PLC, DIVERSIFICATIONS, INNOVATIONS, PRODUCT REENGINEERING NOTES
What is PLC in Strategic Management ?
For the purpose of this chapter, PLC will be taken to mean product life
cycle and product and service will be used interchangeably. Many will be
familiar with this timeless model which not only describes the stages in
the sales pattern of a product or product category, but also offers some
strategic directions for each stage. This model is concerned with the
sales pattern & strategic directions for each stage of a product‘s life
cycle. It is important to differentiate between a product’s life cycle
(home loans), a product category’s life cycle (variable, fixed,
no-frill) and a brand’s life cycle (Westpac, St. George‘s, BankWest,
ANZ). With matured markets, the life cycle model, for strategic
planning, is appropriate at the product category level where one
normally finds different categories/variants at different stages of the
cycle.
APPLICATION OF THE MODEL (PLC)
The model can be used for analysis as well as for strategy formulation.
We shall examine the former first. The PLC concept attempts to provide
managers with an understanding of the characteristics of each stage of
the life cycle and, therefore, can be used to predict future sales and
profit patterns. Underlying the PLC concept is the theory of diffusion
of innovation, which identifies categories of buyers (adopters) of the
innovation. By understanding these buyers, marketers can plan for the
appropriate target market strategies. The early buyers of a new product
are called innovators. The numbers are very small because the new
product has to prove itself. If the product is satisfactory, it will
attract the next category of buyers, early adopters. Later, mainstream
buyers, early and late majority, will start adopting the product. Over
time, the market becomes saturated and sales come mainly from product .
Eventually, sales decline as new products appear and the original
product becomes obsolete. This phenomenon gives rise to the distinct
S-shaped pattern of a typical product life cycle.
The PLC concept provides a framework for developing marketing strategies
in each stage of the product life cycle. Bear in mind that these
strategies are appropriate for market leaders whose behaviour parallel
the industry. Lesser competitors may need different strategies to
compete. In some ways, the PLC model can be used as a forecasting or
predictive tool. It can enable marketers to forecast the market
characteristics of subsequent stages as well as predict the strategies
of the leading competitors. This, of course, assumes that the life cycle
exhibits the traditional pattern. Later, we will realise that many life
cycle patternsare more than traditional, and the stages are of varying
duration. In the following section, we shall examine the use of the PLC
model both as an analytical tool and as a planning tool. These will be
divided into characteristics, objectives, and strategies for each stage
of the PLC.
STAGE Characteristics
When the new product is first commercialised, it enters the introduction
stage of the life cycle. This stage is characterised by a slow sales
growth and profits are usually negative because of the high costs of
marketing associated with the introduction. Many buyers are unaware of
the product and sales are limited to a category of buyers known as
innovators. These buyers tend to be more affluent, venturesome and from
upper social classes. Mobile phone innovators include company chief
executives, sales representative, and tradespersons. These adopt the
product for business use while others may buy it as a status symbol.
Regardless, these buyers will be influential. There usually is no or
little competition at this stage.
Primary Objectives
The main objective here for the pioneer is market expansion by
stimulating primary demand, i.e., demand for the product category. For
example, Apple has taken upon itself to market its innovative personal
MP3 player. Sony did likewise with its personal stereo, the Walkman, in
the late 1970s. The marketing objective at this stage is, therefore, to
create product awareness and encourage trial.
Strategic Emphases
With innovators as the target market, the pioneering company would
emphasise customer education/trial through advertising and sales
promotion; and ―push‖ for trade acceptance (distribution support). The
product design and function are usually very basic because of the new
technology involved. Price is often cost-based and tends to be very high
reflecting the ―newness‖ of the innovation and its associated R&D and
marketing costs. Potential competitors, meanwhile, monitor the market
closely for signs of customer acceptance.
GROWTH
Characteristics
This stage is characterised by rapidly rising sales as the product
receives wide acceptance amongst the early adopters. The innovators, as
opinion leaders, serve to ―legitimise‖ the innovation through product
use and social interactions. The arrival of major competitors and their
combined marketing strategies fuel sales growth and industry profit
rises. These events necessitate different marketing objectives.
Primary Objectives
Facing competition, perhaps for the first time, the pioneering company
and other leaders will need to maximize their market shares by
emphasizing selective demand, i.e., demand for a particular brand. Here,
the brand‘s product features and performance are stressed by extensive
promotion to both the trade and customers. Stability of market shares of
mainstream brands is a characteristic of the next stage, maturity.
Therefore, the size of the market share gained in the growth stage will
tend to persist in the maturity stage, the longest and most competitive
stage of the life cycle. A brand with a small share at the end of the
growth stage will find it hard to survive
in the next phase.
