativity with the capture of value from ideas.  Creativity is the generation of new ideas that could address a problem or demand, while value capture is the act of getting social or private value from these ideas.  An organisation can maximise the value that they get from their innovation by ensuring that they have both a good level of creativity and a good rate of value capture from them.  An example of a balanced innovation process is the process run by Filip Kabeya, the president of the Fondation Lumumba Lab, a non-profit organisation providing training and development support for digital technology in the D.R.C.  He has introduced numerous organisational innovations, including the Fondation Lumumba Lab itself [24], a meeting space for innovators and entrepreneurs [25, 26], a mobile programming workshop for women [27], a bimonthly conference on digital innovation [28], a group of computer programmers offering free training [29], a developer group [30], and other groups and events relating to digital technology [31].  He also uses the innovations to deliver social and private value, with 3,000 children and many adults trained in digital technology in 2018 [32].
 
Summary
To summarise, there are a number of actions that a manager can take to increase efficiency throughout an innovation process.  These are motivating people to innovate, focussing on customer or end-user requirements, establishing connections between innovators and other people, groups, and organisations, involving a wide variety of people in innovation, making innovation teams function well, choosing a suitable structure between the management and innovators, setting measures and objectives for the innovation process, and setting an innovation strategy that is suitable for the organisation.  Managers should also consider factors in the D.R.C. which influence the way that the actions are applied.  There are many examples of Congolese organisations that are already implementing these actions, and there will be plenty of opportunities to use them in the future.
 
References
Links [5], [6], [13], [15], [16], and [17] are in French.  All links are active.
[1]...World Bank Enterprise Surveys, 2013. Democratic Republic of the Congo.  Available at https://microdata.worldbank.org/index.php/catalog/2026/study-description, and downloaded in May 2015.  The pseudo-code is “table m1a”.
[2]...https://translate.google.com/translate?sl=auto&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-necessite-de-creer-des-chaines-des-valeurs-agricoles-pour-rendre-les-produits-locaux-competitifs%2F
[3]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-la-bcc-lance-un-concours-de-startups-dans-les-services-financiers-novateurs%2F
[4]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fdeskeco.com%2Fles-jeunes-comptables-congolais-lancent-leurs-activites-pour-la-bonne-gouvernance-des-entreprises%2F
[5]... https://www.facebook.com/pg/CongoChallengeScience/posts/?ref=page_internal
[6]... https://twitter.com/CongoScience
[7]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Factualite.cd%2F2019%2F06%2F19%2Frdc-les-etudiants-les-plus-brillants-attendus-la-1ere-edition-de-congo-challenge-science
[8]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fzoom-eco.net%2Fa-la-une%2Frdc-1ere-edition-du-forum-congo-challenge-science-prevue-le-24-juin-a-kinshasa%2F
[9]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=http%3A%2F%2Flavieagricole.ca%2F3288%2F
[10]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fdeskeco.com%2Fkinshasa-au-moins-100-pme-attendues-au-grand-marche-de-lagriculture-et-de-lartisanat-congolais%2F
[11]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fzoom-eco.net%2Fa-la-une%2Frdc-1ere-edition-du-forum-congo-challenge-science-prevue-le-24-juin-a-kinshasa%2F
[12]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-congo-business-network-et-afrobytes-signent-un-accord-de-partenariat-pour-levenement-du-15-mai-a-paris
[13]... https://www.kinshasadigitalweek.com/hackathon
[14]...https://internews.org/news/lokole-congolese-youth-are-using-digital-technology-combat-ebola
[15]... https://www.facebook.com/KEYDrcongo/posts/2457773647648207/
[16]... https://twitter.com/Internews_RDC/status/1134003074849288192
[17]... https://youtu.be/YexxPR77K0w?t=15
[18]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=http%3A%2F%2Fwww.rfi.fr%2Femission%2F20140319-rdc-robots-kinshasa-remplacent-policiers-circulation%2F
[19]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-electricite-le-projet-inga-3-va-produire-au-moins-11-000-megawatts%2F
[20]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-electricite-le-projet-inga-3-va-produire-au-moins-11-000-megawatts%2F
[21]...https://translate.google.com/translate?hl=&sl=auto&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-ivanhoe-determinee-a-faire-du-projet-kamoa-kakula-la-2eme-plus-grande-mine-de-cuivre-au-monde%2F
[22]...https://www.ivanhoemines.com/projects/kamoa-kakula-project/
[23]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fdeskeco.com%2Frdc-etam-ouvre-une-boutique-de-lingerie-et-du-pret-a-porter-a-kinshasa%2F
[24]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.eventsrdc.com%2Fpatron-de-la-fondation-lumumba-lab-filip-kabeya-plaide-pour-la-promotion-du-numerique-en-rdc%2F
[25]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.eventsrdc.com%2Fpatron-de-la-fondation-lumumba-lab-filip-kabeya-plaide-pour-la-promotion-du-numerique-en-rdc%2F
[26]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fcyriacgbogou.ci%2F2017%2F05%2Fle-lumumba-lab-limprimante-des-innovations-en-republique-democratique-du-congo-rdc%2F
[27]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.eventsrdc.com%2Fpatron-de-la-fondation-lumumba-lab-filip-kabeya-plaide-pour-la-promotion-du-numerique-en-rdc%2F
[28]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fcyriacgbogou.ci%2F2017%2F05%2Fle-lumumba-lab-limprimante-des-innovations-en-republique-democratique-du-congo-rdc%2F
[29]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fcyriacgbogou.ci%2F2017%2F05%2Fle-lumumba-lab-limprimante-des-innovations-en-republique-democratique-du-congo-rdc%2F
[30]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.eventsrdc.com%2Ffilip-kabeya-2019-une-annee-evenementielle-a-lumumba-lab%2F
[31]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.eventsrdc.com%2Ffilip-kabeya-2019-une-annee-evenementielle-a-lumumba-lab%2F
[32]...https://translate.google.com/translate?hl=&sl=fr&tl=en&u=https%3A%2F%2Fwww.eventsrdc.com%2Fpatron-de-la-fondation-lumumba-lab-filip-kabeya-plaide-pour-la-promotion-du-numerique-en-rdc%2F
]]>
<![CDATA[Innovation as a process: the example of traffic robots in Kinshasa]]>Mon, 04 Mar 2019 17:55:17 GMThttp://investinginafrica.org/blog1/innovation-as-a-process-the-example-of-traffic-robots-in-kinshasa Innovation as a process: the example of traffic robots in Kinshasa
The act of innovation is often described as a process [1, 2, 3, 4].  The process consists of a succession of activities which starts with someone looking for an opportunity for a valuable new product or action, and ends with people getting the new product or doing the new action.  Table 1 presents innovation as a process, with activities put into four stages that follow each other.
 
Table 1: Innovation as a process
- Stage 1: Find an opportunity for a new product or action, and find ideas that may help to respond to the opportunity
- Stage 2: Assess the opportunity and ideas to see whether they are valuable and whether the ideas can be developed
- Stage 3: Develop the best ideas
- Stage 4: Benefit from the product or action developed from the ideas
 
It is sensible to describe innovation as a process for a number of reasons.  Firstly, the act of innovation consists of activities that follow in a natural sequence.  For example, ideas have to precede their development into a product, and the development of a product has to precede its launch in a market.  Secondly, the activities that make up innovation require different skills and equipment, so it is sensible to consider them separately.  An example here is that advertising is used in the final stages of innovation when a product is sold, but is not used in the earlier stages when a product is designed.  Thirdly, the process separates activities into different stages, and managers can examine performance at the end of each stage before deciding whether to continue with the innovation.  An example here is that after assessing the value of an idea, a manager can decide whether to develop the idea into a product.
 
