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Last year, during the 2018 Young ICT leaders’ Forum in Busan, Republic of Korea, we asked some young global talent to let us know what their ecosystems felt like for innovators. One group in particular demonstrated this well, in a sketch dubbed: “Joel’s journey in the valley of death” reflecting on how it is like to be an innovator in an immature sub-Saharan ecosystem. At the 2018 Regional Innovation Forum in Oslo in Norway, when we ran this exercise for a more developed ecosystem in a high-income country, the problems were different, but the innovators also struggled with the same systemic issues.

With an estimate of over 300 million start-ups located in various clusters around the world, only very few ecosystems have the right innovation fabric to help their startups develop into the next unicorn (billion dollar valuation companies).

There is a white elephant in the room, and very few want to acknowledge it

A white elephant is rare and illustrates a big dream that may never materialize. Having one in the room gives new meaning to people avoiding difficult conversations about problems that they face. Digital development is at a crossroads, and your investments in the traditional inputs of innovation such as R&D may not make a big difference.

Creating the next Silicon Valley has been elusive and difficult, especially in the developing country context where less than 1% of GDP may be going to R&D. Following traditional Science Technology and Innovation (STI) experts’ recommendations of investment in inputs such as R&D, infrastructure, and education does not guarantee the right results even for developed countries. In 2018, Switzerland ranked second in the Global Entrepreneurship Index, first in the Global Innovation Index, yet in the Global Startup Ecosystem Report, the only city that ranked well was Zug for blockchain and Fintech sub-ecosystems.

The "father" of 3M post-it notes, Dr. Geoffrey Nicholson, famously said: “Research is the transformation of money into knowledge, and innovation is the transformation of knowledge into money”. Today, there is an abundance of knowledge in the world. However, given our increasingly more global and open economies, digital knowledge can be developed in the ecosystem of one country, but its value captured in a completely different country. This is an interesting paradox with significant inclusiveness impacts.

Countries need to understand how the money they are spending in innovation input is going to create jobs, growth, and income. If you are investing $1 and getting $0.5 back, why would you want to spend more money on a leaky system?

Having an exciting ecosystem is not enough, it has to be competitive with all the right ingredients

The minute a tech startup is born, it competes globally. In your community, you could be investing in talent and in getting them started through various programs or policies, only to see them migrate to a better performing ecosystem.

In recent interviews of stakeholders in Thailand that I conducted, I asked whether they have a “real teach unicorn” in Thailand. The answer was astoundingly “No! We only have companies with up to $400 million valuation”. When I inquired as to why, the answer was insightful about the ecosystem: “The minute they reach a certain valuation, they go and register their company in Singapore or New York, or another better performing ecosystem”.  The search for a unicorn in Thailand is ongoing.

Kenya is known for being the Silicon Savannah, with an aspiring ecosystem, but to date, no tech unicorn sighting has occurred.  During a country review of the ICT-centric innovation ecosystem in Kenya, I saw clear excitement in the young talent pool, but in the words of one stakeholder, "Young people have some talents, they have energy. But it burns out soon if that energy is not guided or supported to help build good companies".

Kenya and Thailand are no exception.  From Africa to Europe, and Americas to Asia, we can see the same struggles. Whether the ecosystem is considered mature like Thailand or nascent as in some sub-Saharan countries, there are many reasons for the lack of unicorns.

There may be a new brain drain in progress, and it is taking talents, resources and opportunities with it

Often coummities are proud of their startups finding a home in the more developed ecosystems. I am puzzled as there is a real leakage of resources and opportunities, and it has consequences for economic growth and inclusion in the local community. This is a brand new paradigm.

Harvard economist Clay Christiansen, while studying the theory of disruptive innovation by companies, realized that the traditional ways companies deliver products and services to serve the market can be ineffective in creating competitive solutions and lasting companies. “Thirty thousand new consumer products are launched each year. But over 90% of them fail—and that’s after marketing professionals have spent massive amounts of money trying to understand what their customers want”.  He theorized that customers hire a product or service to get a job done. But if we do not understand what this job is, and how the customer will use the product or service to get the job done, then we cannot come up with a competitive solution.

To aid in understanding this paradigm of ICT-centric innovation, ITU in its toolkit, “Bridging the Digital Innovation Divide”, introduces the stakeholder interface canvas tool (also known as the innovation journey map). This tool helps innovators quickly analyse the performance of their ecosystem in covering the key activities needed to take innovations from pre-ideation to high growth. It describes the role each stakeholder group can take on to support entrepreneurs and innovators at each stage of their lifecycle.

Are you ready to take on the paradox?

 

The canvas is based on the 'valley of death curve', which shows the lifecycle of innovation and entrepreneurship. The lifecycle reflects growing companies, and notably identifies the 'valley of death', a period after ideation when innovators require significant investment and support, and where there is a high risk of failure as a business. If any part of the entrepreneurial lifecycle becomes a common failure point, it will vastly reduce the chances of success for all entrepreneurship in the ecosystem.