Strategic Emphases
The competing brands are priced to penetrate the now mainstream market,
both to secure intensive distribution and build customer preference. The
target market is broader in demographic terms and the product range,
therefore, has to be expanded to cater to the
diverse needs of the market. The companies that enter at this stage of
the PLC are often large and formidable competitors with similar access
to the core/basic technology. Technological advancement is pursued
vigorously for product superiority. This leads to
improvements to a product‘s form and function, i.e., the physical
attributes of a product that can be evaluated objectively. Examples
include frost-free refrigerators, digital mobile phones, ABS brakes and
stereo video cassette recorders.
MATURITY STAGE
Characteristics
This is, perhaps, the most important turning point of a market. Its
potential indefinite duration, together with its dynamism, makes this
stage the most difficult to predict or plan for. Consider the digital
camera market. In the early days, they were targeted as
a computer multi-media accessory and as a status symbol. Today, they are
marketed as a replacement of the conventional film-camera for anyone and
everyone. Is the market now still growing or reaching maturity?
Technically, a product matures when the market
has been saturated and further sales are mainly from replacements. In
other words, most potential customers already have one. Who are these
potential customers?
Some indicators of maturity may be helpful to analyze the market:
Sales growth and market saturation — maturity is evident when sales
growth declines because the number of potential first-time buyers is decreasing. The market is said to be
saturated, or fully penetrated, and sales level is maintained mainly
because of replacement purchases.
Lower prices and profitability — oversupply and intense competition
force prices to fall resulting in lower industry profitability.
Technological maturity and product parity — the core technology used has
matured and this leads to mainstream brands all having similar product
form and functions. There are very little physical differences among the
competing products‘ key features. Products are usually differentiated on
brand name, image and perceived quality, i.e., subjective dimensions.
Buyer knowledge — over time, buyers gain experience in the use and
evaluation of the product. They may eventually accept the reality of
product parity and will buy on price or convenience (economic-driven
buyers) or simply on brand name (status-driven).
Primary Objectives
The main objective for most competitors is market share protection.
Because the industry does not recognize the notion of a given market
share starting point for each competitor, any marketing strategies can
be construed as either offensive or defensive. In
a sense, market share protection is a misnomer. An aggressive competitor
can claim that it is merely rebuilding lost market share (on the
defence) where, in fact, it could had lost share previously by letting
its guard down. Also, pro-competitive legislation may prevent businesses
from having too high a market share especially through corporate
takeovers. These quasi-monopolists or functional monopolists will always
be under the scrutiny of the Trade Practices Commission because of their
ability to control the market.
Strategic Emphases
For the reasons mentioned above, it would be difficult to generalize
marketing strategies especially for the early maturity stage. The
marketing mix strategies adopted in the growth stage tend to persist in
the early maturity stage but with greater intensity. However, product
strategies would usually involve multi-branding and an increased number
of product variants/models to appeal to an even broader market. The
intention is to revitalize or prolong the maturity stage through product
quality improvements, functional
improvements, or style/design improvements. Recall that this stage can
last indefinitely. Strategies in the late maturity/decline stages will
be presented in the next section.
DECLINE STAGE
Characteristics
This stage is characterized by declining sales and profits. However, the
contributing factors need to be identified and analyzed so that the
business can decide on the best course of action. It is important to
note that we are not concerned here with the decline stage of a brand‘s
life cycle. A brand may decline due to poor marketing, etc. Rather, we
are concerned with the fate of the product category‘s decline such as
those evident in the case of dialup internet connections, floppy disks,
CD players, CRT TV sets, etc.
These products and others have declined because of obsolescence. There
are even products or models with planned obsolescence, being replaced
with new models. Products become obsolete because of substitutes and
forward-planning companies are usually
prepared for with these product substitutes. Buyers of these products
are known as laggards. They tend to be older, more conservative and from
lower socio-economic backgrounds. Their numbers are usually very small.
Competition is less intense as some players are quick to exit the market
(industry shake-out).
Primary Objective
Since many businesses may have a sizeable infrastructure investment in
the product, e.g., plant and machinery, a quick exit may not be the best
solution. The more usual move is to reduce expenditure and milk
(harvest) the product. Therefore, the primary objective is to maximize
cash or profit generation as quickly as possible. Another option is to
maintain in, and dominate, the market when others are exiting—―a big
fish in a small pond‖. There are also situations where a business can
attempt to revitalize the market to create growth.
Strategic Emphases
Some options are available at this stage.
