July - December 2019

Using futures studies to help plan sustainable human settlements in Cape Town

Using futures studies to help plan sustainable human settlements in Cape Town

The Steinhoff Saga Management review - University of Stellenbosch Business School

July – December 2019

Using futures studies to help plan sustainable human settlements in Cape Town

Using futures studies to help plan sustainable human settlements in Cape Town

By Hester Agnes Van den Berg

  • DEC 2019
  • Tags Futures Studies

21 minutes to read

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Cape Town: On the brink of a human settlement crisis?

Cape Town is one of South Africa’s most popular destinations, both as a place to visit and as a place to live and work. Renowned for its scenic beauty, varied leisure pursuits and high hospitality standards, the city is a jewel in South Africa’s crown. Yet, as one of the country’s fast-growing cities, Cape Town is also facing major spatial and infrastructure development challenges. These can largely be attributed to inadequate resources and planning in the face of a significant influx of people in recent years – from other parts of South Africa, Africa and the world. Traffic congestion, service delivery problems, a shortage of affordable accommodation, densely populated informal settlements, and unemployment and crime have all reached worrying levels.

Many believe there are simply too many people in Cape Town for the city to function efficiently and for the government to satisfy the growing need (especially among poor, marginalised communities) for housing, water, sanitation, waste removal, electricity, transport and other public services. Inadequate attention has evidently gone into determining how to accommodate rising numbers of people in a city whose geography and socioeconomic make-up do not permit unlimited expansion. This is putting increasing pressure on city planners and making life more difficult for business people, residents and even tourists.

For Cape Town’s inhabitants to enjoy a reasonable quality of life, sustainable human settlements are needed. This goes well beyond simply building enough houses to ensure that everyone has a roof over their head. A sustainable human settlement comprises a community of people in which economic growth and social development are in balance with each another; resources are used responsibly so that they will continue to deliver value to future generations; and everyone has an opportunity to participate in the economy, to be treated fairly and to prosper. Not surprisingly, achieving a sustainable society is a huge challenge as it calls for strong cooperation and leadership in the political, economic, social, technological, legal and environmental spheres. It also demands a clear vision and long-term outlook.

A sustainable human settlement is a community of people in which economic growth and social development are in balance with each another; resources are used responsibly so that they will continue to deliver value to future generations; and everyone has an opportunity to participate in the economy, to be treated fairly and to prosper.

Some might claim that Cape Town is on the brink of a human settlement crisis. Plans tend to be of a short-term nature (typically covering five-year periods), economic opportunities are in short supply (particularly for those with limited education and skills), and existing resources and the environment as a whole are taking strain as a result of relentless urbanisation. Who is responsible and why things have been allowed to escalate to this point is the subject of much debate. For example, when the city was gripped by a severe drought in 2017 and unprecedented emergency measures had to be introduced to conserve water, should the government and its partners not have been better prepared? Was the decision to implement onerous water restrictions a case of ‘too little, too late’?

Clearly, it is time for the City of Cape Town and others with a vested interest in the city’s growth and development to take stock. New approaches are needed to throw light on the various dimensions of the human settlements problem so that realistic solutions can be crafted that will deliver sustainable results. While careful planning is a key component in this process, plans are of little value – however well informed ‒ if they do not enjoy the necessary support. South Africa has seen a succession of growth and development plans over the years, but many have not been successfully implemented. A contributing factor is a lack of political will. Another is that government departments and agencies tend to operate in silos, which weakens information-gathering and complicates problem-solving. In addition, there is insufficient collaboration between the public and private sectors, which impedes progress.

Futures Studies: Looking at the world in a different way

It is in the face of Cape Town’s human settlement challenges that Futures Studies methodologies have a vital role to play. Futures Studies aims to develop people’s long-range decision-making skills across many disciplines, thus helping to expand the range of potential solutions to identified problems.

A study was therefore undertaken to explore how effectively Futures Studies methodologies have been applied to date in the planning of sustainable human settlements in Cape Town; and to recommend how things should change in order to induce a more holistic response from government on the human settlements issue. The methodologies investigated were Environmental Scanning and Causal Layered Analysis (CLA) which includes scenario planning. The study comprised a literature review and a focus group discussion among a selection of Cape Town residents. They were asked questions about their experience of living in Cape Town, what they believed had contributed to conditions in the city and what should be done to ensure a better future for all.

The Futures Studies environment is a complex one, particularly as organisations are composites of many interconnected (human and non-human) systems, which need to be mutually reinforcing if organisational objectives are to be achieved. Strong leadership becomes especially important when past performance highlights the need for improvement but the future appears highly uncertain. A Futures Studies approach encourages a more creative and less linear approach to decision-making, the latter being more suited to stable and predictable conditions. Futures Studies methodologies are geared towards the formulation of plans that push boundaries and have been described as ‘altogether different’.

Environmental Scan and Causal Layered Analysis compared

An Environmental Scan involves the monitoring of an organisation’s internal and external environments for early signs of opportunities and threats that could influence its current and future plans. Such monitoring activity could reveal facts, trends, events and relationships – of a political, economic, social, technological or legal nature ‒ that would help management to chart the way forward. A strong emphasis is placed on the competitive environment. There are many sources of information for an Environmental Scan, including publications, focus groups, media reports, civic associations, and leaders inside and outside the organisation.

Many believe that there are simply too many people in Cape Town for the city to function efficiently and for the government to satisfy the growing need … for housing, water, sanitation, waste removal, electricity, transport and other public services.