Systems issues require systems solutions

In the model above, the framework looks at 30 micro-jobs to be done from six groups. Every one of these micro jobs could be done by numerous programs or policies from several organizations.  Three engines of growth must come together to create an ICT-centric innovation ecosystem: an innovation ecosystem, an entrepreneurial ecosystem, and a sound technology ecosystem. As in any engine analogy, the worst-functioning part must be replaced or the system is completely ineffective.

Failure to do so is one of key reasons why you may not have a unicorn in your community. In an interconnected ecosystem, policies and programs have to constantly change to be best in class. If they do not change, your ecosystem will be leaking resources and talent to a better performing ecosystem.  If a neighboring country has a nicer policy to attract talent and your country doesn’t, then once innovators reach a certain roadblock for growth, they will migrate to your neighbors or even a far-distant ecosystem where they can grow.

Often investments are too focused on individual components. Very few think about the system’s problems. A few organizations exist to care about such challenges, but they are few and far between, and often their scope is limited. Your traditional innovation agency may claim a stake in solving this problem, but the reality is different. The three engines of growth may not be coming together to enable the next unicorns in your community. This is the root cause of the paradox.

Are you ready to prepare the ground for the next unicorn in your community?

We have embarked on helping countries solve this paradigm through various products and services. One of the initiatives we have is helping countries develop a novel digital transformation center which will enable them to navigate highly-disruptive technological environments. Take your first step to transforming your community. 

If you want to take action against the new brain drain that is taking talent, resources and opportunities, and if you want to have the next unicorn in your community, take action. Rethink your three engines of growth. Unicorns are elusive but not impossible.

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About the Author

Moe Ba leads the Innovation Programme for the Development Sector at the International Telecommunication Union, the UN specialized agency for ICT/Telecommunication.

His role is to help strengthen ITU Membership capacity to accelerate digital transformation. His passion is to help communities unlock their potentials through stakeholder empowerment and connecting opportunities to resources.

Prior to joining ITU, Mr. Ba spent several years in the private sector including working in Silicon Valley and internationally. He is an expert on innovation policy and the development of platforms focused on innovation, ICT and telecommunication.

This article is written in a personal capacity and doesn't engage the organization that I am currently working for.

Six years ago, Wired Magazine described the word innovation as “not important” in an article titled “Innovation: The Most Important and Overused Word in America”. They were on to something. Innovation has become the most abused word in many circles including, policy makers and career bureaucrats. That is something to have a deep breath about. Innovation by all accounts seem antithetical to bureaucracy, but it actually is not.

Innovation is about change and change is inevitable

If you are willing to reframe your thoughts, you will actually see that innovation is simply about change, and today change is inevitable. I am being dramatic using the term “bureaucrats”, but in reality they are managers who work for organizations that need to be efficient to survive. You might be one of these managers, at the city level, in a government, or private sector. For you to become a bureaucrat, you were probably caught in many unproductive habits in your organization. As a result, you or people you know might feel paralyzed because new ideas are not finding a conducive culture to flourish.

In the Oslo manual, OECD defines “Innovation as the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations”. ICT affects business model, mindsets, organizational structures, R&D, markets, network; therefore, ICT centric innovation can contribute to significant growth and inclusion in economies that are increasingly digital, global and interconnected. This change impacts our communities, and we need to know how to leverage innovation to optimize opportunities.

Often, I am bombarded by comments from people who thinks that innovation should be led by one person, particulary the creative type. This is a misunderstanding. Innovation is a team sport, except there are specific type of people that you want in the core team. However, everybody has a role to play in innovation, and the sooner you understand this, the better off your community will positively navigate change.

Innovation is a system issue

In my first ecosystem review of a country four years ago, we noted that "In the early days of academic research on innovation, stimulating innovation was thought to be a linear process. In this model, science produces technology and technology delivers products and services in response to market need. Unfortunately, this perspective does not reflect the dynamism of the innovation process, which includes a variety of factors interacting together such as R&D investment, but also talent pools, culture, economic conditions, markets, and investment, among many others". Innovation is therefore a complex issue.

Thus innovation can be seen as a system issue where different building blocks need to have coordinated actions to drive result. These coordinated actions allow an innovator to develop new products and services that achieve economic value.  For ICT centric innovation, ITU has developed a comparable Innovation Framework with 30 interlinked building blocks to help assess a country ability to navigate technological changes and innovate. Imagine the complexity of such interlinkages in a dynamic and open system, as opposed to closed system. Failure in any component will impact your ability to produce ICT innovation, and the changing environment impact it too.

The building blocks of this system provide essential ingredients such as the vision and strategy setting a direction, infrastructure where the innovation can take place, talent and champions to drive the change, resources and programmes that deliver result, market and network where innovation find a footing, culture and communities fuelling innovation, and policies that underpin everything. These ingredients are applicable whether you are a country, a community or an organization.