Most innovation can be considered as a process, whether it is done by a very large company or a single individual.  For example, a person who works alone offering flexible services to tourists is often highly innovative.  They adapt their services to the requirements of the tourists, and may offer sightseeing, travel advice, or translation.  The person’s innovation may be described as a process using the stages in table 1.  They find a tourist who may present an opportunity for work, and find whether the tourist would like any services, such as sightseeing.  If the tourist makes any requests, the person assesses whether they can provide the service.  They then develop a plan for satisfying the request, such as visiting major monuments, and propose it to the tourist.  If the tourist likes the plan and the price of the service, the tourist will purchase the service, and the person benefits from the payment.
 
Traffic robots in Kinshasa
The process can be illustrated more clearly by a specific example of innovation: the introduction of traffic robots in Kinshasa, the capital city of the Democratic Republic of the Congo (D.R.C.) [5, 6, 7].  The traffic robots are machines for controlling and monitoring traffic, and have a distinctive human shape.  They were introduced in 2013 [8].  They were designed by a team led by the entrepreneur and industrial engineer Thérèse Kirongozi [9].
 
The problem that Kirongozi’s team solved was easy to find.  Kinshasa is a mega-city with a population exceeding ten million people, where traffic security is a public health hazard according to Kirongozi [10].  She wanted to create something that allowed better control of the chaotic traffic and that provided assistance to traffic police [11].
 
Having identified Kinshasa’s traffic security as an important problem, Kirongozi tried to find ideas that could be developed into a solution.  The “Women’s Technology” association, of which Kirongozi is the president, discussed the issue [12].  They organised a trade fair for Congolese inventors, who could propose ideas for addressing the Kinshasa traffic problem [13].
 
The trade fair gave Kirongozi the chance to assess the proposed ideas.  She liked one idea that proposed a robot with moving arms, which was demonstrated by a working model [14].  She also liked another idea that showed a model vehicle [15].  These two ideas were selected for further development.
 
It wasn’t certain that the ideas could be turned into a product that helps to solve the traffic security problem.  However, the models presented at the trade fair allowed Kirongozi to assess some of the mechanics and appearance of possible products [16].  Additionally, her skills as an engineer and entrepreneur reduced the risk of bad management [17].  It was also not certain that the Kinshasa authorities would want to buy the final product.  However, the benefits from improved traffic security were clear, and a robot product would be original and may be able to capture the whole Congolese market for automated traffic control [18, 19].
 
To develop the ideas, Kirongozi set up a laboratory [20, 21] without government funds or orders [22].  She hired a team of four engineers, including the engineer who proposed the original robot idea [23].  They combined the model robot and the model vehicle that Kirongozi had seen at the trade fair, and built prototypes from them [24].
 
Two prototypes were provided free on two crossroads in the city, and the city authorities provided feedback to the development team on how to improve the robot [25].  After further development [26, 27], the team produced a commercial product that met specifications for traffic control, user-friendliness, and robustness.  Some features of the early versions of the robots are shown in table 2; the robots may also be customised to meet specific demands and are subject to ongoing development [28].
 
Table 2: Features of the early versions of the traffic robots
Traffic control
- Contains four traffic lights for vehicles and pedestrians
- Rotates to regulate traffic from different directions [29]
Monitoring of traffic and compliance with regulation
- Stores or transmits live video to police [30, 31]
Power
- Powered entirely by solar energy [32]
Pedestrian-friendliness
- Issues visual and verbal instructions, and plays music [33]
Safety
- Monitors traffic using cameras to determine when it is safe for pedestrians to cross [34]
Robustness
- Has an aluminium cover to withstand tropical conditions [35]
Appearance
- Has a human shape that is close to science-fiction robots
 
The traffic robots initially did not financially benefit Kirongozi.  She offered them for sale to the Kinshasa authorities, but the authorities were reluctant to purchase [36].  She gave the authorities two prototypes for free, and motorists praised the prototypes [37, 38].  She adapted the prototypes to meet the authorities’ requirements, and pushed for new contracts in Kinshasa, elsewhere in the D.R.C., and internationally [39, 40, 41].
 
Kirongozi’s persistence brought benefits after a time.  The Kinshasa authorities purchased three traffic robots in 2014-2015 at a price of around US$27,500 (24,000 Euros or 44,000,000 D.R.C. Francs at the exchange rate of 1 March 2019) [42], and subsequently purchased more [43].  Others have been installed in major cities across the country [44, 45, 46, 47] with various designs [48, 49].
 
The traffic robots have brought non-financial benefits too.  The number of traffic accidents has reportedly fallen in the areas of Kinshasa where the robots were installed [50].  Ten skilled permanent jobs and several trainee jobs in robot assembly have been created in Kinshasa [51].  Kirongozi has shared her business experiences in many press interviews, and won business prizes [52, 53].
 
Kirongozi continues to innovate the traffic robots.  They have improved technically [54, 55] and new designs have been introduced [56, 57].  Robot prices in 2018 were as low as US$10,000 (9,000 Euros or 16,000,000 D.R.C. Francs at the exchange rate of 1 March 2019) [58].  Kirongozi is also looking to use her team’s skills in robotics in other sectors, such as the military, toxic waste handling, and road cleaning [59].
 