Exiting the market involves either selling the business (divestment) or
liquidating existing assets such as plant and equipment. Sometimes there
could be ready overseas buyers for outdated equipment especially for
third world or developing countries. This should be seen as a last
resort especially when milking or harvesting is not feasible. Harvesting
attempts to milk the business of all available profits or cash. This is
usually possible when there is still a loyal, but small, group of buyers
(laggards) to maintain sufficient sales to generate profits. All
marketing and overhead expenses are kept at a bare minimum in order to
manage profitability and cash flow. The marketing of typewriters is a
classic example.
If exit barriers exist, the business may be motivated to continue
business-as-usual. This suggests allowing enough investment to maintain the business and
sending a message to the competitors of its determination. An industry
shake-out, typical at this stage, will
allow the surviving businesses to reap additional market share and
profits from the industry. Of course, depending on the nature of the
decline stage, this strategy may not be durable.
Finally, a more positive strategy would be to revitalize the market.
This can be achieved by creating new uses for the product (Teflon in
paints), targeting new markets (baby shampoo for adults) and product
modifications/variants (breakfast cereal redeveloped and
repackaged as snack bars).
CRITIQUE OF THE PLC MODEL
The model is not without its critics. The major criticisms of the
concept can be summarized as follows:
External versus internal impact on the life cycle
The model assumes that the pattern of a product or brand‘s life cycle is
influenced by the chosen strategies (internal) of the business. There is
enough empirical evidence to suggest that many companies fail miserably
in meeting forecast sales. We can only conclude that environmental
forces (external) can play an important role in shaping the sales
pattern of the product or brand.
Consider this. An unexpected turn in the environment may, in the short
term, cause the sales of a product to decline. Adhering to the PLC
concept a manager may misread it as the decline stage of the product‘s
life cycle and act accordingly. Marketing support gets
withdrawn and this will surely kill off the product. This creates a
self-fulfilling prophecy that the brand is at the end of its life.
It is, therefore, not clear how much influence a firm‘s strategy has on
the life cycle. One way of resolving this argument is to consider
whether pattern follows strategy or strategy follows pattern. The former
assumes that the chosen strategy is the primary influence on the life
cycle pattern. This is typical of proactive companies, which attempt to
prolong both the growth and maturity stages through some of the
aggressive marketing strategies discussed earlier.
Lesser competitors tend to be more reactive by accepting the pattern as
given. They have lesser control over environmental and competitive
forces. They respond by adopting strategies appropriate for each stage.
In this case, strategy follows pattern.
Other PLC patterns
Not all products or brands exhibit the traditional S-shaped pattern.
Styles are common in clothing, home design and passenger cars. A style
such as blue jeans may last for decades, going in and out of vogue. Fads
come as quickly as they decline. They have a steep introduction stage
followed by a rapid decline and are found in toys and paraphernalia
associated with hit movies. Scalloped or staircase life cycles exhibit a
series of upward growth-maturity stages. This
occurs when new applications of the product are found, as in nylon,
Teflon, and ScotchGuard.
Varying duration
So far it is not surprising to learn that life cycles do not have a
fixed pattern and that the duration of each stage varies. Also, it is
not always evident when the turning point (from one stage to the next)
occurs. Only a sales history can provide the evidence. By
then, it may be too late for strategy development
Within a product category life cycle, the product form and brand life cycles can exhibit contrasting patterns. Brands tend to have the shortest life cycle with the exception of ―classics‖ such as Levi‘s, Colgate, Coca-cola, Hill‘s hoist, Speedo, etc. Product forms are prone to style patterns. Moreover, there may be no clear delineation among product
forms, which could result in a strategic planning nightmare. For
example, should prebrush mouth rinses be separate from traditional
mouthwashes for analysis and strategy formulation? Should product forms
of passenger cars be based on price range, engine
capacity (1.5 litres), body style (sedans), or body types (sports)?
Despite these limitations, the PLC model remains one of the most widely
used (and misused or abused) strategic tools. The concept is simple and
many of its limitations can be minimised or totally avoided through
proper market definition, understanding of
key environmental forces, and careful dealing of exceptions. After all,
there is no known model that can predict the dynamic and erratic
marketing environment.
DIVERSIFICATION STRATEGY
A diversification strategy involves venturing into a new business to
exploit growth opportunities in that area but is a high risk move
because of the unfamiliarity with the new business. It makes sense when
attractive opportunities are found outside the present
businesses. There are two types of diversification, related and unrelated.
Related Diversification
Here, the new business has some commonalities with the company‘s
existing businesses. These typically involve skills and assets
(resources) that can be shared for synergy or economies of scale.
