More African companies are prioritising innovation more than ever before–and have experienced an increased innovation readiness, unlike global counterparts–although not without challenges.
A new report released from Boston Consulting Group (BCG) finds that 65% of African executives see innovation as the number one priority for their companies in 2024.
Additionally, 85% of African executives view innovation among their organisation’s top three priorities, compared with 83% of global executives.
The report by BCG has found that more African firms qualify as “innovation ready” in 2024 – a slight increase of 4% to 69% compared to 65% in 2023, and slightly higher than the global readiness rate of 68%.
This is despite nearly three-fourths (70%) of respondents in Africa citing rising cost of capital as a top three challenge to their organisation, followed by the lack of skilled talent (65%).
Nihmal Marrie, MD and partner at BCG in Johannesburg, highlights the need to build a strong local talent pool and to enable an environment conducive and attractive to talent from other markets.
“We’re seeing more organisations in Africa experimenting with Gen AI, which is a demonstration of an appetite for innovation and perhaps an indication of a growing need for technical skills needed for a tech-advanced environment.”
For its 18th annual innovation study, titled Innovation Systems Need a Reboot, BCG assessed companies’ innovation maturity on a 100-point scale and surveyed over 1 000 senior innovation executives globally.
Among the global executives BCG surveyed, less than half (48%) felt that their organisation made some effort to link its business and innovation strategies, and only 12% reported strong links between the two that were delivering real impact. However, innovation activity (that is, the number of active projects) has remained steady.
“It has never been more important for organisations to be innovative. While most organisations globally are experiencing low innovation readiness, African companies have diverged and are increasingly innovating across many sectors,” says Mamello Selamolela, partner at BCG, Johannesburg. “There remains a critical need to sharpen innovation strategies and to leverage the use of emerging technologies such as Gen AI to accelerate innovation.”
When global business leaders were asked to rank the challenges facing their innovation teams, strategy concerns topped the list, with 52% of respondents citing an unclear or overly broad strategy as one of their top three challenges. Rising interest rates and talent constraints were cited among the top three concerns of 47% and 44% of innovation executives, respectively.
Unfortunately, not all companies are acting on their concerns. Just 30% of global respondents said they’re planning to refresh their innovation strategy. Instead, 70% plan to focus on process optimisation moves, such as boosting the efficiency and speed of their operating models, and 65% seek to increase the number of projects in their portfolio.
Of those respondents increasing their project load, roughly one-third are prioritising more short-term projects – suggesting a lack of clarity or conviction on medium- to long-term opportunities.
While most organisations were already experimenting with classical predictive AI, the rise of GenAI seems to have shaken many innovators’ assessments of the quality of their AI achievements to date. Between 2022 and 2024, the proportion of global executives reporting their companies had implemented AI with impact has declined from 37% to 10%.
Nearly all global executives (86%) said their organisations were experimenting with GenAI for innovation, R&D, or product development; however, most remain in the early stages. Just 8% said their organisation is currently applying GenAI at scale.
Locally, 80% of African companies are experimenting with GenAI for innovation and 20% are implementing it in select applications, however most are in the early stages of their journey.
In the GenAI race, “ready” innovators are already moving out ahead. They’re applying GenAI more frequently in a single use case and are 5x more likely to have applied it at scale.
Looking locally, this could have a transformative contribution in service delivery. The healthcare sector is one such area. In 2019 for example, South Africa registered a doctor-patient ratio of 0.8 doctors per 1,000 people. To put that into context, compare the ratios of Brazil (2.3), China (2.2), France (3.3) and the UK (3.0).
In rural public hospitals and clinics, where the ratio is likely to be lower still, it is even more difficult for people to get the medical care they need.
“The healthcare example is just one of many, critically we need to understand that GenAI can boost efficiency and bring fresh perspectives to organisations, empowering their innovation function to invent faster and better, something that can be applied across both the private and public sector alike,” says Nanda Padayachee, associate director at BCG, Johannesburg. “Regionally, the appetite is there, the opportunity now is to implement strategic imperatives to overcome the dual challenges of talent scarcity and funding.”