References
The Youtube videos, as well as links [4] and [52], are in French.  All links are active.
[1]…https://www.uk-cpi.com/news/the-innovation-process/
[2]…https://online.rivier.edu/5-stages-of-the-innovation-process/
[3]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.economie.gouv.qc.ca/fileadmin/contenu/formations/mpa/materiel_pedagogique/defi_innovation/processus_innovation.html
[4]…https://www.kmu.admin.ch/kmu/fr/home/savoir-pratique/gestion-pme/innovation/etapes-processus-innovation/processus-innovation.html
[5]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.startup.cd/innovation/robot-roulage-circulation-innovation-100-made-in-rdc/
[6]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.radiookapi.net/actualite/2013/06/28/kinshasa-presentation-dun-robot-regulateur-de-la-circulation-alimente-lenergie-solaire/
[7]…https://www.youtube.com/watch?v=phLXQ0iq_e8
[8]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.radiookapi.net/actualite/2013/06/28/kinshasa-presentation-dun-robot-regulateur-de-la-circulation-alimente-lenergie-solaire/
[9]…https://youtu.be/YexxPR77K0w?t=15
[10]…https://youtu.be/YexxPR77K0w?t=36
[11]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[12]…https://youtu.be/YexxPR77K0w?t=42
[13]…https://youtu.be/YexxPR77K0w?t=55
[14]…https://youtu.be/YexxPR77K0w?t=59
[15]…https://youtu.be/YexxPR77K0w?t=72
[16]…https://youtu.be/YexxPR77K0w?t=59
[17]…https://youtu.be/YexxPR77K0w?t=15
[18]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[19]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.aljazeera.com/news/africa/2014/03/dr-congo-turns-robots-combat-traffic-20143205531424870.html
[20]…https://youtu.be/YexxPR77K0w?t=100
[21]…https://youtu.be/nb_gVn2zGAM?t=46
[22]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[23]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[24]…https://youtu.be/YexxPR77K0w?t=78
[25]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[26]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.radiookapi.net/actualite/2013/10/21/kinshasa-robot-regule-la-circulation-routiere-au-carrefour-du-boulevard-triomphal/
[27]…www.theguardian.com/travel/2015/mar/05/robocops-being-used-as-traffic-police-in-democratic-republic-of-congo
[28]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.jeuneafrique.com/mag/274151/economie/rdc-therese-izay-et-son-robot-100-made-in-kin/
[29]…https://youtu.be/itiR3RdswtU?t=62
[30]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.radiookapi.net/actualite/2013/06/28/kinshasa-presentation-dun-robot-regulateur-de-la-circulation-alimente-lenergie-solaire/
[31]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[32]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[33]…https://youtu.be/itiR3RdswtU?t=169
[34]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[35]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[36]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[37]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.rfi.fr/emission/20140319-rdc-robots-kinshasa-remplacent-policiers-circulation/
[38]…https://www.theguardian.com/travel/2015/mar/05/robocops-being-used-as-traffic-police-in-democratic-republic-of-congo
[39]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.jeuneafrique.com/mag/274151/economie/rdc-therese-izay-et-son-robot-100-made-in-kin/
[40]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.radiookapi.net/emissions-2/linvite-du-jour/2015/03/04/therese-iza-kirongozi-parle-de-deploiement-des-robots-roulages-kinshasa/
[41]…https://youtu.be/YexxPR77K0w?t=158
[42]…https://www.theguardian.com/travel/2015/mar/05/robocops-being-used-as-traffic-police-in-democratic-republic-of-congo
[43]…https://youtu.be/nb_gVn2zGAM?t=26
[44]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.jeuneafrique.com/mag/274151/economie/rdc-therese-izay-et-son-robot-100-made-in-kin/
[45]…https://translate.google.com/translate?sl=fr&tl=en&u=https://habarirdc.net/therese-kirongozi-mere-robot-roulage-congolaise-innovation-rdc/
[46]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.laprunellerdc.info/2018/06/25/sud-kivu-bukavu-a-son-robot-roulage-intelligent-pour-reguler-la-circulation-routiere/
[47]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.forumdesas.org/spip.php?article15402
[48]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.laprunellerdc.info/2018/06/25/sud-kivu-bukavu-a-son-robot-roulage-intelligent-pour-reguler-la-circulation-routiere/
[49]…https://youtu.be/nb_gVn2zGAM?t=73
[50]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.forumdesas.org/spip.php?article15402
[51]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.startup.cd/innovation/robot-roulage-circulation-innovation-100-made-in-rdc/
[52]…https://twitter.com/RTNC_nationale/status/960446783204847617
[53]…https://youtu.be/YexxPR77K0w?t=20
[54]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.radiookapi.net/actualite/2013/10/21/kinshasa-robot-regule-la-circulation-routiere-au-carrefour-du-boulevard-triomphal/
[55]…https://translate.google.com/translate?sl=fr&tl=en&u=https://www.jeuneafrique.com/mag/274151/economie/rdc-therese-izay-et-son-robot-100-made-in-kin/
[56]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.laprunellerdc.info/2018/06/25/sud-kivu-bukavu-a-son-robot-roulage-intelligent-pour-reguler-la-circulation-routiere/
[57]…https://youtu.be/nb_gVn2zGAM?t=73
[58]…https://translate.google.com/translate?sl=fr&tl=en&u=http://www.forumdesas.org/spip.php?article15402
[59]…https://youtu.be/itiR3RdswtU?t=288
 

]]>
<![CDATA[In what state does President Joseph Kabila leave the Democratic Republic of the Congo?]]>Mon, 14 Jan 2019 23:27:17 GMThttp://investinginafrica.org/blog1/in-what-state-does-president-joseph-kabila-leave-the-democratic-republic-of-the-congoAt the end of December a presidential election was held in the Democratic Republic of the Congo (D.R.C.), which will bring President Joseph Kabila’s period in office to a close (link).  It’s a good time to consider in what state he leaves the D.R.C.  As it turns out, despite much criticism of his government, some aspects of the D.R.C.’s economy and social outcomes are quite strong compared to other countries with a similar income per person.  However, if the presidential election is perceived as unfair and people contest the results, both the economy and social services could be severely damaged.

Economic growth
The D.R.C. is one of the poorest countries in the world, measured by how much an average person can buy (measured in GDP per person in purchasing power parity (PPP)).  But it has been growing quite strongly in recent years, with an average annual growth rate of 2.7 percent from 2013 to 2017.  Indeed, before the political crisis of 2016-2017, only twenty countries grew more quickly. [1]
 
Figure 1 shows growth rate plotted against GDP per person, for countries with income less than 10,000 U.S. dollars per person in PPP.  The black cross marks the D.R.C., with low income but quite high growth.  The fitted curve (based on a quadratic function and the country data) shows the expected growth rate at each value of GDP per person.  Countries below the curve have a lower than expected growth rate at their value of GDP per person, and countries above the curve have higher than expected growth rates.  The D.R.C. growth rate is higher than expected.
 
Figure 1. Growth rate plotted against GDP per person for countries with income below US$10,000 (PPP)
Notes: The D.R.C. is marked with an X.  Growth rates are averages from 2013 to 2017 inclusive.  Growth rates and GDPs per person are in PPP.
 
Inequality
Inequality in the D.R.C. is above average by international standards.  It is around the same rate (measured by the Gini index, and equal to 42) as the United States and China, but below the rates in most of its neighbouring countries [2].  Figure 2 shows inequality plotted against GDP per person in PPP, for countries with income less than 10,000 U.S. dollars.  The black cross marks the D.R.C. with an above average inequality rate.  The fitted curve (from a quadratic function) shows the expected inequality at each value of GDP per person.  Countries below the curve have lower than expected inequality at their value of GDP per person, while countries above the curve have higher than expected inequality.  The D.R.C. inequality is higher than expected.
 
Figure 2. Inequality plotted against GDP per person for countries with income below US$10,000 (PPP)
Notes: The D.R.C. is marked with an X.
 
Literacy
The literacy rate in the D.R.C. is 76 percent for adults, which is quite high for a country with low income per person.  The youth (people aged 15 to 24) literacy rate is a better indicator of education during the period of the Kabila government.  The youth literacy rate is 84 percent, which is higher than the rate in most neighbouring countries [3].
 
Figure 3 shows youth literacy plotted against GDP per person in PPP, for countries with income less than 10,000 U.S. dollars.  The black cross marks the D.R.C., with high youth literacy for its income.  The fitted curve (from a quadratic function) shows the expected youth literacy at each value of GDP per person.  Countries below the curve have lower than expected youth literacy at their value of GDP per person, while countries above the curve have higher than expected youth literacy.  The D.R.C. youth literacy is much higher than expected.
 
Figure 3. Youth literacy plotted against GDP per person for countries with income below US$10,000 (PPP)
Notes: The D.R.C. is marked with an X.  Youths are defined as people aged 15 to 24.
 
Life expectancy
Life expectancy in the D.R.C. is 59.6 years, which is close to the average for low income countries but much lower than high income countries.  The life expectancy is also close to the average for its neighbouring countries [4].  Figure 4 shows life expectancy plotted against GDP per person in PPP, for countries with income less than 10,000 U.S. dollars.  The black cross marks the D.R.C. with a low life expectancy compared with most countries.  The fitted curve (from a quadratic function) shows the expected life expectancy at each value of GDP per person.  Countries below the curve have lower than expected life expectancy at their value of GDP per person, while countries above the curve have higher than expected life expectancy.  The D.R.C. life expectancy is very slightly lower than expected.
 
Figure 4. Life expectancy plotted against GDP per person for countries with income below US$10,000 (PPP)
Notes: The D.R.C. is marked with an X.
 
Summary
The Kabila government relinquishes power with the D.R.C. performing well in some important economic and social measures compared with other low income countries.  Economic growth and literacy are better than expected, while life expectancy is close to expectations.  Inequality is above expectations, but below regional averages.  It’s a base on which the new president can build, if they have the will and political skills to avoid conflict after disputed election results (link).
 
