Taking the long view on innovation investment

Allied Electronics Corporation Limited (Altron)

Winner of the MTN Award for Excellence in the Management of Innovation
Category for large enterprises

Taking the long view on innovation investment

How many South African companies are prepared to wait three to five years before receiving any return on an investment? That’s how long it realistically takes for an innovation investment to start paying off, says Dr Willie Oosthuysen, Group Executive: Technology and Strategy at Altron.

This might explain why the local innovation community is so small and why South Africa is a technology-consuming nation rather than a technology-producing one. “In China and India, the technology industry contributes around 7% of national GDP; here in South Africa, technology contributes less than 1% of GDP.”

Altron is certainly doing its best to fill that gap. In 2016 alone, despite a subdued economy, it invested R70 million on research and development, gave bursaries to 44 bright young engineering students, and continued to employ as many master’s and doctoral engineering graduates as it could find.

“The people who are the main contributors to innovation have master’s and doctoral degrees – and they are mostly young,” says Oosthuysen. “If you want real innovation, disruptive innovation, you need someone younger than 35 who is willing to take a little more risk and willing to put in those extra hours.”
Apart from youthful energy and engineering expertise, other essential ingredients of Altron’s innovation strategy are robust IP rights protection, institutionalised technology processes, value-adding technology partnerships and, last but not least, customer feedback.

What do customers want?

“There are different views on asking customers what they want,” Oosthuysen says. “Apple’s Steve Jobs could afford to be arrogant; he didn’t ask customers what they wanted. He once famously said, ‘I have never been so out of ideas that I had to ask my customers what they want.’ Canon, on the other hand, did. It found out that 70% of new photographers doing photography as a hobby were female and that the company’s cameras were too big for them”  Making a smaller camera in the Canon 7D, produced one of the fastest ever selling SLR cameras.”

Altron itself commissions quite a bit of market research to test customers’ requirements, compare its competitiveness and see what changes are taking place in its markets – for telecommunications, multimedia and IT.
It also keeps an eye on the latest innovations in criminal behaviour, particularly in vehicle theft and hijackings, and responds with innovations of its own.
An example is the signal-jamming detection system of Altech Netstar (part of Altron), which picks up areas where signal jamming is occurring and then uses its Safe and Sound app to alert customers when they enter signal-jamming hotspots.

Similarly, to deter speed fiends from racing their cars – at potentially great cost to their insurers – it has designed a system that can detect when a car is on a race track and can notify insurance companies when an insured car is driven excessively fast or is taken to a race track.

These innovations, and many others, have to be protected from would-be copycats and so Altron has a formidable IP portfolio of patents and trademarks. As its latest annual report says, Altron safeguards its investments through “strident protection” of its IP rights, which includes registering patents, designs, domain names and trademarks.

As Altron continues to look to innovation to maintain its competitive advantage, expect more of the same – but different.