Related diversification is appropriate when any of the following
dimensions is present:
R&D/technology — Canon‘s photographic and electronic technologies have
successfully allowed the company to diversify into photocopiers, video
cameras, and printers. SaabScania boasts of its association with
passenger cars, trucks, and jet fighters. Even a conglomerate like
Pacific-Dunlop has many related businesses. Its tyre, rubber glove,
mattress, and, industrial foam and hose businesses are all
rubber/latex-based.
Brand image/association — a strong brand name can help launch a new
product especially one that will directly benefit from the brand
association. Matsushita‘s Panasonic brand now dons its host of consumer
electrical and electronic goods. However, its Technics‘ brand is
reserved for its upmarket sound systems. Levi‘s was successful when it
marketed a range of casual wear but failed in the sportswear
business.
Some brands are so well positioned in a given product category that
extending them to other areas can be a disaster. Windex (window
cleaners) lost out when the brand was extended to other household
cleaners. Xerox failed when it ventured into computers and
so did IBM when it attempted to diversify into photocopiers.
Marketing skills — the marketing functional areas most responsive to
synergy are distribution and promotion. Many good products failed due to
the lack of adequate distribution and are targets of takeovers. For
example, a major pharmaceutical company
may diversify by taking over a failing toiletry company and relaunching
the latter‘s brands through its existing distribution channels.
Traditional soft drink producers such as Coca-Cola & Pepsi have
diversified into packaged snack foods, mineral water and packaged fruit
juices to take advantage of their distribution and mass marketing strengths.
Unrelated Diversification
Unrelated diversification is the seeking of new businesses that have
little or no relationship with the company‘s core business. By
definition, unrelated diversification has few opportunities to share or
exchange skills and assets across businesses. It can be
argued that the motivations for such a strategy are primarily financial.
These conglomerates usually have a ―parent‖ known aptly as a holding
company. Because some of these conglomerates are so diversified, the
holding company or board of directors are so removed from the daily
operations of each business. These businesses operate independently and
are quick to be sold or new ones acquired depending on some financial
criteria.
Common financial criteria include cash flow, ROI, risk spreading, and
tax benefits. The text even suggested the enhancement of CEO‘s personal
power. Many Japanese conglomerates have ventured into real estate,
hotels, golf clubs, casinos, private colleges,
WHAT IS INNOVATION
Innovation is defined as revolutionalizing service delivery in terms of
translating new ideas into practice, offering new customer prepositions,
and implementing effective organizational change. This change adds value
and is driven by one or more of the
following;- transformed inputs, process/technology, habits/behavior or
mindsets, experimentation, feedback and responsiveness.
For example, innovation in the public service context has a wide scope
which encompasses but is not limited to the following areas:-
- Innovation in the service delivery chain including systems,
processes, operations, concepts, designs and technologies - Innovation in the final product/service which is required by the
customer - Innovation in partnerships, participation and promoting social inclusion
- Innovation in governance and advancement in democracy
- Innovation in knowledge/information management and feedback systems
- Innovation in development of policy, strategy and leadership
- Innovation in value and legal systems, and corporate culture
- Innovation in career actualization and staff welfare
- Innovation in science and its application
- Innovation in organizational arrangements
Kenya Vision 2030 recognizes that innovation is crucial in making
service delivery to the customer more efficient and effective.
Evaluation of innovations
- Enhancement of customer satisfaction
- Ability to save time
- Reduction in cost
- Handling of feedback
- Access to service/information
- Safety and convenience
- Esteem
- Enhancement of product or service features
- Originality
- Integration (muiltipurpose utility or application)
- Quality
- Modification
- Service delivery processes and systems
- Automation
- Partnership arrangements
- Efficiency
- Service provider safety
- Reduction of fatigue
- Utilization of skills
- Workplace environment and safety
- Community impact
- Effect on vulnerable groups
- Promotion of equity
- Social inclusion
- Social integration
- Sustainability/Replication
- On the basis of local resources
- Evidence of having been instituoalized
- Simplicity in application and universal appeal.
Note.
Patenting: Individuals, groups or institutions which come up with
inventions/innovations have a responsibility to make them legitimate by
acquiring patents or copyrights.Innovation is not possible without
knowledge. So in this session we will also cover
knowledge management. What is Knowledge? It is important to understand
the concept of what is knowledge when looking at Knowledge Based
Economies and Knowledge System. Knowledge can be defined as information
and skills acquired through experience or education or it is a process
of knowing, taking available information and translating it into action.
Knowledge is a valuable resource that holds the potential for sound
governance, socioeconomic development and service delivery. Knowledge
system is used to understand the process of knowledge and is often
equated with ‗culture ‗ or ‗ world view‘, terms that
refer collectively to a society, its way of life and its underpinning
values and beliefs. People‘s culture is not consciously learned but
rather absorbed from birth throughout life. It forms the foundation of
all societies by reinforcing a given society‘s way of life,
thereby giving legitimacy. Different systems of knowledge exist to allow
us to understand, perceive define and experience reality.