Footnotes:
[1] The data here and in the figures is from the World Bank (link).  The World Bank says its data is “compiled from officially recognized international sources”, but there are many ways that the data could be inaccurate (for example, in the D.R.C., it is difficult to observe people working and trading in isolated areas so it is difficult to estimate the size of the economy there).  The data is uncertain, and the accuracy of my comments will be affected by the uncertainty.
[2] For comparison, a list of Gini coefficients is at link. The data is slightly different from ours.
[3] Link
[4] Link
]]>
<![CDATA[What types of innovation do Congolese companies develop?]]>Sat, 01 Dec 2018 21:35:35 GMThttp://investinginafrica.org/blog1/what-types-of-innovation-do-congolese-companies-developThere are many types of innovation.  For example, innovation may be a new product for consumers, or it may be a new process that a company uses to produce its current products.  It’s worth thinking about the different types of innovation, as the innovating company may have to develop them in different ways, and they may have different effects on the company or society when used.
 
This post will look at different innovation types, with examples from companies and people in the Democratic Republic of the Congo in 2018.  Eight types of innovation will be discussed: product, process, position, paradigm, incremental (in contrast to radical), discontinuous, modular, and architectural.  Table 1 presents the eight types and their definitions.
 
Table 1
1. Product innovations… changes in the products provided by the company
2. Process innovations… changes in the processes used to produce a product
3. Position innovations… changes in the market position of a company
4. Paradigm innovations… changes in the way that the company thinks about its activities
5. Incremental innovations… innovations which are not very different from what they replace
(and radical innovations… innovations which are very different from what they replace)
6. Discontinuous innovations… innovations which cause substantial change in their industry’s operation
7. Modular innovations… changes in individual components that make up a product
8. Architectural innovations… changes in the links between the individual components that make up a product
 
Product innovations are changes in the products provided by the company.  The product may be a physical good such as a computer, or a service such as medical care.  An example of a product innovation is the introduction of a new energy drink by the brewing company Bralima (link).
 
Process innovations are changes in the processes used to produce a product.  The new processes may be the result of new machinery being installed or the result of new techniques being followed.  An example of process innovation is the introduction of two improved electricity generators in Kinshasa by the electricity supplier SNEL (link), which updates the machinery they use to produce electricity.
 
Position innovations are changes in the market position of a company.  The market position includes the way the company presents itself to their consumers, and the identity of those consumers.  An example of position innovation is the entry into the market for flights between Kinshasa and Johannesburg by the airline Congo Airways (link).   As a result, the company started competing for customers flying between them.
 
Paradigm innovations are changes in the way that the company thinks about its activities.  The change will often be in the type or nature of the product that the company provides.  An example of paradigm innovation is the introduction of secure mobile banking by the bank UBA (link).  The innovation is a change from banking services that are provided by a person in a physical location during certain hours, to banking services which are provided by a computer online at any time.
 
Incremental innovations are innovations which are not very different from what they replace.  They contrast with radical innovations, which are very different from what they replace.  An example of an incremental innovation is the introduction of a new television channel by the company Trace (link).  It has new TV programs, but the basic technology and ideas are well-established.  An example of a radical innovation is the introduction of a new maternity centre in Chiherano hospital in South Kivu province (link).  It offers maternity services that are much better than were previously available in the region.
 
Discontinuous innovations are innovations which substantially change the way their industry operates.  An example of discontinuous innovation is the development of renewable energy and low-carbon products by the DRC entrepreneur Gabriel Shabani (link).  These products have the potential to replace products which mainly use hydrocarbon fuels, and which dominate many markets.
 
Modular innovations are changes in individual components that make up a product.  An example of a modular innovation is the introduction of the CineBuzz cinema in Kinshasa by the entrepreneur Déo Kasongo (link).  The cinema differs in its location and presentation from the Cinekin cinemas already present in Kinshasa (link), but the basic business operations are similar.
 
Architectural innovations are changes in the links between components that make up a product.  An example of an architectural innovation is the introduction of “M-Pesa Solola na mur” by Vodacash (link).  This innovation allows consumers with a bank account and a mobile phone to withdraw money from ATMs, without using a bank card.  It brings together the three components (account, phone, and ATM) to create a new product.
 
Innovations can be more than one type.  For example, we said that the new maternity centre in the Chiherano hospital (link) is an example of radical innovation.  It could also be considered as product innovation (hospital maternity care is provided for the first time in the region), process innovation (the hospital has to set up the centre and prepare its operation), position innovation (the hospital will attract women who would have travelled elsewhere for maternity care), and possibly paradigm innovation (women no longer have to travel long distances, a month in advance of the birth, for care).
 
Innovations may also not be a clear type.  For example, we said that mobile banking is a paradigm innovation, because it changes banking to an automated service accessible at any time.  But it could be argued that it doesn’t really change the way people think about banking, and just gives them another means of accessing their bank services, so it isn’t really a paradigm innovation.  What matters isn’t a perfect classification, but a reasonable classification that we can use to examine the innovations further.
]]>
<![CDATA[Why do companies in the Democratic Republic of the Congo innovate?]]>Wed, 10 Oct 2018 03:42:04 GMThttp://investinginafrica.org/blog1/why-do-companies-in-the-democratic-republic-of-the-congo-innovateWhy do companies in the Democratic Republic of the Congo (DRC) innovate*?  Identifying, making, and selling a new good or service can take a lot of work, but many companies choose to do it.  For example, after the launch in July 2018 of its new online banking service, the United Bank for Africa said that it is “committed to improvement in the quality of its customer service, by introducing products ever more innovative” (link; my translation from the French).  Other goods and services introduced in recent months include energy drinks (link), cinema services (link), and maternity care (link).
 
Companies can have many reasons for innovation.  Often, a company wants to change something in order to either increase profits or satisfy another organisational goal, and the innovation is a good way to do it.  This post will consider some important reasons for innovation, and illustrate them with recent examples from the DRC.  Table 1 lists the reasons that this post will examine.
 
Table 1. Reasons for innovation
  1. To meet consumer demand
  2. To respond to competitors
  3. To reduce production costs
  4. To respond to government legislation
  5. To respond to the emergence of new technology
  6. To respond to conditions within the company
  7. To perform a public service
 
Reason 1: To satisfy consumer demand
A company may innovate to satisfy consumer demand.  The unmet demand may be recognised by potential consumers, and the company may decide to innovate after talking to them.  Alternatively, the unmet demand may be unrecognised by potential consumers, and the company may innovate based on its own expectations of what consumers will want.
 
An example of innovation to satisfy consumer demand is the introduction by the company Transco of a new bus route in Kinshasa in July 2018 (link).  The route connects two parts of the Congolese capital, Mokali and Zando, that were not previously linked by bus.  The new route meets an unmet demand for bus transport, but also for transport more generally, as it “is one of the rare alternatives that Kinshasa residents have during a strike by other means of transport such as taxis, or during a shortage of fuel” (link).
 
Reason 2: To respond to competitors
A company may innovate to respond to competitor actions or to get an advantage over them.  They may develop a good or service that is entirely new, and try to take the consumers of a competitor’s existing product.  Alternatively, they may develop a good or service which is a copy of an existing product, but which the company hasn’t made before (so it is innovation for the company, but not the market).  The company may be trying to capture consumers from a competitor, either as a new entrant to the market or in response to a competitor’s earlier innovation.
 
