that come here?), or of a certain skill that is not available locally (all our good chefs come from Gauteng), there are many issues that can only be addressed by local collaboration. It is often very difficult for competing enterprises to even fully realise that they are all held back by the same kind of problems, it is difficult if not impossible for these trends to be spotted by individual firms. This means that a third party is needed to identify some of these patterns, and to facilitate a process of joint problem- solving. Solving these problems often lowers barriers to entry, and also forces incumbents to keep on investing in improved business models, products and processes.
Lastly, the whole concept of reducing transaction costs relating to finding information about suppliers, possible technologies, new markets and specific kinds of knowledge remains very high in South Africa. That is generally why people with higher qualifications often succeed in business and in the government; they have better knowledge about where to find knowledge. Generally when we visit 40 to 50 businesses in a particular area we are often amused at how visible it is that firms that invest in new technology or new business units (like a design centre, or a testing lab) outperform the rest of the sample by a noticeable margin. Are all the other firms ignorant about the benefits of investing? No, often they are not ignorant. They just do not know what the next investment should or could be. The time costs of finding the relevant information is simply too high.
This is related to the relatively high costs of coordination in the South African economy. While our competitors in other economies can collaborate with minimal project management support, in South Africa implementing a multiple stakeholder project is very costly. Information about systems, procedures, laws and even opportunities flows very slowly between organisations, and often coordinating any process is more about personal contacts than about institutions that work.
The Innovation Journal
What can innovation practitioners do to assist regional innovation systems? Firstly, it is necessary to move beyond the firm and individual products or processes towards the more dynamic system that shapes the behaviour of individuals and organisations. An understanding of the broader environment, information and knowledge flows and the competitive environment must be understood. Furthermore, this interpretation of what is going on should be articulated to industry.
Secondly, current patterns of problem- solving, knowledge sharing and innovation must be identified in the targeted area or sub- sectors. How are people solving problems now, and which problems remain unsolved? Who do people contact when they require knowledge from outside of their organisation, and are these knowledge resources visible and known? How can this knowledge and access to various private and public competencies be made public?
Thirdly, sources of unique regional tacit knowledge must be identified. In a global digitised world, local sources of tacit knowledge gives local firms a unique competitive advantage, even if it is temporary. Often this kind of tacit knowledge is spread by individuals in public and private organisations, such as chambers of commerce, local universities but also specialised service providers. Therefore at a local level it is important to see what kind of institutions (public or private) exists or can be created.
Lastly, our priority should be to try and
create new or novel patterns of interaction between different stakeholders. Can we get the public sector in the region to be more specific or responsive in their support? Can we use the skills prerequisites in the region to create a competitive advantage? Are there importance local competencies or patterns that we can build on? These are all small steps in building unique regional institutions that spread knowledge and that decrease the costs of transacting, finding the right information, and even the cost of innovating.
September 2012 | Management Today 35
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