With the permission of Timothy Gbadeyan, I am happy to share the introduction of his Capstone for the award of Tekedia Certificate in Business Innovation, Growth and Sustainability. Our capstone is a research paper and it is one way we are co-learning with our learners to develop deeper capabilities on business communication, and writing investment briefs, proposals, etc.
We have a library of dozens of these works but unlike typical university projects and theses, our learners are examining core business matters with IPs. So, we do not make them public and have no plans to do so because some of them have become startups, and critical elements in companies.
Now, read Tim’s work:
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Introduction
By an equation formula, Prof Ndubuisi Ekekwe[1] has described Innovation as a combination of invention and commercialization. He postulated that invention does not necessary translate to innovation, as invention in its raw form is limited in breadth as an idea. However, for an invention to translate to innovation, it must meet a societal need. By this, invention must be implemented and whisked away from its form as an idea with potential to fix a friction into homes, offices and hands of humans to actually fix the identified friction. In doing this, invention is essentially commercialized.
While innovation is critical to building the wealth of nations, it is actually the lifeblood of firms. For businesses, innovation is not desirable, it is mandatory. First, the mission of firms is to fix frictions in the society and/or societal units and in order to fix frictions, firms must innovate. Secondly, when sustainability is viewed from economic lens and not the lens of social impact or environment, one cannot but come to the conclusion that innovation and/or continuous innovation is the main factor of sustainability for businesses. Beneath this is the fact that “consumer loyalty” is a farce. In reality, what exist is “consumer satisfaction.”
Actually, consumer loyalty is a construct which Companies use to describe a group or “repeat customers” for the purpose of reward, feedback, product review, defining product base and such other data purposes. However, customers are neither to loyal to products or companies; they only continue to patronize either because they remain satisfied or because of the absence of better alternatives. In the wake of the emergence of better alternative, a company can lose 95% of its market share within one to three months. It’s simple- wholesalers will buy only the products which in Nigeria market parlance are “moving”.
In effect, wholesalers buy the goods which retailers want to quickly buy and retailers will buy the products which consumers will quickly buy- because no matter how profitable a business, the periodic profitability boils down to “turnover”. From the foregoing, it is obvious that the basis of consumer loyalty is continuous customer satisfaction and to keep customer satisfied, firms must meet emerging needs and perceptions and to do so, firms must innovate.
When firms innovate, one of the expected outcome is sustainable growth. By this we mean that firms continue to experience year-on-year, quarter-on-quarter and month-on-month profitability. This is because the market will always reward innovation. But the question is this- what guarantees that the trajectory of growth being experienced by a company will continue. Rapid growth will not attract Investors like Sustainable growth.
For a business to be healthy and sustainable, it must demonstrate that the rate of growth can be maintained. Innovation is a key influencer for maintenance of growth. Sometimes, consumers want the taste of a particular food product to remain the same over time as a mark of quality, but producers can innovate with access to product, ease of payment, ease of opening product carton, sachetization of product and so on. One thing is clear in the digital age, innovation and continuous innovation are keys to growth and sustainability.
[1] N. Ekekwe Ph.D, “The Innovation and Growth of Firms; P. 10 TEKEDIA INSTITUTE 2021
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Talking about consumer loyalty being a social construction/construct, same goes for brand loyalty. Just because the exit barriers are higher for a consumer does not make them loyal. Think about being bound by a 2-year contract and experiencing irretrievable service failure say 6 months down the line. What would consumers do with the remaining 18 months that has their ink on the dotted line. Just thinking of Messi’s recent exit from Barca and all those transfer windows in football and you might get the gist. Besides, as far as innovation is concerned, it needn’t always be radical. Frugal and/or incremental innovation have proven to be more sustainable especially in the context of developing, emerging and/or transition economies. Just thinking aloud…