Angus Robinson, director of mobile, content and community divisions of Native, says the rate of change is ever increasing. Consumers are adopting new technology faster than ever before and their behaviour and expectations are changing.
Businesses have to respond. And there are two trends emerging that will help companies do just that – the lean start-up movement and the connected economy.
Up until now that response has been a slow and measured, with businesses adopting a cautious approach to innovation trying to get things ‘as near to perfect as possible’ before implementation.
This results in lengthy lead times in product or service development and to innovation in general.
Businesses should consider rethinking this approach and lean start-up is one of the preferred approaches to deliver on this challenge.
TREND #1 – Lean start-up
Lean start-up is a new way of managing a more uncertain environment in a more scientific way. It assists businesses in testing project-related hypotheses as quickly as possible.
A hypothesis is a set of assumptions deemed as the starting point for further investigation.
So for example a number different product offerings, payment options, value propositions or even digital platforms could be presented to potential customers in order to get feedback and responses.
It’s about changing the way you measure progress and revolves around learning.
By using the concept of getting a ‘minimum viable product’ to market in the fastest possible time is the ideal way to test what you are trying to prove. What do customers want and how are you going to make money?
We need to constantly be learning about what value is for customers and who their customers are, based on a hypothesis rather than perfectly executing a plan that is flawless.
Success should be based on how much validated learning is happening and how quickly this is happening through experimenting and learning from your customers.
Lean Startup is cyclical in nature moving from the idea to building the product, to measuring the data, learning from it and then using it to generate the next idea and so on.
A great international example of the success of Lean Startup is Zappos.com – an online shoes and clothing store renowned for its great customer service.
Instead of waiting to bring a flawless site to market, the creator decided to rather visit a shoe store, take pictures of the most popular shoes, and put them online to test the assumptions around selling a product such as shoes online.
These included, would people buy shoes online, how are returns handled, what information do potential customers want about shoes, how to they compare shoes online, how are international sizing complexities handled, and many more.
This basic site gave rise to a billion dollar business that was eventually acquired by Amazon.
TREND #2 – Connected economy
Another trend that businesses should be keeping their eye on is the much-spoken about connected economy. And, the connected economy is powered by connected devices.
What’s most important is how businesses will apply this concept to their organisation in the coming years. The introduction of smartphones into our daily lives has opened the possibilities of connecting to peripherals.
Peripherals are small, portable objects that can be plugged into or connected to a device. Smartphones have all the computing power needed to run other devices and innovative products are hitting the market almost daily.
The medical industry is benefiting from peripherals such as the IBGStar – a blood glucose-testing device that is plugged into an iPhone and, together with the Diabetes Manager App, helps users track blood glucose, carb intake and insulin dose.
The possibilities to use this info, not only from one user but linking multiples users, can provide the industry with trends and statistics that will lead to ground-breaking innovation.
Along with peripherals, the rise of sensors is changing the world dramatically. Sensors are devices that read environmental factors and present them in understandable formats or analysis, recording or comparison.
We find sensors in almost everything from cars and shoes to industrial units and mobile phones. Using information gathered from these sensors, organisations, cities and even countries could drastically change the way processes are managed, maintenance is done and business is run. The potential for cost-saving and reducing the environmental impact is vast.
So what does this mean for business owners? Firstly, decision-makers need to determine how sensors can gather information or data to help improve business operations and customer experiences.
They also need to look for peripherals that could result in more efficient job tasks and how the networked devices impact business effectiveness.
Most importantly – be agile and realise you are part of a changing world. Consider new ways of doing things and keep an eye on what is hot and happening in your industry.
R33 Million Boost For Job Creation And Innovation In SA
The Craft + Design Institute (CDI) has launched R33 Million in funding to boost SME growth, job creation and innovation.
The CDI has raised the R33m to establish three funds – a Growth Fund, an Innovation Fund and a Loan Book – these funds will be managed by its investment arm, CDI Capital.
The funding will be for developing 60 growth oriented SME’s and 20 innovative technological solutions – and to create 600 permanent jobs in the process over three years.
This funding has been enabled by the National Treasury’s Jobs Fund through the Government Technical Advisory Centre (GTAC), the Technology Innovation Agency (TIA), and the Western Cape Department of Economic Development and Tourism (DEDAT).
CDI Capital was specifically incorporated as a CDI subsidiary in 2016 to catalyse funding for SMEs. A level 1 B-BBEE company, it aims to combine government grants with corporate Enterprise Development spend and private funds to de-risk investments in SME’s to stimulate growth and returns.