Causal Layered Analysis (CLA) involves creating alternative futures (scenarios) by studying the present and the past. It does not predict a particular future. Sources of information for CLA include reported historical events, news commentaries, political developments, economic trends and technological advances. It conducts research at four different levels:

(1)   Evident/visible trends and problems in society, which do not necessarily have a clear connection or logic and can prompt anxiety among those who are exposed to them;

(2)   Social, economic, technological, political and historical information, which is typically found in editorial pieces in the media;

(3)   Discourses or expressed worldviews on issues such as family traditions and women’s rights, which are influenced by people’s social, cultural and ideological backgrounds; and

(4)   Emotive or unconscious responses to circumstances and problems, which often emanate from a deep psychological state.

CLA is sensitive to different people’s perceptions and is intended to expand and enrich the process of scenario planning. While facts are important, so are people’s perceptions because the latter can be useful in determining priorities. CLA also helps communities to understand the nature and scale of the problems confronting them, to suggest solutions and to hold their leaders accountable. In this way, there is a stronger likelihood of policies being well-informed and balanced.

Reclaiming Cape Town’s future through sustainable human settlements

A sustainable human settlement (which could be a village, town or segment of a large city) is one that will prevail comfortably into the future, supported by strong economic, social, institutional, spiritual and cultural foundations. For the purpose of this study, ‘human settlements’ cover Cape Town in its entirety (not just its many informal settlements), stretching from Somerset West in the east to Atlantis in the north.

When delving deeper into why the strong emphasis on the musical concept, most participants referred to the criticality of a shared vision between all parties for an independent record label to remain consistent …

Theme 1: Musical concepts are shared visions

Theme 1 refers to a shared vision between owner and artist, which is critical for musical concepts to be developed. Musical concepts are more than establishing a theme for a project; it is a prerequisite for strategic musical narratives that create label identity and improve business sustainability.

The interviews with the independent record label producers started with a discussion around musical concepts. It probed the creative process when artists and the label decided to embark on a project, and how the parties involved choose to interact with each other. Various participants mentioned that the musical concept is important for independent record label producers. In most cases, it related to what job they want the music to perform and whether they were planning to distribute the project commercially. In many cases, single releases and experimental projects are designed to be given away for free.

When delving deeper into why the strong emphasis on the musical concept, most participants referred to the criticality of a shared vision between all parties for an independent record label to remain consistent and sustainable over the long term. According to them, incongruence in this “shared vision” can lead to creative instability and even derail projects.

Theme 2: Virtual organising

This theme reaffirms the importance of virtual organising through digital technologies when performing the tasks of creating musical concepts, music production and customer interaction. The interaction of these elements integrates the asset configuration and customer interaction sections of the theoretical business model. This theme explains the key technologies together with the respondents’ rationale for using tools such as WhatsApp, Google Drive and WeTransfer.

Futures Studies aims to develop people’s long-range decision-making skills across many disciplines, thus helping to expand the range of potential solutions to identified problems.

The World Commission on Environment and Development describes sustainability as follows:

A process of change in which the exploitation of resources, the direction of investments, the orientation of technological developments and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations.

Therefore, in a nutshell, sustainable development is geared towards catering to the needs of society today without robbing future generations of their birth right. While sustainable development tends to be associated with the judicious use of resources and a reduction in waste, it is so much more. It is also about ensuring a good quality of life, promoting fairness and equity, encouraging participation and partnerships, recognising ecological constraints and caring for the environment as a whole.

If Cape Town is to create sustainable human settlements, much needs to be done to bring the city back from the brink and set it on a more balanced path, using a systematic Futures Studies approach. Tackling inequality will be particularly challenging. According to statistics compiled a few years ago:

  • Nearly 36% of households are living below the poverty line of less than R3 500 per month.
  • Nearly 24% of the population are unemployed, discouraged work seekers or economically inactive.
  • Nearly 9% of households have no access to on-site sanitation.
  • Just over 50% of the population have no access to the internet, which is particularly worrying given the strong youth profile of the city.
  • Cape Town is ranked as one of the most dangerous cities in the world, well ahead of Johannesburg.

On a more positive note, however, the statistics show that:

  • 90% of households have flush toilets
  • 90% have access to refuse disposal services
  • 94% of households have lighting
  • 80% of households have electricity-powered cooking facilities.

Water remains a critical resource in the city. While various initiatives have been introduced to conserve or reclaim water, the city is likely to remain under serious pressure for the foreseeable future.

Strong leadership becomes especially important when past performance highlights the need for improvement but the future appears highly uncertain.

What the focus group participants said

The key discussion points can be summarised as follows:

  • Excessive traffic volumes: Travelling to and from, as well as in, the CBD is a major problem, with little provision having been made for additional traffic volumes as the city’s commercial and residential infrastructure has expanded. Land is also at a premium. A contributing factor to the traffic congestion is that many commuters are too nervous to use public transport. Certain suburbs have become economic hubs (e.g. Woodstock has become a magnet for jewellery designers and their clientele), which has also increased traffic volumes. However, the northern and southern suburbs are better connected than in years gone by.
  • Service delivery problems: The heavy influx of people into Cape Town, particularly in informal settlements, has added to the government’s service delivery burden. Services to remove waste, for example, are inadequate in a number of informal areas. Pollution (even on the beaches) is also on the rise.
  • Weak planning: Although the City of Cape Town has developed a number of plans over the years to overhaul infrastructure and develop new facilities in the interests of better spatial development, it does not have a good implementation record. Shortcomings in terms of road/traffic and water management and crime control are very pronounced. The absence of political will and corruption are often at the root of dubious expenditure. In addition, plans are at times conceived without sufficient consultation with affected parties and other stakeholders, leading to misguided projects.
  • Dashed hopes: Whereas many people move to Cape Town to fulfil a ‘dream’, their basic needs are often not met and they face an uncertain future. The manufacturing, clothing and woodwork industries are in serious decline in the face of more competitively priced Chinese imports, and job opportunities have dwindled. This is contributing to heightened poverty and crime. A lack of investment is exacerbating the situation, as is inaction or wasted expenditure on the part of government. Many poor people have taken to protesting about their economic marginalisation or have resorted to crime to make ends meet or to send a message that they feel entitled to what other people have. This has created an increasingly incendiary atmosphere in underdeveloped areas.

