Companies should spend less time worrying about product innovation and more about how they can help their customers, says a report by brand strategist Yellowwood. GM Honore Gasa says companies should focus more on what she calls "transformative" innovation.
"Most marketers are looking at consumer markets in the wrong way," she says. "They have been too interested in the bottom of the economic pyramid; particularly those consumers earning average income or less." Marketers' main concern is about producing what consumers in this spending sector can afford to buy.
"But these people have little disposable income and are already financially stretched," says Gasa. "Our argument is that companies should be asking themselves how they can operate in a way that can add to consumers' incomes. How can they help them increase their spending power?"
She points to SA Breweries (SAB) and MTN as examples of the small number of companies to successfully empower customers and simultaneously boost their own businesses. MTN launched its pay-as-you-go airtime when mobile phones were accessible only through long-term contracts. By allowing consumers to buy prepaid vouchers, MTN created opportunities across the continent for entrepreneurs, who created entire businesses out of reselling airtime, says Gasa.
SAB's owner-driver programme has turned former employees into independent distributors across the company's network. So far over 450 people have become empowered in this way.
Few SA companies think this way, says Gasa. International comparisons suggest SA spends much less on innovation research than many other countries.
Yellowwood MD David Blyth says African companies can outperform global competitors by being "closer to the ground, more relevant and more innovative". The world, he says, needs companies "who embrace a new kind of purpose-led business".
Gasa highlights the example of emerging publishing company Paperight, which has developed a business model through which small photocopy shops can download and print books legally and cheaply, thus creating new employment opportunities.
"A lot of the big companies in SA are satellite offices for global companies," says Gasa. "Much of their focus is on implementing innovations that are developed elsewhere rather than looking at their own research."