An example of innovation to respond to competitors is the introduction by the company Congo Airways of flights from Kinshasa to Johannesburg in South Africa in May 2018 (link).  The Kinshasa to Johannesburg flight is not an innovation to the market, as South African Airways already provide direct services, and numerous airlines provide indirect services.  However, the flight is an innovation for Congo Airways, which will hope to take customers from these competitors.
 
3. To reduce production costs
A company may innovate to reduce production costs.  Often the innovation will be the introduction of a new process within the company, and the customer won’t see any difference in the good or service they buy.  Sometimes, the good or service may change as well, for example if a service is automated so that workers are replaced by machines.
 
An example of innovation to reduce production costs is the introduction by the United Bank of Africa of automated online banking in July 2018 (link).  The automated banking, aided by artificial intelligence, allows the bank to serve customers with far fewer staff members, saving money on staff.  Another aspect of the innovation is that the bank can provide services outside of usual working hours.
 
4. To respond to government legislation
A company may innovate in response to government legislation.  Legislation may ban a certain product, or raise the cost of manufacturing it, and the innovation will develop a replacement product.  Alternatively, legislation may prevent an item or person being employed in the manufacturing process, and innovation will develop a new way of manufacturing that doesn’t use them.
 
An example of innovation in response to government legislation is the introduction by Kinshasa supermarkets of biodegradable wrapping by August 2018 (link).  DRC government legislation banned the use of plastic wrappings and bags from July 2018, and some supermarkets in Kinshasa responded by introducing packages made of cardboard or tissue.  The legislation also increases demand and profits from direct sale of bags (link), creating incentives for innovative responses among those sellers as well.
 
5. To respond to the emergence of new technology
A company may innovate in response to the emergence of a new technology.  The emergence of a new technology is only part of the innovation process, and the company would still have a lot of work to do to complete the process.  For example, the technology would have to be included in a good or service, which would have to made attractive to consumers, and then sold.
 
An example of innovation in response to the emergence of a new technology is the introduction of 4G mobile phone services by Vodacom Congo from 2018 (link).  The 4G network technology had emerged internationally and in the DRC, allowing faster and larger data transfer across it.  Vodacom Congo introduced a network based on the technology in the DRC, and goods and services such as software and SIM cards which allowed the technology to be used by personal users.  It also marketed the goods and services.
 
6. To respond to conditions within the company
A company may innovate in response to conditions within the company.  One example is that the company may have an owner or manager who is very enthusiastic about innovation, and the company innovates to satisfy them.  Alternatively, a company may require a more skilled workforce, and innovates by developing a training program for them.
 
An example of innovation in response to conditions within the company is the development of electric cars and trains in Angola by the entrepreneur Gabriel Shabani (link).  Shabani was an important influence on the innovation.  He couldn’t reach agreement with the DRC government over his initial plan for the innovation, but he persisted.  After approaching and reaching agreement with the Angolan government, the innovation proceeded.
 
7. To perform a public service
A company may innovate to perform a public service.  The company’s owners or employees may want to benefit other people without selling them anything, and may want use the company to do so.  The public service may also have benefits for the company, such as improving its public image or creating future demand for their products.  The innovation may be developed in a similar way to commercial innovations, by identifying good ideas, converting them into usable goods or services, before passing the goods and services to the recipients.
 
An example of innovation to perform a public service is the introduction of a course to teach school students about personal finance, which was done by BCDC bank in 2018 (link).  The innovation helps students understand and manage an important influence on their life.  It also improves the company’s public image, and may encourage the students to bank with BCDC in future.
 
Summary
In summary, there are many reasons why Congolese companies innovate.  Some of them are discussed here: to meet consumer demand, to respond to competitors, to reduce production costs, to respond to government legislation, to respond to the emergence of new technology, to respond to conditions within the company, and to perform a public service.  The many reasons, and the many accompanying examples, suggest that understanding innovation more fully would help businesspeople develop their companies.
 
Footnote:
* Innovation is the development of an idea into a new practical use.  It includes the identification of an idea that may be useful, its conversion into a usable form, and supporting work such as design or sales that help to apply the idea.  The conversion of the idea into a useful form is usually called invention.  However, many studies of innovation focus on how to identify ideas and how to do the supporting work.  These parts of the innovation process are quite similar to other managerial work.
 
Similar definitions of innovation are used in well-known textbooks on the subject.  In the textbook Dodgson, Gann, Salter, “Management of Technological Innovation”, innovation is “the successful commercial exploitation of new ideas”.  In the textbook Schilling, “Strategic Management of Technological Innovation”, technological innovation is “the act of introducing a new device, method, or material for application to commercial or practical objectives”.  In the textbook Tidd, Bessant, “Managing Innovation”, innovation is “the process of growing [good ideas] into practical use”.
]]>
<![CDATA[How new Central African businesses can increase their chances of getting finance]]>Sun, 02 Sep 2018 12:50:40 GMThttp://investinginafrica.org/blog1/how-new-central-african-businesses-can-increase-their-chances-of-getting-financeThe challenges facing entrepreneurs in Central Africa were vividly described in a recent article in the newspaper Iwacu (here).  Although the businesspeople interviewed are Burundian, similar problems occur across the border in the Democratic Republic of Congo (DRC).  The challenges described are the lack of customers, the lack of public support for new entrepreneurs, the number of documents required to bid for public contracts, and above all, the lack of finance.  Here are the words from one of the entrepreneurs interviewed:
 
“Founded two years ago, Edaco, a company specialising in architecture and construction, is nearly “fictitious”.  It doesn’t have a physical address…  It hasn’t hired anybody.
 
Prechore Nsabiyaremye, general manager of this business,… has been disillusioned.  “I had created this business to compete for government contracts.”  It’s an objective that he still hasn’t reached.  His company can’t bid for government contracts as a business.  It doesn’t have sufficient financial guarantees and experience.  Where the trouble comes from, he says regretfully, is that no financial institution will agree to grant credits to new companies without a mortgage.  Since 2016, he has won no contract.”
Source: http://www.iwacu-burundi.org/des-entreprises-et-emplois-fictifs, with my translation from the French.
 
Potential investors can have a number of concerns that make them reluctant to invest in an entrepreneur’s project [1].  One concern is that the investment returns are likely to be highly uncertain, so that it is difficult to value the investment.  Another concern is that the investors probably know less than the entrepreneur about the planned project, so that the entrepreneur could secretly act against the investors’ interests.  Concerns about limited project information and anti-investor activity may be particularly acute in the DRC, where it is often difficult to collect information about companies or entrepreneur behaviour.  It will also often be difficult for investors to ensure in law that entrepreneurs don’t act against the investors’ interests, due to difficulty in legal access and enforcement.
 
Potential investors are more likely to provide finance if their concerns are calmed.  The entrepreneur can help to calm their concerns by doing a number of things.  The entrepreneur can start by giving more project information to the investors.  The information could be a business plan or detailed financial and organisational information.  Such information could be released initially, or during the life of the project perhaps with extra investment being released if the information is good.  The entrepreneur could also give evidence of their past successes or their skills for running the business, as well as of the skills and suitability of other people and organisations connected with the business.  Additionally, the entrepreneur could look for finance from investors with whom they have worked in the past, or with whom they have social ties, since such investors are likely to know more about the entrepreneur, and their abilities and ideas.
 
A problem with disclosing information about the project is that the investors could use the information to undertake the project without the entrepreneur.  However, if the project is small, has low or moderate profitability, or is difficult to implement, then the chance of the investors acting alone is reduced as the incentive for them to undertake the project is reduced.  The entrepreneur could also avoid disclosing detailed information on how to run the project, at least before its start.
 