While the City of Cape Town and its development partners should never ignore the numbers, focusing on the human side of sustainable development provides much richer insights into what can and should be done to turn the desire for a better future into reality.

The focus group participants said that in order to achieve a more sustainable society, city planners, businesses and residents alike need to adhere to some core principles:

  • Corruption must not be tolerated.
  • VUCA (volatile, uncertain, complex and ambiguous) issues should take centre stage when priorities are determined and plans formulated.
  • Home ownership comes with responsibility (and should also be a source of pride).
  • Climate change needs to be acknowledged and properly managed.
  • An active citizenship needs to be developed.
  • Dreams can be realised if relevant stakeholders collaborate with one another.

Alternative future scenarios for Cape Town

On the basis of the input received from the focus group, four alternative future scenarios were devised for Cape Town in the year 2040:

  • Scenario 1: A city in serious decline. The City of Cape Town has done little to create sustainable human settlements and conditions have deteriorated markedly. With the City providing few public services, the private sector has had to step in and contribute some of the shortfall – but at high cost, which means that much of the population is excluded. Jobs have become increasingly scarce and life is hard for many people.
  • Scenario 2: A city full of promise. The City of Cape Town and other stakeholders have collaborated in creating more sustainable human settlements through effective spatial, infrastructure and housing developments. There is also much improved and more equitable service delivery, while meaningful steps have been taken to stamp out corruption and crime. There has been a high level of cooperation between the public and private sectors, both of which have displayed strong leadership in addressing the sustainability challenge.
  • Scenario 3: A city under authoritarian rule. The City of Cape Town has become highly authoritarian. It demands strict obedience from those over which it has control, using oppressive measures to exact compliance. The private sector makes practically no contribution to the running of the city, other than to pay rates and taxes. The divisions in society have deepened and the vision of a sustainable future has all but faded.
  • Scenario 4: A city engulfed by poverty. Most of the city ‒ from Somerset West to Atlantis ‒ has deteriorated into a huge slum, with informal dwellings dominating residential areas and commercial districts and service delivery being both erratic and of a poor standard. Crime levels have risen and most investors have fled. The virtual collapse of the city is largely attributable to a lack of interest and involvement from both the public and private sectors in planning and actively bringing about sustainable human settlements.

Clearly, Scenario 2 is the best of the four options. It paints a picture of a city buoyed by a clear and realistic vision, a sense of responsibility, ethical leadership, strong cooperation, a long-term planning horizon, and hope. While the City of Cape Town and its development partners should never ignore the numbers, focusing on the human side of sustainable development provides much richer insights into what can and should be done to turn the desire for a better future into reality.

    • This article is based on the research assignment of Hester Agnes Van der Berg – an MPhil in Futures Studies alumnus of USB. The title of her research assignment is: The application of Futures Studies methodologies in the planning of sustainable human settlements in Cape Town.
    • Her study leader was Prof André Roux, programme head of USB’s portfolio of Futures Studies programme. Prof Roux lectures in Management Economics and Africa Country Risk Analysis at USB.

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What does it take to lead today’s technology innovators?

The Steinhoff Saga Management review - University of Stellenbosch Business School

July – December 2019

What does it take to lead today’s technology innovators?

By Dr Awie Vlok, Prof Marius Ungerer and Dr Johan Malan

  • DEC 2019
  • Tags Futures Studies

24 minutes to read

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Leadership in a connected world

Leading teams to successfully bring about new technologies during fast-changing times can be challenging. Today, people are more connected than before; they can access knowledge, networks, equipment and services themselves without corporate structures and management permission.

What, then, are the competencies that technology innovation leaders should have in order to lead teams to successful technology innovation?

Already in 1982, Peter Drucker warned that the management of innovation will become increasingly challenging. This may have been an early attempt to reveal the shortcomings of a management paradigm for innovation.

A different perspective suggests that the best managers of the most innovative organisations do not tell their employees how to innovate. Instead, they shape the chaos. Insubordination is a secret ingredient in Google’s success: ideas emerge organically through conversations, with managers keeping unruly conversations going while listening for what bubbles up.

A different perspective suggests that the best managers of the most innovative organisations do not tell their employees how to innovate. Instead, they shape the chaos.

These two perspectives – proper planning versus organic change – convey different views of what the person heading up a team for innovation should be doing.

This study accepts that management and leadership may be important for innovation, and that one person could assume responsibility for both. However, the term leader is used because of the increasing emphasis on the ability to influence and inspire others to engage in innovation.

Although managing innovation has changed, the leadership discussion has not necessarily followed this development. The authors, after reviewing 13 leadership theories or models for their potential relevance to leading technology innovation, could not gain a holistic view of what successful technology innovation leadership competencies entailed. So they started afresh and asked: What technology innovation leader competencies are required for successful technology innovation? What individual behaviours underpin leader competencies? Can we draw up a theoretical model for innovation leadership?

The connection between leadership and innovation management

The ability to lead others to innovate is becoming increasingly important because human factors are crucial for innovation. In technology-driven organisations, hit-and-miss innovations can often be linked back to the human chemistry of innovation, including leadership. While technology innovation is important for business, the human element can be an organisation’s greatest innovation asset.

Leaders responsible for leading innovation are expected to shape innovation performance and inspire others to embrace innovation. Yet, innovation leadership competencies are uncertain, untested and inconclusive. Innovation should be managed in new ways, based on new insights, and not be driven merely by efficiencies, as many managers have been trained to do. The innovation challenge for leaders is to mobilise knowledge, technological skills and experience to create value. However, as leaders face lots of uncertainty, they need to change the way they manage and lead.

