Innovation, Institutions and the Knowledge Economy

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*First published in Apr 2016

by Obinna Igwebuike

The world hasn’t changed. The world keeps changing. Change hasn’t happened. Change keeps happening. The tectonic plates that held previous models of social and economic development are fast changing. This is the innovation the whole world is talking about.

Institutions that are able to move ahead of the curve and adapt to fast changing realities can develop unassailable competitive advantage and relevance. Those who are unable to adapt may fizzle out and this usually has grave economic consequences. This change isn’t necessarily a new concept. In 1942, Joseph Schumpeter, the Austrian-American Economist postulated the theory of creative destruction, which articulated that industries mutate in ways that revolutionalise factors that drive demand and supply.

In my career as a management consultant, I have had the privilege of studying a wide range of organisations from all over the world. None has quite captured me with its robust but focused approach to innovation like General Electric (GE). From inventing light bulbs in 1879, the company pioneered the creation of the electric locomotive engine in 1895 and in 1896, developed the X-Ray Machine. In 1921, GE revolutionalised innovation in aviation by building the first jet engine. The company was ahead of the curve in the late 20th century, when a focused strategy by then CEO, Dr. Jack Welch, saw it servitizing what was most and generally a product business model.

GE’s innovation model has again turned the company on its head with its bold attempt at the industrial internet. The vision of the industrial internet initiative is to leverage sensors, software technology and big data analytics to create intelligent machines for industries. Brilliant Factory, one of the products of this initiative is a new digital manufacturing technology the company expects to deliver 10% to 20% improvements in unplanned downtime.

The economic benefits of GE’s Industrial Internet initiative are very tangible. In 2015, GE’s total portfolio of software and solutions was projected to have revenues of around $5billion (this is about 25% of Nigeria’s budget) and Predix, the company’s cloud-based platform-as-a-service proposition for creating industrial internet is expected to drive revenues of more than $15billion by 2020. This is startling, considering the fact that 20 years ago, the industrial internet was essentially an undeveloped value proposition. As at September 2015, Predix had around 4,000 software developers and this number is expected to grow to 20,000 by 2016. The economic possibilities of this are limitless.

Institutions drive innovative efforts like this. For a country to reap the quantum benefits of innovation, it needs institutions that are wired to innovate. For these institutions to optimise innovation as a growth model, they need to be fed with outputs from an education system that is wired to support their innovation ambitions.

Unfortunately in Nigeria today, innovation is heavily driven by corporate institutions. This is not a sustainable model as the unit cost on these institutions is prohibitive. The wider education system through primary, secondary and tertiary learning institutions in collaboration with industry, needs to produce people who have been ingrained with curiosity, imagination, and critical thinking, the most important inputs to such bold attempts at innovation.

Nigeria needs a national learning (or knowledge) strategy that has as its overarching objective, the development of people, systems and processes to drive innovation. Unity Schools, with their scale and multi-cultural make-up are critical to this strategy. With students drawn from all sections of the country, they provide a blend of cultures, experiences and motivations that are important for curiosity, imagination, and critical thinking. For these Unity Schools to achieve their potential of being instruments of innovation, I propose some actions that should be taken to promote a culture of innovation.

First of all, innovative projects have to be a part of the learning process. I remember secondary schools in Nigeria had Junior Engineers, Technicians and Scientists (JETS) societies that built a competitive culture in young Nigerians in themes around science and technology. These societies were supposed to build young but curious minds who were then supposed to build careers in Science, Technology, Engineering and Math (STEM). STEM learning is at the heart of innovation today. This culture has to be rekindled.

Closely tied to this is a student measurement and evaluation system that goes beyond asking students to regurgitate knowledge that has been fed to them, but emphasises outputs of curiosity, imagination and critical thinking. This will provide an incentive for learning beyond the classroom.

For this new measurement system to work effectively, the Unity Schools need to have more teachers with cognate industry experience. There are a lot of retired Nigerians with relevant industry experience who will be willing to teach in these schools. Also young professionals can teach in these schools as volunteers, so that from a young age, these kids have a good understanding of the demands of industry.

At the heart of all of this, is a Unity School system that is not completely in the hands of the public sector. There is a need for private and third sector efficiency in the management of Unity Schools if they are to be at the centre of this push towards a culture of innovation.

The world today is borderless. However, not every country has a right to advancement. Nigeria will only move as far and as fast as its institutions learn. This means we will continue to follow until we decide to lead through innovation.

Obinna Igwebuike is Managing Partner at Sawubona Advisory Services Limited. He can be reached on o.igwebuike@sawubonang.test


Pictured above are innovators at the CoCreation Hub, a Lagos-based social innovation centre.