The entrepreneur could also give potential investors more control over the use of their funds, if they choose to finance the project.  If the investors have more control, the entrepreneur cannot easily act against their interests.  The entrepreneur could invite the investors to participate in the management of the project, perhaps as non-executive directors.  Investors will probably only be interested in participation if the project is quite large.  The entrepreneur could also give investors control over some business activities, such as asset sales, which could make the entrepreneur richer at the expense of the investors.  Additionally, the entrepreneur could agree not to do certain things, such as selling assets or expanding the business rapidly.
 
There are some problems with transferring control to investors.  One problem is that it can leave the entrepreneur with a reduced role in the business, even though they are likely to be its most knowledgeable and committed supporter.  Another problem is that it can be difficult or expensive to enforce legally the transfer of control, particularly in the DRC where the government has limited jurisdiction over part of the country.  An entrepreneur’s reputation and experience is likely to be important for showing investors that the entrepreneur can be trusted to do what they say.
 
The entrepreneur could also help to calm investors’ concerns by reducing the investors’ exposure to risk.  If investors are less exposed to risk, then concerns about limited project information and anti-investor activity may be less important to them when deciding whether to finance the project.  The entrepreneur could offer the investors some protections against risk.  One type of protection is guaranteed repayment of funds before other creditors are paid, if the business closes.  Another type of protection is transfer of ownership to the investors if performance targets are not met.  A further type of protection is repayment of funds with a fixed additional amount after a certain time period – in other words, funding through debt, rather than through equity or something else that pays an amount linked to profit.
 
There are problems with reducing investor risk, both for the entrepreneur and investors.  One problem is that if investors are given extensive protections, then any uses of their funds which threaten the protections become unsuitable, so the funds can’t be used for many business purposes.  A second problem is that it is impossible to anticipate all potential threats to investors’ funds, so that the investors will always be exposed to some risk even if they are offered protections.  A third problem is that it may be difficult to enforce in law any protections promised or written in a contract.  A fourth problem is that if debt funding is used, then the investors may still be exposed to risk.  The entrepreneur will receive any profit or loss from the business after debt repayment.  If the entrepreneur’s potential loss is limited (for example, if their business has limited liability), then they may choose riskier business strategies that increase the expected profit or loss, but decrease the chance of repaying their debt.  The risk faced by the investors would have a different form, but would still be there.
 
Table 1 summarises actions that an entrepreneur can take to increase their chances of getting finance, organised by their aim.  An entrepreneur who takes these actions is not certain to get funds, but it’s more likely.
 
Table 1: Actions that an entrepreneur can take to increase their chances of getting finance
Aim: Reduce investor uncertainty
1. Give information about the project to the investors, either initially or during the project life
2. Give information about the entrepreneur’s skills or experience in running a business
3. Work with investors who have worked with the entrepreneur in the past
4. Work with investors who are socially connected to the entrepreneur
Aim: Reduce investor concerns about acting against their interests
1. Invite the investors to participate in project management
2. Give the investors control over specific business activities which could be against investor interests
3. Agree not to do specific business activities against investor interests
Aim: Reduce investor exposure to risk
1. Guarantee that the investors will be repaid before other creditors, if the business closes
2. Guarantee to transfer the business to the investors if performance targets are not met
3. Ask for debt funding, rather than equity funding (this action changes the form of investor risk, rather than removes it)


Notes:
[1]. The analysis here follows the book Shane, 2003, “A General Theory of Entrepreneurship”, chapter “Resource Acquisition”.

]]>
<![CDATA[How DRC companies can increase their innovation – my first thoughts]]>Mon, 30 Jul 2018 01:50:28 GMThttp://investinginafrica.org/blog1/how-drc-companies-can-increase-their-innovation-my-first-thoughtsCompanies in the Democratic Republic of the Congo (DRC), like companies everywhere, often benefit from innovation.  Innovation is making or doing something new, and then trying to get money or a benefit out of the change.  Some examples are shown in Table 1.  They could also be considered as examples of entrepreneurship, the process of setting up a new business, which is closely linked to innovation.
 
Table 1. Examples of innovation
  1. A company starts making a new type of furniture, and sells it
  2. A company buys some computers, and lets people use them for money
  3. A person hires a car, and starts a taxi service
 
There have been many studies of things that increase a company’s innovation.  Most of these apply just as much in the DRC as in other countries.  For example, the textbook “Managing Innovation” (written by Tidd and Bessant) discusses seven features of a company which can increase innovation.  They are listed in Table 2.
 
Table 2. Features of a company which can increase innovation
  1. Clear leadership
  2. The company’s organisation is flexible enough
  3. People take roles that help other people innovate, such as promoting the project
  4. Teamwork
  5. Everyone in the company can take part in innovation
  6. Innovation is encouraged, for example by payment
  7. Good ideas from outside the company are welcome, for example from customers
Source: Tidd and Bessant, 2013, “Managing Innovation”
 
But what about things that influence innovation more in the DRC than in other countries?  One way of finding them is to look at the special circumstances that apply there, and then see what things would be particularly influential in those circumstances.  It’s an approach that I’ll use here.  I’ll start by looking at influences linked to the special demand circumstances faced by Congolese innovators, before looking at influences linked to their special working circumstances.
 
Influences on Congolese innovation linked to special demand circumstances
Congolese innovators can aim to meet growing domestic demand.  The DRC has a moderate to high growth rate in personal income by the standards of developed countries, and the population is growing quite quickly (link).  As people become richer and the population larger, demand for different types of goods is likely to emerge fairly quickly.  It’s important for a company to innovate fairly quickly as well, to meet the emerging demand.  Some features of a company which can accelerate innovation are mentioned in Table 3.  Additionally, a quick and readily available source of ideas is the goods sold in richer countries.  If a company monitors goods sold in medium-income and rich countries, then it could copy or adapt them, saving some money on idea search and market analysis.
 
Table 3. Features of a company which can accelerate innovation
  1. A strategy targeting fast innovation
  2. Management commitment
  3. Preparing people and resources
  4. Efficiency in supporting activities such as administration
  5. Increased decision making at lower staff levels
  6. Committed and powerful project leaders and champions
  7. Good initial specification
  8. People from different departments (for example, design, manufacturing, and marketing) working at the same time and in cooperation
  9. Commitment to quality control at every stage
  10. Looking for small improvements constantly
  11. Using good ideas from existing goods
  12. Designs are flexible enough to be changed into many different products
  13. Technologies are basic enough to be used for many different products
  14. Close links with suppliers
  15. Up-to-date information on materials and suppliers
  16. Involving knowledgeable users
  17. Accessing external knowledge and skills
  18. Use of modern communications technology
  19. Use of computer-assisted design, and including suppliers and buyers in it
  20. Generating prototypes quickly, for example using computer-assisted design
  21. Use of simulation modelling in place of prototypes
  22. Understanding basic technologies, and using the knowledge in simulation
  23. Use of intelligent computer systems to evaluate each stage of design
Source: Rothwell, 1994, “Towards the Fifth-generation Innovation Process”
 
Congolese innovators can aim to adjust to disruption to demand in domestic markets.  Markets in eastern parts of the DRC are vulnerable to disruption due to military activity.  Demand for goods may rise or fall considerably at short notice, for example as physical markets are destroyed, or as refugees arrive.  A company should be able to innovate quickly to meet this demand, and we have already discussed how some company features can accelerate innovation (the list is in Table 3).  A second approach is to produce flexible innovations, which have many different uses, or which can be adapted to a different purpose without much difficulty.  A third approach is to ensure flexibility in the innovation process, by selecting ideas, processes, and technologies that may be used to produce different innovations.  A fourth approach is to make innovations and use processes which can be transferred easily into different markets.  For example, if an innovation is produced mainly by human skills rather than heavy machines, it is easier to transfer into a different market.
 