Innovation insights that may contribute to the improved performance of innovation leaders are often not integrated with existing practices, resulting in gaps that leave innovation leaders vulnerable. While most leaders accept the significance of innovation, many of them appear to be uncertain about what they should do differently to improve their innovation success.

Some claim that innovation is too complex for leaders to influence performance effectively while others claim that leadership is the best predictor of innovation. Either way, up to now there has not been much guidance for such leaders.

In technology-driven organisations, hit-and-miss innovations can often be linked back to the human chemistry of innovation, including leadership.

Understanding the innovation process

To answer the research question – namely what technology innovation leader competencies are deemed necessary for successful technology innovation – clarity on the innovation process was required to identify the leader competencies needed for successful technology innovation.

The researchers therefore reviewed 10 innovation processes – including the generic innovation process, the technology push process, the integrated process, the network spiral process and the presensing process – before concluding that none of these could be elevated to a universally representative level. Next, they deconstructed the 10 innovation processes into component parts in order to rearrange the parts without fundamentally changing them. Based on the deconstruction process, six clusters of leader competencies were conceptualised to use as primary codes for a thematic content analysis of expert interviews, case studies, workshops and literature reviews. These competency clusters were:

  • Cluster 1: Integrative competencies
  • Cluster 2: Technology connectedness competencies
  • Cluster 3: Competencies to achieve stakeholder alignment
  • Cluster 4: Competencies to liberate mind sets
  • Cluster 5: Value creation competencies
  • Cluster 6: Value realisation competencies.

Looking at existing leadership models

Finding literature on leader competencies for successful technology innovation was challenging.

There is the growing understanding of the interconnectedness between technical issues and people issues in leading technology innovation. This includes motivational factors, the challenges of managing creative professionals, cross-disciplinary team issues, leadership styles and roles, and organisational processes and practices related to technology innovation. Another collection of case studies on the management of innovation added insights on leadership and learning, one of which had found that leadership was the only factor consistently and positively correlated with perceived innovation effectiveness.

In this study, the authors reviewed 13 leadership theories and models for their potential relevance to leading technology innovation:

  • Transformational leadership model
  • Transactional leadership model
  • Path-goal leadership theory
  • Leader-member exchange theory
  • Innovation leader behaviour inventory
  • Project leader behaviours
  • Facilitating increased creativity
  • Total innovation management framework
  • Gliddon’s innovation leader’s competency model
  • ILQ innovation leader competencies
  • Collective genius approach
  • Special-forces framework
  • Servant leadership model.

Leaders responsible for leading innovation are expected to shape innovation performance and inspire others to embrace innovation.

Innovation increasingly requires the creative combination of different disciplines and perspectives; and a mere aggregation of available theories will not represent a holistic view of what successful technology innovation entails. The bridging transition from what can be imagined to the creation and realisation of value can be seen as the essence of innovation. Competent innovation leadership is critical to innovation success, and is about inspiring individuals to higher levels of performance, to go the extra mile – which is often required in innovation, as leaders shape new futures by looking forward and connecting things in new ways. Connecting things in new ways, however, requires integrative capabilities that have only partially been acknowledged in the leader competencies literature. While sustainable competitiveness requires organisation-wide coherence, organisations often experience a lack of communication among the marketing, R&D, and manufacturing functions. Collaborative innovation involving players in supply chains may also require integrative skills for which a leader may have to assume responsibility.

It is clear that innovation leaders are challenged in new ways for which competencies may not yet have been defined. Can theoretical perspectives simply be extrapolated or used by leaders to imagine and realise technology futures, or does this call for a new approach to determine appropriate leader skills?

The next steps in the research process

Further research was conducted to obtain data from sources other than the theoretical perspectives found in the literature. This study focused only on competent technology innovation leader behaviours.

In essence, qualitative research triangulated expert opinions, case materials, workshops results and the literature to identify leadership competencies. A measurement instrument was developed for the quantitative research, which involved eligible respondents rating the significance of identified leader behaviours. Statistically significant relationships were found in a hypothetical competency model. The results reinforced some previously identified competencies, and contributed to understanding and identifying additional innovation leader competencies, including integrative leader competencies, to lead technology innovation into the future.

This study adopted an exploratory research approach and added a survey method. Exploratory research is conducted when few or no previous studies exist, and aims to identify patterns, hypotheses or ideas that can be tested or that form the basis for further research, to provide alternative explanations or to confirm the exploratory results.

Four steps

Steps 1 and 2 covered the qualitative study phase that fed into steps 3 and 4 of the quantitative study phase. A pragmatic perspective ensured that knowledge contributions would be both scientifically and managerially relevant and timely.

There is the growing understanding of the interconnectedness between technical issues and people issues in technology innovation.

Step 1: Design and implement a qualitative strand for the adequate coverage of variables for saturation

A total of 12 experts were interviewed to obtain their views on the processes and competencies of successful technology innovation leaders in their environments. Practitioner workshops were also conducted. The data was analysed to identify the underpinning leader behaviours, resulting in six interim process competency cluster constructs: integrative leader competencies, technology connectedness, stakeholders’ alignment, liberating minds sets, value creation and value realisation.

Cluster 1: Integrative leader competencies

According to the experts interviewed, successful technology innovation leaders have exceptional integrative capabilities in bringing technology, business and people elements together in successful technology innovation. Issues of context, complexity, integrating the efforts of highly talented individuals, and an ability to create disproportionate amounts of value from available resources were emphasised. The underpinning leader behaviours identified from the qualitative data reinforced some previous research findings, such as the leader leading by example as a role model, developing an inspirational and intellectually challenging vision, engaging people, empowering them, supporting them, recognising innovation performance, and ongoing feedback. The experts mentioned four behaviours not previously included in innovation leadership literature:

  • The leaders had a broadly-defined framework or plan for the envisaged innovation
  • They systemically integrated technical, people and business elements
  • They solicited intense levels of shared ownership in generating innovative solutions
  • They radiated a positive innovation energy rooted in a positive attitude in support of the vision.