The Growth Fund is open to businesses with turnover or assets of more than R1m with the ability to create permanent jobs. Applications open on the 27th of November and close on the 31st of December 2017. For specific criteria and more information on the grant please visit www.cdicapital.co.za/GrowthFund
The Design Innovation Seed Fund (DISF) is open to inventors who believe they have protectable innovative technological solutions that could impact on specific sectors and could create permanent jobs. This is the third round of this fund. Applications open on the 27th of November and close on the 31st of December 2017. For specific criteria and more information on the grant please visit www.cdicapital.co.za/DISF
In addition to the grant funding products, CDI Capital will also launch a R3.5m working capital and term loan facility at reduced rates for the duration of the three-year project to provide access to cash flow during the growth stage of these, and other qualifying SME’s.
The CDI has 16 years of experience in SME development and started supporting development in the craft and design sectors nationally in 2015. Signaling this change, the organisation changed its name in September from the Cape Craft + Design Institute to The Craft + Design Institute.
According to Erica Elk, Executive Director of the CDI, it was a landmark moment in the organisation’s history.
“Over the past few years our team has successfully taken our services across the country – we have conducted a business and product development workshop series in every single province and received incredibly positive feedback. The message clearly is ‘more please’.”
Elk said that there is a consensus in South Africa today that SMEs hold the solution to our intractable problems of a sluggish economy and high unemployment rates.
“In most countries, SMEs play a vital role as drivers of economic growth, innovation and job creation, but, in South Africa, this value is yet to be properly realised. To achieve this, the challenges experienced by SMEs need to be addressed. Namely access to markets, finance and credit, infrastructure, resources for R&D, and access to adequately skilled and work ready labour.”
She added that the CDI, through its specialised investment arm CDI Capital, is gearing up to provide solutions to some of these challenges, particularly in the craft and design sector and related sectors where design and innovation can catalyse growth.
“Our first Jobs Fund project, completed successfully in December 2015, had 45 participating companies creating 464 jobs off an investment of R14.5m. This was 105% of the target of jobs to be created. Participating SMEs grew their combined annual revenue by 73% over three years – from R60m to R104m. Funds were used to improve their products, processes and competitiveness through the acquisition of new machinery or specialist staff, and to expand local and international market reach.”
“We also completed a first round of DISF grants in 2016, and are currently working with seven innovative SMEs in round two – round one attracted private funding of over R10m in equity funding into some of the high-potential innovators. The DISF gives innovators and entrepreneurs in the Western Cape an opportunity to get the finance and support needed to get their ideas to the next stages.”
“We have put a significant amount of work into developing these offerings, not only ensuring good governance and appropriate monitoring and evaluation measures, but realising real and sustainable impact with the businesses we support. We are excited to have raised R33m to launch this new funding for SMEs, and we thank our funders and supporters – we look forward to making meaningful investments.”
“Now – having led the way with investment from the public sector – we would like to partner with the private sector to support and strengthen this initiative. We believe this project – which aims to catalyse innovation, support growth orientated SME’s and create 600 jobs – would be an ideal Enterprise Development spend opportunity. CDI would gladly partner with corporate growth orientated accelerators and mentorship programmes to further strengthen the support offered to the participating SMEs.”
Najwah Allie-Edries, Deputy Director General: Employment Facilitation within the Jobs Fund:
“The Jobs Fund supports this initiative in recognition of the critical role that SMEs play in creating a more inclusive economy and job creation and also because it will contribute toward CDI becoming a more self-sustaining entity. The aim of this initiative is to provide appropriate financing options to SMEs in the craft and design sector in order to catalyse sustainable growth which will result in attracting further investment into a sector that has often been neglected. The introduction of a revolving loan facility will not only ensure that over time more SMEs can benefit from access to finance, the enhanced revenue streams will also contribute to the CDI’s goal of becoming a sustainable entity in its own right.”
Mr Vusi Skosana, Head: Technology Stations & IATs (TSP) at TIA, said that the Technology Innovation Agency (TIA), an agency of the Department of Science and Technology, was established with an objective to support the State in stimulating and intensifying technological innovation in order to improve economic growth and the quality of life of all South Africans by developing and exploiting technological innovations.
Solly Fourie, Head of Department, Department of Economic Development and Tourism, Western Cape Government:
“We know that there is a strong need to develop and improve the socio-economic conditions of the citizens in our region. To this end, the creation of a healthy and vibrant regional innovation system can be a catalytic driver of sustainable economic growth and development. But neither DEDAT, nor the WCG, are able to tackle this alone. The partnerships created through the Seed Fund and Jobs Fund; and initiatives like it, go a long way to creating an enabling regional innovation system in which we collectively draw on the Quad helix’s expertise and resources; promote local industry and attract and grow innovative businesses. By doing this, we are crafting the best possible conditions for businesses to develop in this region.”