Congolese innovators can aim to meet growing international demand for goods.  Export opportunities are opening for DRC companies, as incomes rise around the world.  There may be also less competition in the production of some goods, as production costs rise in industrialising countries.  A company should be able to innovate to meet this international demand.  What seems important here is being aware of international opportunities, and being able to take advantage of them.  A company could monitor international marketplaces (for example through online retailers) for goods that it could produce at a competitive price.  It could also maintain links with international companies known to sell or use their goods.
 
Congolese innovators can also aim to overcome geographic and military barriers which constrain demand.  The transport links between different parts of the DRC are often limited, restricting access to markets by companies based outside those markets.  The access problem is worsened by military action in the East, which can hamper free movement of goods and people there.  A company should be able to produce innovations that can overcome these barriers.  It could produce innovations whose production could transfer easily to the region where the demand is, which would require the company to establish relationships with manufacturers and retailers in those regions.  Alternatively, it could produce more intangible innovations, such as computer programs or new types of services.
 
Influences on Congolese innovation linked to special working circumstances
Now I’ll look at influences on Congolese innovation that are linked to the special working circumstances in the country. To start, Congolese innovators can aim to adjust to disruption to their working environment.  The innovative process may be disrupted by military activity, particularly in the east of the country.  One way of handling the disruption is to innovate quickly, so there is less time for disruption to occur – we have already discussed how innovation may be accelerated by some company features (with the list in Table 3).  Another way is to ensure that the innovation process requires few physical assets, and proceeds in clear, self-contained stages, so that the innovation process can be temporarily suspended or transferred somewhere else if disruption occurs.
 
Congolese innovators can also aim to overcome geographic barriers which hinder their innovation.  Geographic barriers, whether due to restricted transport links or military action, can prevent the innovator getting information and ideas from outside of their region.  They can also prevent them from using the best partners for developing the innovation.  An approach to overcoming the geographic barriers is to make heavy use of online communications for meetings, networking, and the innovation process in general.  Another approach is to maintain the largest possible network of information sources and potential innovation partners, so that any available information and opportunities can be used.
 
Summary
In summary, many of the things that can increase innovation in DRC companies are the same as in companies in other countries.  However, some things have stronger effects in the DRC, or are mainly suitable there.  Table 4 summarises the actions that a DRC company can take to increase innovation.  They need to be supported by evidence from DRC companies before they can be considered recommendations, so at the moment they are just my first thoughts.
 
Table 4. Actions that a DRC company can take to increase innovation
  1. Undertake general improvements in company features (listed in Table 2)
  2. Undertake improvements leading to faster innovation (listed in Table 3)
  3. Produce innovations with many different uses, or which can be adapted to them
  4. Have a flexible process that can be used to produce different innovations
  5. Develop innovations and use processes that can be transferred to different markets easily
  6. Develop innovations whose production could occur near the target market
  7. Establish links with manufacturers and retailers near the target market
  8. Monitor international marketplaces for goods that the company could produce competitively
  9. Maintain links with international companies known to sell or use the DRC company’s goods
  10. Produce more intangible innovations
  11. Use few physical assets in the innovation process, and proceed in clear, self-contained stages
  12. Maintain the largest possible network of information sources and potential innovation partners
]]>
<![CDATA[How I’d organise a business forum in the D.R.C.]]>Thu, 07 Jun 2018 01:01:23 GMThttp://investinginafrica.org/blog1/how-id-organise-a-business-forum-in-the-drcA business forum, the Katanga Business Meeting, was held last month in the city of Lubumbashi, in Haut-Katanga province, South Eastern D.R.C (link).  The aim was to allow businesses to meet and form commercial links with each other.  130 companies attended, from sectors including agriculture, services, mining, and energy.
 
Such forums are a good idea.  They can help companies to identify and assess the feasibility of business opportunities.  They can help companies to access resources required to realise those opportunities, and to find potential partners, suppliers, and customers.  They can help companies to assess demand and potential competitors, and to decide on the best strategy to enter a market.  They can help companies to find goods and services that make their operations perform better.
 
Given all these potential advantages, how can an organiser prepare a forum to achieve them?  A forum is more likely to bring advantages if it engages a large number of companies, and facilitates communication and opportunity identification between them.  So an organiser would want to make detailed preparations that promote engagement and communication [1].  Here’s what I’d do.
 
The first thing I’d do is contact as wide a cross-section of companies as possible and let them know about the forum.  If more companies are involved, the forum’s impact is likely to be bigger.  So I would use telephone directories, tax records, business organisations, business networks, and expert knowledge to identify and contact companies.  Advertising in business publications would be useful.  I’d also advertise in more general newspapers, both to contact those companies not reached by business publications, and to attract potential businesspeople who have not yet established a company – a nominal entry fee may ensure that forum participants are committed to business.  A well-publicised forum website would also be useful, giving information about the forum.  I would also encourage involvement by stating that the forum has support from prominent business associations, government, and international organisations.  Stating that many other companies will be attending can influence companies to attend themselves.  I’d also look at whether broadcasts or internet conferencing could be used to link to companies whose representatives cannot attend in person.
 
The next thing I’d do is hire people who are familiar with the companies and their business, or who can learn about them.  Such people can act as “brokers” or “go-betweens”, connecting companies who may not be aware of each other.  Their knowledge can be used to arrange group or bilateral meetings between companies with common features, or to provide information to participating companies, or to arrange communications whether in print or on the internet.  The brokers may also be able to resolve any difficulties between companies, if the brokers have negotiating skills or can acquire them.
 
The third thing I’d do is explain before the forum what companies can do when they arrive.  Letting companies know in advance allows them to prepare, and makes the interactions at the forum more effective.  So I’d tell companies that they will meet other firms from their own and other industries, and that they can swap product samples, leaflets, and business cards.  I’d also tell them that they can exhibit and present publicly.
 
The fourth thing I’d do is arrange the seating, spaces, and timetable in the forum so that company representatives can meet and move on quickly.  The more meetings a company has during the forum, the more likely it is to identify business opportunities, partners, or suppliers.  Company tables and stalls could be positioned close to each other, perhaps side-by-side so that representatives can move from company to company with few omissions.  I’d suggest that initial meetings would be limited to a few minutes, with opportunities for further discussion in subsequent open meetings or at lunch.  Sessions could be held for companies from different regions and industries, and on different topics of business interest.  These sessions would increase the range of company interaction.
 
The next thing I’d do is distribute information about the region, industry, industrial specialisation, and product range of each company, together with contact information.  A company will often be interested in opportunities where it can use its existing knowledge and skills, and such opportunities may arise from observing and cooperating with firms with which it shares some features.  Recognising local suppliers and clients may allow companies to reduce costs, as business with local partners will have lower transport expenses, which can lead to large savings in a region where transportation is difficult.  Indeed, without finding a local supply chain, a business may never get going.  Additionally, if companies are aware of other firms with shared features, they can form lobby groups to protect their interests.
 
The sixth thing I’d do is encourage companies to talk about their work.  Discussion of work can stimulate ideas and collaboration.  I’d ask companies to give public presentations for five minutes about their products, organisation, and goals.  Companies could provide samples of their work, and describe how they can assist other firms.  Companies could also describe any problems that they have, so that potential partners or contractors can work to solve them.  Open meetings could discuss topics of interest to some or most businesses, including electricity supply, regulation, taxation, and technology.
 