Cluster 2: Technology connectedness competencies

Technology innovation leaders appear to be in constant contact with changing science and technology landscapes. Examples were given of technology decisions being reversed within 24 hours because of new software becoming available that would dilute the anticipated value of their previous decision. The technology connectedness of the leader was not mentioned in the innovation leadership literature reviewed, yet it emerged as being critically important for the leader to be respected as a credible thought leader. These leaders had their own channels feeding them with news, and had personal networks to access experts. They established collective tracking mechanisms with others to monitor trends; they considered new possibilities as strategically aligned portfolios; and they always knew what was going on in their operating landscapes to help them model alternative futures.

Cluster 3: Competencies to achieve stakeholders’ alignment

The experts emphasised trust-based relationships with stakeholders. Technology innovation leaders appear to have frequent interaction with people whose support may positively influence technology innovation success. Political or competitor agendas were cited as examples of technology innovation projects that succeeded or failed. In most of the innovation processes reviewed, external support was also mentioned. It is clear that successful technology innovation leaders appeared to be in constant interaction to understand their stakeholders’ interests, helping them to explore new ideas and innovations. These leaders were competent in their communications, in obtaining interest and support from stakeholders, and in managing possible tensions between them, while also ensuring that the design parameters accommodated different stakeholder interests.

Cluster 4: Competencies for liberating mind sets

Leaders may focus on creative thinking or ideation, while successful technology leaders appear to focus on challenging the beliefs and assumptions that prevent people from thinking beyond what is already possible and available, and to creatively explore new paradigms made possible by new advancements. The underpinning behaviours indicate that successful technology innovation leaders can elevate the thinking in teams beyond what could be accomplished with traditional ideation practices. These leaders managed to establish a creative energy focused on integrative solutions-thinking and value improvement by reframing the challenges and by provoking new.

The bridging transition from what can be imagined to the creation and realisation of value can be seen as the essence of innovation.

Cluster 5: Value creation competencies

Successful technology innovation leaders seem able to guide others towards turning their creative thinking into something of value. Some successful technology innovation leaders combined value-creation and competencies in liberating mind sets to contribute simultaneously to technology innovation. These leaders seemed to minimise risk and maximise learning by working with customers to understand their needs, by working collaboratively in cross-functional teams, and by undertaking low-cost marketing experiments to bring about successful technology innovation that the customer perceives as value, thereby generating revenue potential. These leaders understood and managed the disruptive effects of technology innovation while establishing mechanisms to identify and protect new intellectual property, and putting together strong commercialisation teams.

Cluster 6: Value realisation competencies

According to the experts, successful technology innovation leaders can facilitate the adoption or deployment of new technology so that monetary and other benefits from their work materialise in line with their strategic intent. The literature confirmed that the innovation cycle was not complete if invention alone was the objective. Leaders tended to make technology innovation the responsibility of those involved in a system of innovation to deliver what receivers regard as value, and they would deploy and scale implementation to maximise value realisation. These leaders facilitated the co-creation of integrated solutions by engaging the stakeholders involved in the adoption and transfer of new technologies, while educating and supporting the adopters of technology innovations and providing agile responsiveness to deal with unanticipated adoption issues. They also used their technology innovation support mechanisms to identify new opportunities for innovation.

Competent innovation leadership is critical to innovation success … as leaders shape new futures by looking forward and connecting things in new ways.

Step 2: Strategise on qualitative findings to confirm research questions, instruments and participants

Having identified competencies and behaviours, their significance still had to be established to answer the research questions through a survey questionnaire completed by technology innovation leaders who had previously achieved successful technology innovation. The identified competencies, with 60 underpinning behaviours, were used to develop a questionnaire that 18 experts reviewed to ensure that the questions measured what the survey intended to measure.

Step 3: Design and implement quantitative data collection for reliable and valid measuring

After the development, validation and pilot testing of the measurement instrument, the main survey was used for data collection and assessment of psychometric properties.

The respondents were successful technology innovation leaders from private and public research laboratories, universities and knowledge-based organisations representing a range of technologies. The mean for years of experience in technology innovation was 14.7 years. Several techniques were used to analyse the data.

All the identified leader competencies received relatively high ratings, while integrative leadership was rated as the most significant at a median of 45.5. The second-highest ratings were for technology connectedness, while the third-highest ratings were for liberating mind sets. Of the respondents, 90% agreed that technology innovation may not follow a linear sequential process, while 79% agreed that technology innovation is only achieved when value is derived.

Based on the identification of interim competencies and supporting behavioural items, the hypothetical model of expected construct relationships was constructed. Integrative leadership was expected to show a causal relationship with the other leader competency constructs. This model expected a strong relationship between the success orientation and the integrative leadership competencies of the leader.

Step 4: Interpret the results of a conceptual and theoretically sound model with empirical evidence

The relationships between the constructs were all significant, except for the path coefficient between success orientation and integrative leadership orientation. This suggests that the influence of success orientation on integrative leadership is weaker than other path coefficients. This is not totally unexpected because, during both the expert interviews and the workshops, comments were made about the near-impossible expectations that stakeholders sometimes have of technology innovation, such as simultaneously delivering technology innovations for competitiveness, economic growth, job creation, people benefits and radical innovation.

Connecting things in new ways, however, requires integrative capabilities that have only partially been acknowledged in the leader competencies literature.

This led to the creation of a statistical model depicting the relationship between success orientation and technology innovation leader competencies for successful technology innovation. Thus, as required in Step 4, the emergent m

odel is theoretically sound, based on empirical evidence, and can be described as an ‘integrative innovation leadership model’.

Innovation leadership
Figure 1: Integrative innovation leadership model

How does this research contribute towards leading technological innovation?

This study contributes in four ways to a better understanding of how to lead technological innovation.

