The Computer Society of Kenya

Since 1986

GESDAILY NATION By JOHN WALUBENGO

Tuesday July 28, 2015

As the Obama effect begins to wear out, and before the billions he promised us begin to trickle in, we need, as a country, to interrogate where within the ICT sector our innovative and entrepreneurial capabilities lie.

A while back we were so excited about the BPO/ITES (Business Process Outsourcing/IT enabled Services) sector and spent quite some time, money and effort trying to replicate locally what has worked so well for India and China.

In BPO/ITES, back-office jobs from developed economies are outsourced to foreign destinations through the mediation of the internet. These jobs range from simple jobs such as call centre services to highly skilled jobs such as software engineering or electronic engineering.

India has raked in billions of dollars in this space over the last fifteen years with US and European countries routing their back-office operational tasks to Bangalore, where young Indians work locally but are paid in dollars for BPO-related services.

China has done even better by being the factory of the world, where much of the engineering in electronics, computing and manufacturing is done for global companies headquartered in the West.

Their advanced infrastructure such as reliable power, advanced logistics in terms of efficient ports and transportation, supported by highly skilled but affordable engineers makes them an obvious choice for being the factory of the world.

In Kenya we thought we would get a piece of this action, but for some reason, this is yet to pass. The BPO/ITES strategy remains one of our dead horses that needs a real kick in the back and perhaps a small miracle to wake up.

Meanwhile we must investigate and establish what exactly our competitive advantage is within the innovation value chain, particularly in light of the fact that India and China are way ahead of us in the BPO/ITES game.

At the Global Entrepreneurship Summit, many delegates lauded the Kenyan innovative spirit and promised to pour money to make local innovation, particularly from young entrepreneurs, to help them scale up to global levels. 

All this is good and encouraging, but we still need to have a conversation about our competitive advantage in the ICT innovation spectrum. That way, we are unlikely to blindly play catch-up with nations that enjoy advantages that may take us generations to catch up to.

Perhaps even more importantly, we must ask ourselves whether we are matching our national competencies to the innovative opportunities available within the ICT sector.

In trying to answer these questions, we can seek out Professor Bauer who has identified four different types of ICT innovations and labelled them Type I, II, II & IV respectively.

Type I innovations are simple, require little co-operation and co-ordination between different stakeholders to achieve. They are common in Kenya, particularly in our now famous innovation labs such as iHub, Nailab and iLabAfrica.  They simply need a skilled young man or woman, armed with a laptop and a bright idea to actualise.

While Type I innovations are good and must be celebrated, they belong to the lower league in terms of their level of impact, both in terms of financial returns or scale.

Type II Innovations have a larger, international scale and often require significant market power to execute. They include engineering products such as mobile internet modems or wireless cards.

Type III innovations require significant cooperation and coordination between different stakeholders to realise. Mpesa belongs to this category, as does the smartphone market that has been dominated by Korean brands.

Finally, Type IV innovations require significant market power, extensive collaboration and coordination between international stakeholders to realise. Apple, with its famous line of “i-Products” and Mac products belongs to this category. Google, Cisco, IBM, Microsoft and other major brands contribute innovations in this category.

We in Kenya may be playing successfully at Type I innovation and getting global accolades for it, but this should not lead us to imagine we have completed the innovation journey, when in fact we have barely begun.

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