Innovation and collaboration is key to the success of small business development in the digital era
Fourth industrial revolution by Paresh Soni, Associate Director for research at the Management College of Southern Africa (MANCOSA)
Throughout human history, the world has observed two distinct eras of new product development, and a third era is currently emerging.
These eras can be distinguished by the role that various actors play in designing, manufacturing, and ultimately using a product. The eras differ by who contributes to the work, where the locus of expertise resides, and the resulting product variety and quality.
The first of these product development eras progressed with the dawn of humankind and lasted until the industrial revolution. In pre-renaissance times chances were that what anyone owned, they probably had designed and made it themselves. In other words, this person combined the roles of designer, manufacturer and user in one individual. Collaboration was minimal, and the resulting products, although few in quantity and crude in quality, tended to be tailored to the user’s needs.
During the industrial revolution, a second era emerged. This era was defined by mass design and production by large firms, with the expertise centralised in those producing firms. Product users became consumers, with little or no involvement in the design and manufacture of these goods and services. Collaboration occurred between different experts, but rarely between experts and users.
The current era which is underscored by digital technology enables new forms of collaboration, new levels of product performance, and in some sectors almost unlimited product variety via customisation. Regardless of firm age or size, it is important for entrepreneurs to understand this landscape and leverage its inherent opportunities.
In effect, a ‘perfect storm’ of digital design, rapid prototyping, and social networking is fundamentally reshaping the new product development landscape. Beyond design iteration speed and efficiency, this paradigm shift in business development is affecting the locus of expertise and the form of ownership, which in turn enables achieving new levels of product performance and low cost as well as new forms of collaboration and transactions.
In addition to the importance of physical propinquity to build community cohesion, the new digital era also espouses a popular interest in the creation of self-selected affinity groups not bound by geographic space. The technology that makes these new communities possible has the potential to bring enormous leverage to small business at relatively little cost. Individuals now gather together for side-by-side, face-to-face interaction to create new products. Collaboration is the key catalyst the binds them together in the production of goods or services.
These shared spaces provide tools and other equipment that allow people to create tangible objects. Inspired and fed by the intrinsically motivated “maker” movement of the early 21st century, these facilities have also lowered entry barriers for entrepreneurs seeking to design new tangible products and bring them to market.
The focus of the ‘maker’ movement is to leverage the latest knowledge and equipment to empower individuals to design and make new and innovative products. These individual inventors may have intrinsic motivation or a desire to create a profitable new business.
These new innovative spaces variously called ‘makerspaces’, ‘fab labs’, ‘tech shops’ or hacker spaces’ have four common fabrication devices, namely, a lathe and CNC mill for metal work, a 3D printer, computer-controlled machines for cutting 2-dimensional vinyl sheets and a 3-D laser cutter (for cutting plastic, wood and some metals). These centres also have a recommended inventory of software and electronics parts, specifically the Arduino and Raspberry Pi open source embedded circuit boards.
The new ‘innovation hubs’ enable ordinary people to access digital fabrication devices which are otherwise only available to larger business organisations. They permit individuals without the financial resources to purchase expensive machines like 3D printers or laser cutters to work on their ideas and realise their projects. This access empowers people to pursue their ideas independently from established service companies. Without the access to those tools makers are constrained to utilise special companies which offer production as a service.
Another benefit that emerges from the diversity of tools is the chance to test different machines and experiment with them before committing eventually to a purchase. In times where more and more aspects of our daily lives are driven by electronics or digital technologies, makers are fascinated by mechanical movements and the feeling of parts when working on physical projects. The collaboration within these spaces of diverse individuals also provides individuals with a foundation of new ideas, mentorship, technical know-how and new business ideas.
The main vision for creating this type of ‘experimental lab’ was to contribute to society by educating people and providing them with technical skills. They learn how to apply the tools to realise their individual purpose and vision. Through extensive experience with different tools, they gain hands-on experience and can eventually become expert users. These spaces serve also as an educational institution that conveys skills and knowledge away from academia.
These spaces demonstrate the ongoing importance of physical presence and interaction in an increasingly digital world and the empowerment of small businesses to create digital designs and realise them as products of their manufacturing. In many cases they use tools such as 3D printers that were originally available only to large or medium-sized industrial firms; with falling prices and the shared costs of a community space, this equipment and tangible creation capability is now affordable and accessible for individuals, whether consumers or budding entrepreneurs.
The strength of the ‘innovation’ spaces resides in their ability to make innovation available to anyone. They democratise access to technological tools and machines and, above all, give people the taste to innovate and collaborate. Within this perspective the factory of the future will see these new innovators working alongside regional manufacturers to introduce smart manufacturing like 3D printing, artificial intelligence and robotics. This will help equip our manufacturing sector for the fourth industrial revolution by providing smart manufacturing solutions that will boost productivity and provide new jobs.
If the South African business and entrepreneurial environment, especially the small business sector intends to access the full benefits of the digital era then it will have to work in partnership with society as a whole to establish the new ‘innovation hubs’ in all public and private sector spaces, such as at universities, public libraries, industrial parks and other appropriate settings.
Failure to do so will only give truth to economist Schumpeter’s theory that our small business sector will become a ‘classical follower’ that imitates others selling the same products to the same consumers. Entrepreneurship of this kind will not be innovative and will not be the foundation of creating new jobs and opportunities as espoused by the National Development Plan.
The country’s small business sector will have to harness the full benefits of the digital era through innovation hubs and create new disruptions if it has to become the enabler of entrepreneurship and job creation.