Knowledge is an acquaintance with facts, truth or principles as from
study or investigation critical for decision making. We view Knowledge
in three forms, namely, tacit knowledge, explicit knowledge and
Indigenous knowledge (IK).
Tacit Knowledge is Personal knowledge existing within people that
enables them to know how to do things based on their experiences. This
is what informs their judgment, insights, experience, know-how as well
as personal beliefs and values. Explicit knowledge is documented
information that can be shared with someone based on training materials
read and interaction with others during training. A trainer may know the
exact sequencing and/or steps in conducting and delivering his or her
training. Indigenous knowledge in the other hand is traditional
knowledge which requires increased focus. This has been identified
through research work and documentation by coding or recoding. These are
subsequently transformed into explicit knowledge through written
materials and studies on the same in Africa. Indigenous knowledge thus
includes African traditional knowledge systems and western knowledge
systems.
Definition of Knowledge-Based Economy:
Knowledge and technology have become increasingly complex, raising the
importance of links between firms and other organisations as a way to
acquire specialised knowledge. A parallel economic development has been
the growth of innovation in services in advanced
economies. Knowledge based economy is an expression coined to describe
trends in advanced economies towards greater dependence on knowledge,
information and high skill levels, and the increasing need for ready
access to all of these by the business and public sectors. The
recognition of knowledge as a critical element of economic growth is not
new. Over the past two decades, knowledge has become the engine of the
social, economic and cultural development in today‘s world, radically
transforming all other dimensions of
development and the ways in which societies operate.
The issue has long been acknowledged as a factor behind the economic
success of the developed world according to the Organisation for
Economic Co-operation and Development (OECD, 1996). The OECD‘s
definition of a knowledge economy (KE) focuses on sectors that apply the
intensive use of technology and include services, which are also heavily
knowledge-based.
Pillars of Knowledge Based Economy
There are four elements that allow effective exploitation of knowledge
which are;
- An economic and institutional regime that provides incentives for
the efficient use of the existing knowledge, the creation of new
knowledge, and the flourishing of entrepreneurship; - An educated and skilled population that can create, share and use
knowledge well; - A dynamic information and communication infrastructure that can
facilitate processing, communication, dissemination; and finally - An effective innovation system (i.e. a network of research centres,
universities, think tanks, private enterprises and community groups)
that can tap into the growing stock of global knowledge, assimilate
and adapt it to local needs, while creating new knowledge and
technologies as appropriate.
GLOBAL / AFRICA’S PERSPECTIVE OF KNOWLEDGE ECONOMY
The global economy is currently undergoing a major shift to a
knowledge-based economy. The broad consensus, evidenced by extensive
World Bank data, is that this shift presents a major opportunity for
developing nations. In a knowledge-based economy, the principle means of
exchange and creation of value is through knowledge. Key enablers of the
knowledge value chain include the development of collaborative
communities with aligned or complementary objectives and the
facilitation of knowledge access designed to catalyse innovation,
application and implementation.
Through embracing a knowledge-based economy, Africa can make
disproportionate progress by building on its own natural strengths to
overcome perceived challenges and disadvantages. By developing a
knowledge-based economy infrastructure across the entire continent,
Africa can overcome tendencies towards knowledge silos and socially
exclusive knowledge infrastructures. Various scholars have questioned
why Africa should be part of the global knowledge economy; why and how
can Africa mobilise its indigenous knowledge, innovation systems and
natural resources in the promotion of sustainable development and
community livelihoods.
The experience in other developing countries such as South Korea,
Singapore, etc. has demonstrated that knowledge is the foundation of
sustainable development. A global knowledge revolution is taking place,
leading to a post-industrial society. The mega-trends in this knowledge
revolution and globalisation include: an explosion of
telecommunications; intensified global competition; scientific advances
in areas such as bio-technology; increased exchanges of technology
(international licensing flows); and knowledge investments which exceed
capital goods investments. It is argued that Africa missed the
opportunity of going through an industrial era. Therefore, Africa now
needs to take advantage of its Indigenous Knowledge and innovation
systems, including resources,
to participate effectively in the knowledge revolution characterised by
a shift from a resource-based to a knowledge-based economy.
Africa‘s sustained economic growth will increasingly depend on the
continent‘s economic capacity for innovation, as well as its ability to
produce a wider array of goods and services, to accelerate the pace of
technological change and to integrate with the global economy. Enhancing
this capacity will require investment in human resources development and
a strengthening of the innovation environment and Africa‘s information
and communication technology (ICT) infrastructure.