Leader competencies: Firstly, the research data confirmed the importance of some leader competencies that had been identified before. These leader competencies were included in the integrative innovation leadership model together with newly identified leader behaviours and added innovation process competencies not previously associated with leaders, such as technology connectedness, stakeholder alignment, liberating mind sets, value creation and value realisation. The identification of these competencies addresses competencies across the entire innovation process, previously seen as a gap.

  • The managerial implication is that the competency development of technology innovation leaders needs to cover more than what may be available in generic leadership courses, and more than what is covered in technical training.

The multi-disciplinary nature of leading technology innovation: The second contribution is the emphasis on the multi-disciplinary nature of leading technology innovation, and the integrative competencies required of the leader. The integration of contextual factors, including macro- and micro-economic and strategic technology innovation factors, appears to reflect the integrative leader competencies identified in this study as being required for successful technology innovation. It also appears that integrative leadership would address task partitioning pitfalls previously found to be problematic transition points between players in innovation processes.

  • The managerial implication is that innovation leaders need to be aware of the consequences of task partitioning to bring about a smooth transition between process areas divided by task partitioning. If not, silo behaviours and turf wars across the innovation process could have dire consequences at systemic innovation performance levels.

… the competency development of technology innovation leaders needs to cover more than what may be available in generic leadership courses, and more than what is covered in technical training.

The application of leader competencies in different sequences: The third contribution is that leader competencies may be applied in different sequences. The participating experts and successful innovation leaders indicated that traditional linear sequential technology innovation processes have become an exception rather than the norm, except for processes dictated by the laws of nature. Instead, these leaders were competent to apply competency sets in context-specific sequences through integrative leadership and technology connectedness, stakeholders’ alignment, liberating mind sets, value creation and value realisation in line with the success orientation of the leader. These insights build on earlier observations that, while innovation can be seen as a core process with a defined structure, innovation processes in reality are complex.

  • The managerial implications include the need for managers to acquire competencies for more agile responses during unforeseen landscape changes. If not, it is fair to conclude that innovation plans, budgets, systems and measurements would continue to reflect a check list or compliance mode of thinking, at the expense of more agile innovation processes.

Conceptual model for integrative innovation leadership: The fourth contribution is the conceptual model for integrative innovation leadership. Statistically significant relationships found between leader competencies suggest that the leader’s success orientation positively influences integrative leader competencies, which in turn influence the leader’s competencies related to technology connectedness, stakeholder alignment, liberating mind sets, value creation and value realisation. The weak link in the model is the relationship between success orientation and integrative leadership, which requires further research.

  • The managerial implication is that leaders may have to place more emphasis on prior agreement with stakeholders on which success metric will apply for their envisaged technology innovation. Current research data does not explain this finding.

Mastering innovation leadership towards successful innovation performance

This research identified the technology innovation leader competencies required for successful technology innovation as six clusters of leader competencies that may occur in different context-specific sequences.

These results provide technology innovation leaders, trainers and researchers with research-based content on technology innovation leader competencies that allows them to experiment with this integrative approach to leading for innovation.

… silo behaviours and turf wars across the innovation process could have dire consequences at systemic performance levels.

Humanity’s challenges are calling for more innovation than before. This study confirmed a shift away from industrial-age leadership practices towards collaborative leadership in which the technology innovation leader adopts an integrative leadership approach.

  • Find the original article here: Vlok, A., Ungerer, M., & Malan, J. (2019). Integrative leadership for technology innovation. International Journal of Technology Management, 79(3/4), 247–273.
  • Dr Awie Vlok joined the Economic and Management Sciences Faculty of Stellenbosch University where he lectures on innovation management and conducts research on innovation leaders. His PhD focused on competencies of technology innovation leaders in knowledge-intensive organisations.
  • Prof Marius Ungerer teaches strategic management, leadership and change management on programmes such as the MBA, the MPhil in Management Coaching, and the PGDip in Leadership Development at the University of Stellenbosch Business School. He is an annual Visiting Professor at the NUCB Graduate School, International MBA Program, Nagoya, Japan, and a visiting faculty member of the University of Johannesburg.
  • Dr Johan Malan is an Emeritus Professor and previous chair of the Department of Industrial Psychology, Stellenbosch University. He holds a DPhil in Psychology from Stellenbosch University. His primary research interests include preventive psychology, psycho-education, performance dysfunctions, psychological assessment and innovation leadership.

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Independent record labels on the Cape Flats How new technology can lead to new business models

Independent record labels on the Cape Flats: How new technology can lead to new business models

The Steinhoff Saga Management review - University of Stellenbosch Business School

July – December 2019

Independent record labels on the Cape Flats: How new technology can lead to new business models

Independent record labels on the Cape Flats How new technology can lead to new business models

By Arthur Price

  • DEC 2019
  • Tags Strategic Management

19 minutes to read

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What was this study about?

The Cape Flats, a disadvantaged area of Cape Town, offers a rich cultural heritage. Here, independent record labels help to create awareness through music genres such as hip-hop, R&B, house, kwaito, soul and jazz. But how did technology change the way in which these independent record labels operate? Can technology help these producers to become more sustainable?

Until now, research on digital disruption in the music industry mostly came from the developed world. However, it is also important to gain an understanding of how industry professionals can leverage technology in a localised context.

This calls for a better understanding of how digitalisation affects the design and shape of business models, and how the industry, market forces and innovation shape opportunities to monetise music through the use of digital technologies.

About digital disruption in the music industry

First we had the gramophone and radio. Then came vinyl records, audiocassettes and CDs, followed by the internet, ICT and social media. This has changed the way in which recorded music is distributed and consumed. But it was the development of the MP3 music format, better storage technology and increased broadband internet speeds that really drove the digital disruption of the music industry. Digital interfaces for music production was developed, which eradicated revenue streams monopolised by large record companies. This enabled music professionals to self-produce and publish music far more cost-effectively.