Innovation needs a purpose and intrinsic motivation. One principle for any system is its goal. Innovation needs to focus on solving a problem. A civil servant could be delivering better services to citizens. An entrepreneur could be developing an application software to address an opportunity. An organization could be reinventing its products and services to remain competitive. Everyone has a job-to-be-done that they would like done better. That’s where innovation comes in.

Innovation without a purpose is a bad habit

These bad habits, or culture, spread like a virus. Breaking them up is very difficult. No one remembers when they started. I am sure you have seen this infestation before. One day you woke up and realized that the whole place was infested, including yourself.

Your organization is now officially a bureaucracy, you started not liking your job, your community leaders are divided, and everyone want a claim to the throne. If it sounds like the real life movie “Game of Thrones, that is because it might be. Bureaucracy is an innovation killer. If you have a good intrinsic motivation and a purpose to change the world, you might be able to adapt - but your environment will slow you down.

“An ineffective virus kill its host, while an effective virus doesn’t”. Someone has to clean the bad virus, otherwise it might kill every living thing in your environment. Trust is hard to build, but easy to loose. At some point trust need to be rebuild, and innovation has to happen before the organization dies. How do we proactively manage this tragedy waiting to happen in your community? 

Innovation is about risk management

Innovation is a data issue. You are hoping to get enough data to make the right decision. And if you don’t have enough data, then you want to quickly test the market. The biggest risk in any new proposal is the “unknown unknown”. To know what you don’t know, you need to experiment quickly and get a big enough sample to have some pointers. The old marketing segmentation strategy or an ideological driven strategy can no longer cut it in our hyper connected world.  This goes without saying that the person with the biggest dataset will have a better chance at innovating. This is why data is the new oil and creativity methodologies are cool.

Managers are risk adverse by definition. So you need leadership who believes and empower innovators to take risk. If not, your chances of success are limited. The more knowledgeable resources you have on your side, the higher your change of knowing the unknown. You will also need a portfolio of experiments to increase your chances of success, but be aware of resource hogs and organizational silos.

“Insanity is doing the same thing over and over again and expecting different results”, says Albert Einstein. Organizational units are established to keep resources on an entitlement basis and focus on the unit output. The older a unit, the more established in their ways, and the more resources they have accumulated over the year working on the same thing.  There is a need for disruption in older organizational units to spread resources and weaken bureaucracy so innovation flourish.

There are few ways to create disruption of organizational units, some more effective than others. I have been through many re-organization with Silicon Valley companies. Every time it was triggered by some external factors (aka market or competitor). We jokingly called the changes as “people changing shirts”, but the culture stayed the same. The organization leaders were hoping for the best, but they were almost always wrong. This is a mistake as growth need a mindset change from people.

Innovation is about people

How do we stop our bad habits, these viruses that are making your organization or community less fit and agile? Stopping bad habits means that you need to change the cue, the routine, or the reward. If you find yourself in a hostile environment, there is a simple test to determine how conducive to innovation your environment is.

There are four essential pillars to this test for your community: how people communicate, how they manage hierarchies, how they resolve tensions, and how they navigate networks and access resources. If you can diagnose how people behave in your community, then you can start addressing the underlying culture that is spreading bad habits. You can find new routines for communicating, resolving tension, leveraging networks and  resources, and dealing with the hierarchical command and control world. Innovation needs emergent behaviours and cannot fourish in a command and control world.

The more lasting solutions are built in the DNA of your community. Constantly rotating people or having spaces for disruption provides some options in bureaucratic organizations. These proactive approaches have benefits as well as challenges. It has to be done with a purpose and aligned to the organization core businesses.  Injecting "new blood" with the right mindset can also accelerate the cultural transformation. So, don't be afraid to let foreign talent with the right skillsets in your ecosystem, or younger talent with the right attitude in your organization. Change is inevitable, be prepared.

Are you ready to be an innovation champion?

It is often said that, the biggest fear is the “fear leading to fear”. Don’t be afraid of change, as long as you are prepared. Think about climbing Mount Everest for example, you wouldn’t go on that expedition without the right team, skillsets, tools, a strategy and plan. Would you?  

If you are passionate about ICT centric Innovation, you should bring the odds in your favour.  Be an innovation champion, join this community. Share your comments with us.

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About the Author

Moe BaMoe Ba leads the Innovation Programme for the Development Sector at the International Telecommunication Union, the UN specialized agency for ICT/Telecommunication.

His role is to help strengthen ITU Membership capacity to accelerate digital transformation. His passion is to help communities unlock their potentials through stakeholder empowerment and connecting opportunities to resources.

Prior to joining ITU, Mr. Ba spent several years in the private sector including working in Silicon Valley and internationally. He is an expert on innovation policy and the development of platforms focused on innovation, ICT and telecommunication.

This article is written in a personal capacity and doesn't engage the organization that I am currently working for.

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