If Africa is to benefit from the ICT revolution, more work is needed to
review and modernise telecommunication policies and regulations to
generate fair competition and reduce high communication and operational
costs. It is this consideration that highlights
the importance of the quality of education Africa should offer,
particularly tertiary education, as it is a crucial element of the
capacity to innovate. Alders (2003) emphasises that innovation is the
path to economic diversification and moving up the value chain. The
following section looks at the role of Indigenous Knowledge (IK) and
innovation systems in promoting a sustainable knowledge economy.
INDIGENOUS KNOWLEDGE AND SUSTAINABLE DEVELOPMENT
The term Indigenous Knowledge (IK) and innovation systems refers to a
distinctive body of knowledge and skills, including practices and
technologies, that have been developed over many generations outside the
formal educational system and which enable
communities to survive. Indigenous knowledge (IK) and innovations are a
significant resource, which could contribute to the increased
efficiency, effectiveness and sustainability of the development process
in Africa. It is a key element of rural communities‘ social capital and
constitutes their main asset in their efforts to gain control of their
own lives (Mascarenhas, 2004). Full recognition and utilisation of IK
may reduce the risk of creating dependency, which is often the result of
developmental projects. Therefore, mobilisation of IK and innovations
will assist Africa to attain the following goals:
Kayumba (1999) argues that African governments and their international
aid efforts to achieve sustainable development since political
independence in the 1950s and 1960s have failed. This is attributed to a
number of factors related to the marginalisation and/or
distortion by imported western technologies of Indigenous Knowledge
Systems and innovations.
Most development models have tended to rely on western development
paradigms and structures. Hence, there was a mismatch between what local
people know (IK) and western development models. Western values and
technological interests are perpetuated
by the existing education systems in Africa and their western-style
curricula. There was also a lack of understanding and appreciation by
African governments and development agencies of the pertinent local
issues and no development of a common approach by stakeholders, i.e. a
participatory model, which takes into consideration local communities‘
interests and knowledge systems. Another factor is that some African
elites suffer from colonised minds and do not appreciate the role of
Indigenous Knowledge and
innovations in sustainable development and community livelihoods.
It is important to note that there is increasing realisation among
researchers, academics, policy-makers and development agencies within
and outside Africa that development efforts which ignore local
circumstances tend to waste an enormous amount of time and
resources. Compared to modern technologies and approaches to sustainable
community livelihood, Indigenous Knowledge and innovations have been
tried and tested by the local people themselves.
They are effective, inexpensive, locally available, culturally
appropriate, and based on preserving and building on the patterns and
processes of nature. It is in recognition of this important role of IK
and innovation systems in sustainable development, especially in
R&D, that IKS were identified as one of the flagship programme areas of
the NEPAD Science and Technology.
Indigenous Knowledge (IK) and innovation systems are important because
they are cumulative and represent generations of experiences, careful
observations, and trial and error experimentation. They are also dynamic
because new knowledge is continuously
being added through local innovations as people struggle to survive in
their specific environments. In this process of innovation they use and
adapt external knowledge to suit the local situations. Experience shows
that African local communities have over centuries used these knowledge
systems as the basis for decisions pertaining to food security, human
and animal health, education, natural resources management, conflict
transformation and other vital activities. IK and innovations are a key
element of the social capital of the poor and constitute the main asset
in their efforts to gain control of their own lives.
INTERFACE BETWEEN IK AND INNOVATIONS WITH MODERN SCIENCE &TECHNOLOGY FOR SUSTAINABLE COMMUNITY LIVELIHOODS
African indigenous knowledge systems are increasingly becoming an
integral part of the global body of knowledge. Indigenous knowledge
systems can be compared and contrasted with the global knowledge system
(Warren, 1993) and in so doing uncover
mechanisms for evaluating the strengths and weakness of each system.
This interactive flow has already resulted in mutually-beneficial
exchanges of knowledge that have enhanced the capacity of the formal
research system to solve priority problems identified within local
communities. Both multilateral and bilateral donor agencies are now
recognising the role of indigenous knowledge in sustainable development
including the promotion of public health care.
Most local African communities are realising that Indigenous Knowledge
and innovations continue to provide the building blocks for development
and public health in most African countries, while seeking co-operation
with modern knowledge for the mutual benefit of the two systems. A
number of communities have demonstrated efforts made in various parts of
the continent to interface African indigenous knowledge with modern
knowledge systems for sustainable community livelihoods.