Digital interfaces for music production … enabled music professionals to self-produce and publish music far more cost-effectively.

Next, online music services, music downloading and music streaming led to new platforms for artists to distribute their music and for consumers to find this music.

This changed when music aggregation sites became central hubs for individuals to access music and when music labels created music that could not be sold on major digital distribution hubs because they did not have an agreement with a professional distributor.

The rise in social media has led to online service companies putting more effort into gathering customers than making money from them. Social media gives business owners with a direct route to market and increases consumer-to-consumer promotion.

In addition, crowdfunding has become popular in the music industry due to the success of fan involvement in the creative side of music production. Crowdfunding can indeed provide a revenue stream to help artists and independent record labels to overcome financial limitations associated with music production.

About business models and value chains for the music industry

A business model is a strategic management tool that improves a company’s competitiveness in an industry’s value chain. It can help a company to structure its business for operational efficiency. Four elements are essential for the development of a good business model: A value proposition, supply chain, customer interface and financial model.

The traditional value chain in the music industry went from composing tunes, song writing, live performances, publishing, recording, reproduction and distribution to retailing. But now, fewer people are buying physical music products. This allows music to be classified as information, which calls for a new value chain.

The rise in social media has led to online service companies putting more effort into gathering customers than making money from them.

A virtual value chain is created when value-adding steps are performed through and with information. With the increase of digital technologies in the core of products, services and operations, business models need to change accordingly. This means we need to ask what such a business model should take into account, how networked interdependencies can influence the design of such a business model, and how technology can facilitate two-way links between stakeholders.

A review of the existing literature on this topic says the music industry value chain should be seen as a network. The creation of a musical concept, digitisation and collaboration serves as a value-creation loop. Value is captured by ensuring a personalised delivery and experience for consumers. Expenditure during the value-creation process includes tangible and digital product development, aggregator fees and royalties to rights holders. Revenue is generated, among others, via digital downloads, streaming revenue and crowdfunding.

But what about smaller record labels?

This study wanted to develop a business model and value chain for independent record labels with digitisation as a core competency in order to improve business sustainability. The argument was that if there is a better understanding of the variation in business models and virtual value chain perceptions among independent record labels on the Cape Flats, then surely this will provide much-needed insight into sustainable economic development in a geographical space that would benefit from favourable growth? What’s more, this growth may even help to off-set youth unemployment.

To find out, semi-structured interviews were conducted with eight participants who collectively had over 100 years of experience as independent music professionals. Thematic analysis was used to identify repeating themes, which enabled the researcher to propose a better business model.

What did the study find?

Four themes surfaced from the participant interviews: musical concepts are shared visions, virtual organising is important, digital distribution is important for value creation, and crowdfunding is not necessary for success. Each of these themes were developed to gain a better understanding the respondents’ views.

When delving deeper into why the strong emphasis on the musical concept, most participants referred to the criticality of a shared vision between all parties for an independent record label to remain consistent …

Theme 1: Musical concepts are shared visions

Theme 1 refers to a shared vision between owner and artist, which is critical for musical concepts to be developed. Musical concepts are more than establishing a theme for a project; it is a prerequisite for strategic musical narratives that create label identity and improve business sustainability.

The interviews with the independent record label producers started with a discussion around musical concepts. It probed the creative process when artists and the label decided to embark on a project, and how the parties involved choose to interact with each other. Various participants mentioned that the musical concept is important for independent record label producers. In most cases, it related to what job they want the music to perform and whether they were planning to distribute the project commercially. In many cases, single releases and experimental projects are designed to be given away for free.

When delving deeper into why the strong emphasis on the musical concept, most participants referred to the criticality of a shared vision between all parties for an independent record label to remain consistent and sustainable over the long term. According to them, incongruence in this “shared vision” can lead to creative instability and even derail projects.

Theme 2: Virtual organising

This theme reaffirms the importance of virtual organising through digital technologies when performing the tasks of creating musical concepts, music production and customer interaction. The interaction of these elements integrates the asset configuration and customer interaction sections of the theoretical business model. This theme explains the key technologies together with the respondents’ rationale for using tools such as WhatsApp, Google Drive and WeTransfer.

Yes, software allows them to record in real time with everyone being in different places, but then they need to deal with bandwidth, speed and reliability …

Virtualness as a strategy facilitates interaction via digital technologies between customers and stakeholders that are geographically dispersed. To assess the relative importance of virtual organising within the local context it is essential to explore the driving forces behind the chosen channel and platform for virtual interaction across the supply chain. These interactions are discussed from the perspective of musical concepts, music production and customer interaction:

  • Musical concepts: In terms of virtual organising, all the participants referred to digital tools such as social media platforms, iTunes, Google Play and Spotify. However, affordability and access to the internet are also shaping their interactions. This means that file size, download platforms and interaction platforms were considered as important for a successful digital strategy. Most participants said they use WhatsApp groups to interact with stakeholders, finalise concepts and coordinate schedules. Even though sophisticated platforms designed for cloud-based interaction offer a lot of functionality, the affordability of data and challenges like sign-up procedures can hamper their use.
  • Music production: The importance of owning one’s own recording studio was emphasised. This circumvents the challenges associated with using digital audio interfaces. Yes, software allows them to record in real time with everyone being in different places, but then they need to deal with bandwidth, speed and reliability, which is why these independent record producers preferred to record the final product together at the same time.
  • Customer interaction through social media: One participant mentioned that the use of social media makes it easy to interact with his customers and to enable his record label to have a presence on various digital platforms. However, he added, one must also nurture followers on a personal level (through “personal communication” and “physical presence”) and never overestimate brand strength merely based on social media reactions of support. Another participant stressed the importance of quality content and a solid work ethic to gain a tangible followership (“which calls for a lot of hard work”). They agreed that social media interaction is critical for maintaining the public image of the artist or independent record label, but does not necessarily create revenue streams. They said that social media, Facebook in particular, can be used as a reference point for potential bookings from corporates and event managers when determining the influence and likeability of an artist.

