EDUCATION & TRAINING: CT is Creating Wealth from Innovation
Recent Western Cape Business News
IF the industrial economy ran on fossil fuels, the fuel of the 21st century economy is knowledge and innovation.
The City of Cape Town has made it a strategic priority to position Cape Town as a global knowledge and innovation hub. The relationship with the four regional universities under the Cape Higher Education Consortium (CHEC) has been formally established and a number of excellent projects have started flowing from this initiative.
Through its partnership with the UCT Graduate School of Business’ Centre for Innovation and Entrepreneurship, the City sponsors emerging entrepreneurs to participate in a six month programme with the Raymond Ackerman Academy for Entrepreneurship.
The City also hosts an annual Small Business Week, focused on creating opportunities for SMMEs. Cape Town was recently ranked No 1 in the country for entrepreneurship in an independent 10 year international study conducted by the Centre for Entrepreneurship and Innovation.
Cape Town has a strong history of innovation. It was the location of the first successful heart transplant in the world. Mark Shuttleworth, the internet billionaire and ‘afronaut" is from Cape Town. Recently, the Cape Town-based firm, Optimal Energy, launched Africa’s first all-electric, zero-emission vehicle.
The Bandwidth Barn, is a business accelerator for information and communications technology start-ups. There are science and technology parks in and around Cape Town, such as Capricorn Park and Technopark Stellenbosch.
Design Indaba is an annual Cape Town based exhibition showcasing the best of local design to an international audience. This is followed by during Cape Town Fashion Week.
Innovation is an enabler of economic growth, human capital development and social wealth in the 21st century globally competitive economy. It is the key driver of competitive advantage, growth, profitability and new products and services. Innovators are at the top of the value chain; manufacturers are located downstream. Owners of patents can significantly influence the location of skills, capital and production. Efficient knowledge and innovation systems enhance global competitiveness.
The City of Cape Town is also encouraging a shift from closed to open innovation systems - a concept promoted by Prof Henry Chesbrough at Berkeley's Center for Open Innovation.
The central idea is that in a world of widely distributed knowledge, institutions cannot rely entirely on their own research, but should instead buy or license processes or inventions from other institutions. In addition, internal inventions not being used in a firm's business should be taken outside the company (e.g., through licensing, joint ventures, spin-offs).
The City is currently exploring using strategic land parcels in Cape Town to establish an innovation, technology and incubator hub. It has also approved a municipal optic fibre broadband network to drive down the cost of communications.
Spending on research & development alone is simply not enough to create wealth from knowledge and innovation. Coming up with new ideas or inventions is no guarantee that innovation will occur. Not all research leads to innovation and not all innovation is research-based. Innovation can be demand driven (needs based) or supply led (research based). Proper arrangement of the innovation processes will create an effective innovation system at organisation, local, regional or country level.
Sources of innovation and its geographical location are vital. Innovation hubs closer to universities will benefit from a wealth of resources; for example, private sector research labs are best placed on campuses that benefit both the university and the private sector.
Entrepreneurship is a key source of innovation. Entrepreneurial opportunities are systematically created under certain conditions, such as alignment of investment with the human capital needs of the economy. Individual motivation, risk taking and new ideas will address contemporary economic and social problems. Government support to small business must be focused and relevant. The MIT $100K Business Plan Competition has facilitated the birth of over 85 companies with an aggregate value of over $10.5 billion dollars since inception 18 years ago.
Other key players are required to create efficient innovation systems. Entrepreneurs will lead the way, but research institutions such as universities and technikons are equally important. Businesses and other organizations in pursuit of productivity improvements all play an important role.
Government provides leadership, education, incentives and regulation. Investors provide capital according to their risk appetite. There is an abundance of investment and risk appetite in the innovation value chain but it must be properly matched to the underlying opportunities at the varying stages of development.
Government has an opportunity to leverage research and development spending with the private sector. For example, take solar energy. The sun radiates enough energy to power the current global energy demands 10, 000 times over. With the depletion of fossil fuel resources, solar energy presents an ideal opportunity for government and the private sector to combine resources towards a common objective. It should align policies to ensure most innovation is needs driven and appropriate to meet the demands of the economy. It should establish appropriate rewards based system for innovators and support innovator initiatives such as an innovation fund. Most importantly, it should help decrease costs of ICT, especially broadband.
The shift towards a knowledge based economy has already started. We need to get to grips with this 21st century economic reality if we want to see results from our collective spending on research and development. Government must invest in peoples’ education, and public and private sector organisations must invest in the development of its human resources. There must be an attempt to understand the value chain of innovation, from the light bulb idea stage right to the point where the idea has been made commercially viable. We must understand and create innovation systems by understanding the innovation processes.
The City of Cape Town has already started creating an innovation premium. It has embarked on a business process improvement project in the property management department to improve transaction processing times and better manage municipal property. This has already led to better use of municipal land to stimulate economic and social development for the residents of Cape Town.
The City has also leased land to a non-profit organization to build a school for children who would otherwise never have an education. The land was leased to the school at a minimal rental of R150 per annum in order to leverage foreign donor investment running into millions of rand.
The City of Cape Town is determined to enhance Cape Town’s global competitiveness in order to grow the economy and create more jobs.
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