The Tanga AIDS Group (TAWG) in Tanzania has demonstrated a partnership
between traditional healers and bio-medical practitioners to combat
HIV/AIDS, and the training of traditional healers in diagnosing HIV/AIDS
from a western perspective at the Nelson Mandela Medical University of
Zululand. In Northern Malawi, local farmers practice ethno-veterinary
work in collaboration with research and academic institutions such as
the Bunda College of Agriculture (University of Malawi) and the National
Herbarium in Zomba for botanical identification of the indigenous
medicinal materials.
They collaborate on trials that use western scientific methods to verify
the claims of the farmers. The collaboration aims to promote the
conservation of medicinal plants and the complementary use of indigenous
and conventional veterinary medicine for sustainable
livestock production.
KNOWLEDGE BASED ECONOMY AND KENYA’S ECONOMIC DEVELOPMENT AGENDA
Kenya intends to become a knowledge-led economy wherein, the creation,
adaptation and use of knowledge will be among the most critical factors
for rapid economic growth. The Kenya Vision 2030 recognises the role of
science, technology and innovation (STI) in a
modern economy, in which new knowledge plays a central role in wealth
creation, social welfare and international competitiveness.
The Kenya Vision 2030 recognises that STI will be critical to the
socio-economic transformation of the country. Kenya harnesses science,
technology and innovation in all aspect of its social and economic
development in order to foster national prosperity and
global competitiveness. Science, technology and innovation will be
mainstreamed in all the sectors of the economy through
carefully-targeted investments. The introduction and use of internet in
many rural areas in Kenya has impacted positively on individual lives in
the rural villages making them the catalytic and developmental potential
nerve of the entire economy. The internet has changed people‘s lives by
empowering them to live more sustainable.
Another major innovation that is widely viewed as a success story to be
emulated across the developing world is M- Pesa services, an SMS based
money transfer system that allows individuals to deposit, send, and
withdraw funds using their cell phone. M-PESA has grown rapidly,
currently reaching approximately 38 percent of Kenya‘s adult population.
The service allows users to deposit money into an account stored on
their cell phones, to send balances using SMS technology to other users
(including sellers of goods and services), and to redeem deposits for
regular money. Charges, deducted from users‘ accounts, are levied when
e-float is sent, and when cash is withdrawn.
The ongoing projects in the development of ICT in Kenya shows that
people and communities in rural and urban areas benefit from ICT both
socially and economically and thereby being able to use the internet for
the same purposes as people in western countries, such as communicating
with others, searching for information and buying goods and services. It
has also been noted that Indigenous Knowledge and innovation provides
the potential for local communities to go beyond poverty alleviation and
generate wealth utilising their local knowledge, innovations and
resources. A Case Study in Kenya by Mr. Ngumbi Kimeu of Kitui District,
entitled: ‗Rethinking Indigenous Knowledge in Beekeeping for Sustainable
Livelihood demonstrated how local communities in the district use their
knowledge and innovations developed over the years to promote beekeeping
activities for sustainable income generation.
As envisaged in the Kenya Vision 2030, Strategies for promoting science,
technology and innovation and hence the management of knowledge are;
- Strengthening technical capabilities: Kenya will strengthen her
overall STI capacity. This will focus on creation of better
production processes, with strong emphasis on technological
learning. The capacities of STI institutions will be enhanced
through advanced training of personnel, improved infrastructure,
equipment, and throughstrengthening linkages with actors in the
productive sectors. This will increase the capacity of local firms
to identify and assimilate existing knowledge in order to increase
competitiveness. - High skilled human resources: Measures will be taken to improve the
national pool of skills and talent through training that is relevant
to the needs of the economy. - Intensification of innovation in priority sectors: To intensify
innovation, there will be increased funding for basic and applied
research at higher institutions of learning and for research and
development in collaboration with industries. Measures will be taken
to identify and protect heritage. In order to encourage innovation
and scientific endeavours, a system of national recognition will be
established to honour innovators.
In order therefore to attain Knowledge-based economies, the following
should be done;
- Provide community development services – a knowledge-sharing hub
supporting a collaborative, network of knowledge networks. This can
only be stimulated to develop organically – by supporting knowledge
networks to address particular shared interests and goals such as,
for example, government service delivery, governance, management of
HIV/Aids, promotion of women‘s rights. The goal is to connect
forward-thinking leadership and change agents throughout the African
continent and its Diaspora, creating a strong and effective
continental and global support network; - Facilitate monitoring and evaluation, benchmarking and learning for
different aspects of development and service delivery.
service-delivery challenges stored and continuously improved through
a shared library; - Develop a shared knowledge repository, linked to benchmarking
measures of related challenges and solutions, where solutions
include action-learning resources, services and providers, and
infrastructure approaches.