The seventh thing I’d do is promote contacts between companies after the forum ends.  Companies could be encouraged to exchange business cards during the forum, and enter their names in a database available to other firms.  Some of the forum employees who know about the companies and their business could continue to work temporarily after the forum ends, connecting companies who want to find partners, suppliers, or clients.  The employees could also collate and summarise information given during the forum, which could help companies cooperate in future, and which could be a commercial product in itself.

Notes:
1. Some academic studies have looked at preparations used in other forums and similar networks, including (in English)
Jack et al. (2013) An entrepreneurial network evolving (link)
Lockett et al. (2013) Motivations and challenges of network formation (link)
and (in French)
Chabaud et al. (2003) Les incubateurs d'entreprises innovantes (link)
]]>
<![CDATA[The Easy Commerce USA-RDC platform: what it could do, and what I’d like to see]]>Fri, 11 May 2018 13:52:38 GMThttp://investinginafrica.org/blog1/may-11th-2018There’s a new platform to promote investment in DR Congo from the United States, as well as import and export between the two countries.  The platform is called Easy Commerce USA-RDC (website (still being built); facebook), and is run by the Association of D.R.C. Entrepreneurs, which has the objective of entrepreneurial promotion and development.  One part of the platform is called Easy Profile, which was described by Ted Mvutu, the Association’s president, in a recent radio interview:
 
“We have planned the program called Easy Profile, which creates a virtual professional profile of a Congolese entrepreneur who is going to attract foreign investors who come to invest in the D.R.C.
 
“The investors who are coming to the D.R.C. have to find a platform of entrepreneurs organised so that they contact directly operators corresponding to their projects.  In this profile, we put the identity, the sector of entrepreneurial activities, and we are going to connect these factors to the U.S. Department of Commerce to facilitate the task of American investors who want to come to the D.R.C.”
(Ted Mvutu.  The text is my translation from the French)
 
A business directory of “Easy Profiles” could bring in two types of investors.  One type of investor could bring foreign direct investment (where a business is established in the D.R.C. and (at least partially) owned and run by the U.S. company), while the other type of investors could bring finance investment (where a business run by Congolese entrepreneurs is financed by U.S. money).  The encouragement of each type of investment would require a different emphasis on information provided by Easy Profile, and I hope that the Association specifies their own plans in more detail prior to starting the activities.  As the President of the Association says that U.S. investors can contact local entrepreneurs, instead of being contacted, it seems more likely that they will be bringing foreign direct investment rather than finance investment.
 
Foreign direct investment could benefit from the Easy Profile business directory in at least two stages: the search for new business ideas, and the acquisition of resources to realise an idea.  When considering whether to set up a new business, an entrepreneur will typically search for business opportunities from numerous sources, and show some flexibility in the opportunities that they will pursue.  Under foreign direct investment, the flexibility will typically be reduced, as the investor will be likely to have clearly identified production aims coordinated with other companies owned by the investor.  However, it is possible that local ideas and expertise may influence the details of the investment, for example if resources used in other countries are not readily available in the D.R.C., or if the best human resource management practices differ in the country.  Within a directory format, it may be helpful to include a section where each company could write freely about anything it considers important.  For example, it could describe the products it offers, or why it could offer something unusual, or any ideas it has for new products and services.  It could also give opinions on current Congolese business conditions and markets.  Easy Profile could translate into English.
 
The Easy Profile business directory could also benefit foreign direct investment by aiding the acquisition of resources to realise an idea.  The D.R.C. is unfamiliar for most potential U.S. investors, and they will want to find local companies which help them to realise their aims, by providing relevant and suitable goods and services.  Easy Profile could help them to find such partners, suppliers, and subcontractors.  The presentation and ease of access would be important – I would copy the design of leading websites in the area, and allow data to be sorted, collected, and extracted easily.  The website should be in English and French, so that it can be used by both U.S. and D.R.C. entrepreneurs.
 
To help investors to identify opportunities and D.R.C. companies, it would be helpful if the Easy Profiles contained the following information:
  1. The date when the company joined Easy Profile
  2. Company names
  3. Names of the senior management
  4. Names of the owners and directors
  5. The region in which the company is based
  6. The industry in which the company operates
  7. Whether the company is state owned, or listed on a stock exchange, or privately owned
  8. Whether the company is a subsidiary of a group
  9. Whether the company exports
  10. The number of employees
  11. Revenue
  12. Age of the company
  13. Products or services produced
  14. Whether the company is formally registered
  15. Website
  16. Social media
  17. Telephone
  18. Fax
  19. E-mail
  20. The forms of relationship that the company would consider (partnership, supply, buyer)
  21. The company’s auditor
 
Further information would help to build the trust between investors and local companies.  Trust can be a major issue in any business relationship, and during investment in a foreign country it is of particular importance.  Helpful information may include:
  1. A general statement about relationships with local investors
  2. Statement of current or previous relationships with foreign investors
  3. Audit reports, or at least accounts
The owners or senior managers could write freely about why they are competent to work as suppliers or partners.

]]>
<![CDATA[Why war in DR Congo would be a disaster for business, as well as the population]]>Thu, 26 Apr 2018 00:15:13 GMThttp://investinginafrica.org/blog1/april-25th-2018There is speculation among the press and aid agencies that DR Congo may be close to returning to widespread conflict.  I've written before that earlier war in the country was an economic disaster.  To recap, a war can lead to incomes which are lower by around US$1000 per person per year than they would have been.  Over ten years, that's $10,000.  For a population of 80 million, that's $800 billion.
 
One of the reasons that war is economically disastrous is that business operations are badly hit.  With a very few exceptions, such as arms smugglers, it is hard for business to prosper during war time.  Of course, there are wider economic consequences to consumers and government, and effects in the long term through changes in labour, education, and investment, but let's stay on business for the moment.
 
War can affect business operations by interfering with a firm's ability to identify new opportunities.  Familiarity with, and knowledge of, an environment is an important way for business people to find such opportunities.  When an environment changes radically under war, then business people's ability to identify opportunities is diminished. Any search procedures to identify opportunities - for example, by touring local markets, or surveys - may become dangerous or impossible. Further, the number of opportunities is likely to fall as well, as markets are disrupted.  While the changing environment due to conflict will bring some new opportunities, the disruption of markets established over a much longer period seems almost certain to lead to large net loss of opportunities.
 
Additionally, formerly attractive opportunities may not be worth the risk after conflict starts.  Capital is likely to be in short supply during wartime, driving up its cost.  Extra risk, such as that brought by war, is usually compensated by higher returns as well.  If an opportunity's expected return is the same or lower when conflict starts as before, then it may no longer meet the required investor return, and so not happen.
 
Another reason for war's effect on business operations is that it interferes with the ability of businesses to plan.  War brings increased uncertainty about the future - the actions of the combatants are unknown, and future events that were previously likely may be disrupted.  A planner would have to guess about the future to a greater extent, and additionally have to include the actions of the combatants.  The number of future events the planner would have to consider would be much wider, and costlier to examine in full if that is even possible.
 
The ability to find solutions to any opportunities is also hampered by conflict.  Earlier ways of formulating ideas may no longer be readily possible or suitable.  For example, a company which previously examined the practices of other companies may find that those practices are no longer as visible, or the practices are no longer applicable in the wartime economy.  If solutions are proposed, then testing their viability may be difficult, with methods such as surveys or limited launches likely to be more expensive during war.
 
What's more, war can interfere with a company's ability to implement any proposed solutions.  Finance may be not accessible even if required returns can be met, and the available workforce is likely to smaller.  Fixed capital stock would be a target for looting.  Networks of potential business collaborators may be reduced in size.
 
Overall, then: war is bad news for business operations.

]]>