Theme 3: Digital distribution is for value creation

All the participants viewed digital distribution via major distributors such as iTunes, Google Play and Spotify as a key factor for business success. For them, digital distribution via these platforms is not about revenue generation. Instead, it is a way to improve brand equity which is needed to unlock revenue generation through business-to-business interaction. Their primary revenue come from live performances. As one participant said, “These are just like little things that give you legitimacy but makes no money…”

Digital distribution via major distributors is therefore a component of the value-creation process and not their main revenue stream.

Theme 4: Crowdfunding is non-essential for success

Most of the respondents considered crowdfunding a non-essential activity despite agreeing that it could add value to their business. This opinion was largely driven by the enormous effort required to ensure a successful crowdfunding campaign. For these independent record label producers, sustainable fund generation mostly happened a personal manner within business networks. As one participant explained: “I believe as an artist you first need to be able to invest in yourself.” The participant believed that these entrepreneurs should be willing to invest in their businesses and that the loss of money will result in critical lessons learnt. Another participant believed that crowdfunding only “works if you have a compelling story”. Furthermore, crowdfunding is a technical process, which does not guarantee returns or success of the campaign. Based on the participants’ feedback, it was clear that crowdfunding is a contentious subject that has not yet reached maturity.

What is the take-out from this?

Key findings from the in-depth interviews with the eight independent record label producers from the Cape Flats included the following:

  • Have a shared vision: The independent producers said that musical concepts need to be expanded to factor in the vision of the independent record label. What’s more, the artist and the business owner should agree on this vision. This will help to ensure that musical concepts become strategic musical narratives that ultimately translate into label identity. It is recommended that the initial business model incorporates shared vision as a prerequisite for a strong label identity.
  • Use WhatsApp groups for virtual organising: All the participants referred to the use of WhatsApp groups for communication with business partners and customers. Exclusive content distribution and direct interaction with customers via WhatsApp can create a cost-effective and vibrant online community, which provides a direct route to customer interaction. It is recommended that the initial business model incorporates WhatsApp groups for efficient virtual communication.
  • See digital distribution and social media interaction as a system: Virtual organising for digital distribution and social media interaction with customers serves as a key driver to grow brand equity when followers increase. This leads to an enhanced value proposition, which drives revenue generation. However, primary revenue is generated from live shows. Digital distribution is not crucial for revenue creation. Instead, it forms part of a complex system that incorporates social media interaction, increased downloads and investment in brand identity to build optimal brand equity. Digital distribution via major distributors is therefore a component of the value-creation process and not their main revenue stream.

Previously, corporate clients were neglected as a source of revenue. However, it is now possible for independent record labels to attract revenue from event managers and corporate clients if their brand equity justifies the investment.

  • Ignore crowdfunding for now: Globally, independent music artists have benefitted from crowdfunding. However, most of the participants were hesitant about the potential return of crowdfunding. For the participants, the probability of a successful crowdfunding campaign is not high as they have limited resources while crowdfunding calls for a huge investment of resources. So, crowdfunding is currently not considered a key activity for them.
  • Distinguish between corporates and consumers: Independent record label producers should segment customers into corporates and consumers. Previously, corporate clients were neglected as a source of revenue. However, it is now possible for independent record labels to attract revenue from event managers and corporate clients if their brand equity justifies the investment. This will, of course, also depend on the successful use of digital as a core competency.
  • Manage the customer value proposition: A key expansion from the prior business model is that customer interaction is actually a value-creation system. Social media success requires a mix of online platforms such as Facebook and Twitter, but value optimisation takes place through communication of strategic musical narratives via WhatsApp groups. Integrating strategic musical narratives with digital distribution and social media interaction as a system is critical for managing the customer value proposition across the various customer segments.

Suggested changes to the business model for independent record label producers

What insights can be incorporated into the business model for smaller producers?  Firstly, start with a shared vision to ensure alignment between all parties. Secondly, incorporate WhatsApp groups for efficient virtual communication. In addition, focus on live shows for revenue generation (with a strong focus on corporate clients), and on digital distribution and social media interaction to build brand equity. Most importantly, see customer interaction as a value-creation system.

… personalised delivery and experience management for the consumer segment is now seen as part of the value-creation process.

Suggested changes to the value chain for independent record label producers

The independent producers did not regard digital distribution as a key source of revenue because the earning potential via digital distribution was too low. However, they do realise that it is important to build brand equity. Live performances – whether self-managed, contracted through event managers or corporate clientele – were important as these generated revenue. This triggered key changes to the theoretical value chain. Firstly, personalised delivery and experience management for the consumer segment is now seen as part of the value-creation process. Secondly, successful value creation is necessary to build the brand equity required to capture optimal value, which includes the ability to tap into corporate revenue streams.

The future of music on the Cape Flats is digital

Smaller, independent record labels – such as those on the Cape Flats – can unlock new revenue streams and improve business sustainability if they enhance their digital competencies in the areas that help to build their brand equity. What’s more, digital technologies can help them to save costs and leverage advantages when competing against firms with similar service offerings.

    • This article is based on the research assignment of Arthur Price – an MBA alumnus of USB. The title of his research assignment was: Business models of independent record labels on the Cape Flats to stimulate business sustainability.
    • His study leader was Prof Marius Ungerer, who teaches strategic management, leadership and change management on programmes such as the MBA, the MPhil in Management Coaching, and the PGDip in Leadership Development at USB. Prof Ungerer is an annual Visiting Professor at the NUCB Graduate School, International MBA Program, Nagoya, Japan, and a visiting faculty member of the University of Johannesburg.

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