Knowledge is an acquaintance with facts, truth or principles as from
study or investigation critical for decision making. Knowledge is
informed by understanding that germinates from combination of data,
information, experience, and individual interpretation is referred to as
Knowledge . Within the context of organisation, knowledge is the sum of
what is known and resides in the intelligence
and competence of the people. Personal knowledge existing within people
that enables them to know how to do things based on
their experiences and which informs their judgment, insights,
experience, know-how as well as personal beliefs and values is called
tacit knowledge.
This knowledge is exhibited at individual level. For instance, one may
have training materials but may not have the experience to deliver
training that would lead to transfer of knowledge or skills. He or she
therefore lacks the tacit knowledge which is the know-how based on
previous experience. On the other hand, information that has been
documented and can be shared with someone is referred to explicit
knowledge. Based on the training materials read and interaction with
others a trainer may know the exact sequencing of steps conduct and
deliver his or her training. Though viewed as tacit knowledge,
intensified activities involving research and documentation through
coding or recoding will subsequently transforms IK into explicit
knowledge. Practitioners observe that, much is yet to be captured and
time is running out.
In a local example we shall deal with vision 2030 transformation as
shown above.
Vision 2030 imperatives – Research
- Contextualized and applied research
- Multi-disciplinary – academia/industry/government
- Demand-led research – what are the requirements of Vision 2030?
Infrastructure, economic zones, energy, ICT, construction, etc - Funding for R & D – targeted and prioritized
- Science and technology curricula
Vision 2030 imperatives – Innovation
- New products, technology, processes, markets, ventures, and
organizational models – or adoption/modifications - Innovative capacity a function of university/industry collaborations
and R&D spending - Productivity and competitiveness – dependent on innovation and human
capital - Required – incentives for innovators – incubation, awards
Vision 2030 imperatives – Human Capital
- Human capital and Vision 2030 – Agro-processing, infrastructural
development, Knowledge-intensive industries, entrepreneurship (new
and innovative ventures) – these require highly skilled workforce - Relevant knowledge for Vision 2030 at all levels – graduate and
post-graduate engineers, but also intermediate and vocational
training (technicians) - Skills raise the prospect of adoption of new technologies and
business opportunities
On basis of this we can conclude that:-
- The government should prioritize research funding based on relevance
to development goals - Demand-led research and skills development as opposed to reactive
- Various levels in science and technology qualifications, including
intermediate (vocational) training to be given priority - Multi-disciplinary, inter-organizational research design involving
universities, government, and industry. (Industry – academic
collaboration) - Support recognized innovators and protect them through intellectual
property laws
PRODUCT/SERVICE RE-ENGINEERING
Definition
This is the fundamental reconsideration and redesign of organizational
products/services in order to achieve drastic improvement of current
performance in cost. As organizations continue to evolve and reinvent
themselves to develop new focus areas
and cater to new markets, it is imperative that their business systems
do not fall behind and become obsolete. An organization should provide
maintenance and reengineering services to keep its products tuned so
that business needs do not outpace business
systems.
The Reengineering Process Model has the following phases:
- Product study phase
- Reengineering phase
- Regression testing phase
- Acceptance testing phase
Objectives of product/service reengineering
- Productivity and competitiveness
This emphasizes increased productivity and competitiveness as one of
the key guiding principles for expanding and maintaining the
domestic and export markets in a liberalized environment. - Market development
The takes cognizance of the need to diversify and expand markets for
industrial value added products. It addresses supply side
constraints with regard to product quality, volume and standards. - High value addition and diversification
The recognizes high value addition to the resource endowment as key
for optimizing creation of wealth, employment and regional
development. It therefore emphasizes on further processing of
primary products. - Regional dispersion
The underscores the need for equitable dispersion of industries
throughout the country in order to accelerate the pace of
development especially in the marginalized areas. - Technology and innovation
The recognizes innovation as central to meeting the rapidly changing
consumer tastes and preferences while also boosting productivity and
competitiveness of the industrial sector. - Employment Creation
This focuses on quality and sustainable employment creation. - Environmental Sustainability
The recognizes the need to promote sustainable industrial
development that upholds environmental protection, management and
efficient resource utilization. - Compliance with the New Constitution and achievement of Vision 2030
This is particularly in the Public Sector . Process reengineering should
be well-aligned to the provisions of the constitution and takes into
account the constitutional provisions for a devolved structure of
government and the particular call to encourage regional
dispersal of industries as a basis for equity and empowerment across the
nation.
Education and manpower development
This recognizes that reengineering can only take place when there is a
strong and well trained workforce from all levels of training.
