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Innovation and Peru's curse

John Danner and Mohanbir Sawhney (Seminarium)

By Carsten Korch

September 10, 2012

Last week, when I attended the Innovation Day organized by Seminarium, a new friend of mine told me that Peru is cursed.

I know we have many challenges to overcome, but I never thought we were cursed, so I asked him what he meant by that. He explained that it was not only Peru, but many small countries rich with natural resources, that were cursed. "We focus on the exploration and extraction of the minerals and forget about the added value,” he said. The data backs him up: a recent study, the Global Competition Index, found that Peru has fallen to 117th place in a ranking of 144 countries in innovation

My friend Stiven from Chile added that his country imported copper wires, despite the fact that Chile is the largest producer of copper.

Is there any hope for Peru? Of course there is, but the government must invest more resources into innovation, so we can learn to add more value to the existing products we extract from Peru and to come up with new ideas about how to continue when we have no more minerals to offer. It all begins with our president and his team. They need to come up with a plan and a culture to nurse this idea idea that, "Yes, we can do it."

In other words, we need a University of Innovation to deal with this country's future, and I'll be the first student to sign up.

In last week's event about innovation strategies, around 300 attendees from all of Peru got a taste of it and learned from smart people like Guillermo Bilancio (Profesor en Estrategia y Marketing Estratégico, Universidad Adolfo Ibáñez), John Danner (Senior Partner, The Lester Center For Entrepreneurship and Innovation, Haas School of Business - University of California, Berkeley), Alvaro Delgado-Apanicio (Gestor y Presidente ejecutivo de APOYO Innovación Organizacional), Jorgen Ysusqui (Promotor y gerente general de Colegios Peruanos [Innova Schools]), Mohanbir Sawhney (Profesor Clínico de Tecnología, McCormick Tribune Foundation Director, Center for Research in Technology & Innovation, Kellogg School of Management Northwestern University) and Stiven Kerestegian (Senior Manager, Open Innovation at LEGO) about how we can get started. More importantly, we also got inspired by learning from larger corporations like McDonald's, Cisco and Starbucks among others, who are doing a fantastic job of innovating and reinventing their businesses every day.

Many companies like 3M, Google, Kraft, General Electric, BP Gas & Oil etc. are innovating, not only with the ideas of their employees, but are also seeking help from their customers, suppliers and partners.

In Germany, McDonald's put together an online platform allowing its customers to choose from various ingredients and put together their own burger, after which their chefs were asked to try them out. The guy whose burger made it to the top is now famous and I'm sure he is enjoying his fame right now. Bembos in Peru has done something similar, and is by far the biggest and most popular burger chain in Peru. Why? Yes, you guessed it: innovation and social media.

Some companies are offering royalties to their "inventors", but statistics shows that the creativity decreases if you offer cash in return for people's ideas. That doesn't mean that you shouldn't offer anything in return for peoples time and ideas, but instead of cash, you should find other incentives that fits those you are targeting, like points, stars, recognition, scholarships etc.

Often it is not about inventing a new product, but more about how your product can fit another market or target group:

An Indian manufacturer produces a battery driven refrigerator for its local market. Yes, you heard right: a battery-driven refrigerator. That's because many Indians only have electricity 6 hours a day, and need to charge their refrigerator to have "fresh" products available 24/7. Due to innovation, this refrigerator is now also available to campers in the US and soon in the rest of the world.

To stay in the market, we need to innovate faster and faster.

Check out My Starbucks Idea. This is a platform where customers can share, vote, discuss and see ideas to improve Starbucks and its products and services. Who better than their customers to tell Starbucks on what existing and future customers want?

Not all companies have the resources to start and manage a large scale campaign like Starbucks’, but don't worry, there is help out there. Websites like Yet2.com and Innocentive.com are offering their network to find and execute ideas, but keep in mind to

1. Think BIG, start small and scale fast
2. Break down projects into manageable chunks
3. Avoid "percentage people"
4. Make executives accountable throughout the process

If you follow the above advice from Mohanbir Sawhney, you should be on the right track.

There are thousands of books about innovation that you can purchase on-line and download to your laptop or Kindle (another innovative device) in only seconds, thanks to important innovation from the people who invented the internet, the computer and digital publishing.

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COMMENTS:

Total coments: 8
Commented By: viking
On: September 10, 2012. 3:31 pm

Agreed Peru needs to focus more on innovation. But even the major developed minng economies like Canada and Australia don't turn their copper or gold into wires or jewellery. Ridiculous argument. Peru needs to focus on its education system to improve innovation. They should also focus on doing mining properly before thinking about advanced moves!

Commented By: Stan
On: September 10, 2012. 3:35 pm

Good article, Peru is very dependent on commodity exports. The country needs diversify the economy. Saying this is easier than done. Countries that have done this successfully should be the model. The biggest problem with getting more value added is the low education level of the people.

Commented By: harry61
On: September 10, 2012. 3:40 pm

Best Innovation of all would be the innovation of peruvian mind !! There after you can think big ....

Commented By: bigswede@speedmail.se
On: September 10, 2012. 6:43 pm

Interesting story. Just emailed the story to my buddy Marius Turula in Helsinki, Finland. The most important thing for Peru? Teach all car drivers how to drive! 1) Much slower. 2) Treat pedestrians like any civilized country in Europe, the U.S. and Canada. 3) Stop honking the horn! You never hear "el claxon" in my home country Sweden. I shout at those honking idiots here in Surco every day! Cheers, El Gringo Vikingo

Commented By: christine
On: September 10, 2012. 7:45 pm

How on earth can we focus on educating the Peruvian population, when the education in Peru is the most expensive in Latin America (especially University education) and with Peru's growth is becoming beyond reach, even for middle class citizens.

Commented By: Mario
On: September 11, 2012. 2:45 am

To add value, firstly you need to copy, i. e. to transfer technology. Once you achieve command of a given craft, you can naturally start pushing the envelope. Technology transfer is not cheap but it is much, much cheaper than innovation. Together with technology, you need management skills. Again, state of the art will make a world of difference in Peru. Even before you start transferring technology and business skills, you need to preserve what you already have. For the past 40 years, Peru has consistently failed to have policies to preserve or expand its added value capacity, its industry. Perhaps, Peru has selected to copy and compete with Chile, a bad example in industrialization and diversification. Perhaps, Peru most important and powerful lobbyists, foreign commerce association Comex, has too strongly pushed for import liberalization, including dumping, which has driven out of the market most of the little Peruvian industry. Perhaps, Peruvians will mostly prefer to buy foreign than national, even when national is cheaper and of higher quality.

Commented By: Michael
On: September 11, 2012. 1:32 pm

Infrastructure, infrastructure, infrastructure.

Commented By: MARTAPMONGE@YAHOO.COM
On: September 11, 2012. 3:20 pm

EDUCATION, EDUCATION, EDUCATION!!!

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