Start-ups Require A Strong Legal Foundation Webber Wentzel Ignite
Entrepreneurs, start-ups and scale-ups are a lifeline to South Africa’s economy.
Entrepreneurs, start-ups and scale-ups are a lifeline to South Africa’s economy. It is however a harsh environment and many entrepreneurs find themselves in a situation where they are wearing many hats and navigating potential pitfalls without the knowledge that many professionals have from years of experience.
This is especially true from a legal point of view where entrepreneurs are faced with real world regulatory challenges that could have far-reaching consequences on their fledgling business, such as financial regulatory, tax, exchange control and intellectual property.
A common example is that start-ups often forget to secure the rights and licenses they need to operate. For example, would you invest or partner with a company that:
- doesn’t have a legal right to use their brand
- doesn’t have proprietary technology; and/or
- is reliant on a third party agreement that doesn’t permit commercial use?
Related: How To Raise Working Capital Finance
These avoidable shortcomings often result in failures at critical junctures. The specialist legal services needed to avoid these problems are typically not easily accessible to start-ups.
With this in mind, Webber Wentzel has launched a project called ‘Webber Wentzel Ignite’ – a legal incubation programme that will provide selected entrepreneurs and innovators from any sector with:
- tailored legal services valued at up to ZAR 100,000;
- bespoke mentoring and training support – focused on legal knowledge and developing key legal skills relevant to start-up businesses; and
- targeted networking and profile-raising opportunities.
Video about Ignite
Webber Wentzel is not asking for equity or exclusivity; only an opportunity to connect and make a difference as a trusted advisor over the long-term. It is a wonderful opportunity that will set the selected entrepreneurs apart in the marketplace. Applications close on 15 January 2018
SMMEs So Much Focus On Funding, But What About Skills
A study by StatsSA which surveyed households and obtained evidence relating to skills development and unemployment between 1994 and 2014 showed the following.
I think we can all agree that the funding of small businesses is only part of the solution. What is possibly more important (as an enabler) is the initial assessment of the level and adequacy of skills existing within new or developing enterprises and to evaluate what further skills development or training is required to ensure a firm business foundation and sustainable growth is achieved.
A study by StatsSA which surveyed households and obtained evidence relating to skills development and unemployment between 1994 and 2014 showed the following:
- During this time frame across the South African working population of households there was an increase in skilled labour (21% to 25%), with a shift away from semi and low-skilled labour.
- What is interesting to note in the growth of skilled labour is the disparity within the different race groups.
*For the purpose of this analysis, the occupation types were used to infer skills levels based on the Quarterly Labour Force Survey. Skilled: manager, professional, technical. Semi-skilled: sales and services, clerk, machine operator. Low-skilled: domestic worker.
This is clear evidence that the role of enterprise and supplier development is a crucial one needed to up-skill and train the broader population. It is one thing to provide finance and access to markets, but without the appropriate skills development to make these investments sustainable is would be a fruitless exercise.
The role that the private sector plays in post investment business support and capacity building is incredibly important. There is a requirement to build both technical skills as well as overall business management skills. This in my view is when we will start seeing real impact. In order for the enterprises to be effective in the contracts that they are awarded a focus on skills development (by both parties) is required.
In an economy where growth has crawled to a near halt, SMMEs cannot be expected to be the holy-grail for job creation. Making an impact in increasing the potential salary earning or employable workforce is key and therefore skills development requires a multi-faceted approach:
- From early education phase – where emphasis must be placed at school level for entrepreneurship training and opportunities is a key enabler. Entrepreneurship should in essence become a career option to consider. Innovation must be incubated. The world is changing and the skills required to be productive are changing as well.
- Clear regulations and commitment to quality interventions should be stipulated at policy level to incentivise skills development/ skills transfer from large corporates to small businesses.
- Without looking at the bigger picture these developmental areas are without support – so a holistic approach to skills development – mentorship, networking and overall business acumen are skills that often distinguish between those who do well and those who don’t in business. It needs to all work harmoniously and as an effective and efficient ecosystem reliant on each other’s strengths and support and mutually beneficial objectives.
At the end of the day, an enterprise should leave an ESD programme empowered to stand and survive in the business world. We know that we are losing the challenge when time and time again we see developing enterprises moving from one ESD programme to another with nothing to show for it. Monitoring and evaluation of these enterprises is therefore also essential to track growth and success – but also to identify areas of weakness or need for further intervention.
At the heart of ESD is the notion that larges businesses/ corporates should move beyond compliance (aka box-ticking) and toward the heart of transformation. Intertwined here is the responsibility to use development interventions and activities in a deliberate and focused manner so that the skills level in small businesses can move upwards and ensure the longevity and success of growing enterprises.
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