Gillian M. Marcelle explores some of the key messages to emerge from a study of the relative success of telecommunications companies in various countries in Africa.
Firms in developing countries that wish to innovate effectively must be able to manage the process of 'technological learning'. This refers to the accumulation of capabilities to change technologies, in contrast to the more formal type of knowledge that emerges from lab-based research and development.
As in the industrialised world, firms in developing countries are better equipped to cope with rapid technological change if they develop the ability to manage strategic change and to navigate technological frontiers, the network of global suppliers, and weak national innovation systems.
Evidence supporting these conclusions comes from a study of 26 telecommunication operating companies based in Uganda, Ghana, Tanzania and South Africa, carried out by the author .
The setting for the study was a fast-moving, dynamic industry that is simultaneously a site of technological change and, in parallel, of industrial restructuring. All the sample firms owned or controlled telecommunication networks, and used sophisticated, technologically intensive systems to provide services to final customers.
Several of the companies studied have been able to implement world-class processes in the demanding telecommunications industry. These effective firms were distinguished by their ability to manage strategic change and implement technological learning systematically, focussing simultaneously on internal and external processes.
In the study, the efforts of each company in technological learning were analysed, both quantitatively and qualitatively.
Importance of internal factors
The study showed that, in order to be able to innovate and to manage technology effectively, companies must make — and sustain — adequate investment in the necessary infrastructure. This includes technological hardware, technical personnel, training, skills development and other learning routines.
Effective companies implemented specific management routines to support technological learning. For example, they employed executives who combined technical and management skills, and designed job functions that enabled these executives to bridge general line functions and technical disciplines.
In addition, these companies used recruitment, reward and retention programmes to keep their technically talented staff both highly motivated and innovative.
Such companies often had formal technological 'scan and search' functions, in other words procedures to monitor technological developments elsewhere. They also carried out detailed technological evaluation and assessment of both their internal capabilities and externally available technologies.
Technological activities were not relegated to a single department — such as R&D — within the firm. Rather, they were considered to be central features of the business strategy, thus receiving attention from the highest level of decision-making in the company.
This combination of securing adequate financial resources, and implementing appropriate management routines, is only possible if the organisational culture of the company supports technological learning. In this context, the study revealed that the human aspects of technological mastery are particularly important.
Companies that were effective in integrating technologies into their business strategies had champions who understood technological trends in the industry, and could communicate these with enthusiasm at all levels within the firm.
These champions were seen as visionaries and 'thought leaders' within the firm. They were not only an important source of technological knowledge and know-how, but often also acted as the lead problem-solver. Their technological expertise provided a basis for legitimising a culture of learning and creativity, and was also an important factor in spreading this culture throughout the firm.
The most effective firms did not leave organisational culture to chance. They encouraged individual experimentation and creativity as organisation-wide values, along with a readiness to make mistakes and learn from them. They also built confidence, supported open learning, integrated learning across the whole firm, and aligned such learning with the overall business strategy of the company.
Need to master external factors
The three critical success factors discussed above — namely the allocation of financial resources to technological learning, and management practices and an organizational culture that support technological learning — are each practices that take place within firms, and are generally under their control.
What makes innovation management particularly difficult for companies in developing countries, however, is that the technological inputs they require are often generated externally, far from their local innovation systems. Success also therefore requires firms to be able to master external factors that are outside their control.
For example, it is particularly vital for such companies to manage relationships with suppliers of equipment and services. In the case of telecommunication operating firms, this means developing the ability to manage relationships with suppliers who are the top players in the field of telecommunication equipment and services, such as Alcatel, Siemens, Ericsson, Lucent and Motorola.
These relationships need to be managed in a way that ensures critical knowledge — for example, about the functionality of equipment, about system specifications and parameters, and about appropriate network architecture — flows regularly and effectively between the supplier and developing country client.
The study revealed that firms that were economically successful tended to be those that had established joint technical teams with suppliers, the members of which enjoyed mutual respect and trust.
These teams provided a supportive environment not only for the flow of knowledge that is codified in written documents, but also for the knowledge that remains tacit, and is embodied in the skills of technical personnel. In such situations, achievements in network design and implementation exceeded expectations, and business performance was exceptional.
In one case, for example, a project team that included staff from both the supplier and the operating company — as well as specialist consultants — was able to deploy a telecommunication network in a developing country capital within only three months, and to connect more subscribers within 18 months than the fixed-line company had done in its entire existence. Neither the supplier nor the operating company would have been able to achieve this without a shared commitment to technological learning.
Besides specific links with suppliers, linkages with the wider innovation system are also relevant. Developing country firms have the potential to access technological knowledge from a rich and diverse number of sources, which include universities, commercial suppliers, technological communities of practice (groups of people who share a common interest on a subject), international development institutions and standards bodies, industry associations, trade fairs and exhibitions.
Effective firms were able to obtain technological knowledge from these sources and to evaluate and differentiate among these sources. An additional challenge faced by companies in the developing world is that their local sources of technological information and knowledge are usually out of date, and may well be largely irrelevant. Therefore, effective developing country firms usually found ways to interact directly with the global innovation system.
Indeed, the most effective companies become a source of knowledge for their national innovation systems. They do this, for example, by sponsoring training programmes, assisting with curriculum development and undertaking joint research with national universities and training institutions.
At the same time — and primarily through the activities of their knowledgeable technological champions — they interact with their peers at the technological frontier not by publishing research papers (although this may be useful) but by actively seeking publicly available sources of technological knowledge.
In summary, success for technological companies depends on five critical factors:
- allocating financial resources to technological learning;
- fostering management practices that support technological learning;
- developing an organizational culture that achieves the same objective;
- accessing external technological capabilities from suppliers;
- and accessing the local and global innovation system.
Achieving these requires firms to invest time, effort and scarce management talent. Furthermore there is no trade-off between the internal elements and the external elements of this strategy.
Firms in developing countries must therefore be concerned simultaneously with developing a range of internal learning routines, and with managing assets outside their own boundaries. Companies that can strike a balance between the two will have found the formula for competitiveness.
The study described above revealed that effective companies were those that made an adequate, timely and systematic investment in the five critical success factors described above. In contrast, less effective firms did not organise their technological learning efforts coherently.
At the same time, however, the study also confirmed that none of the five factors above are sufficient on their own to guarantee economic success. Technological learning only yields maximum benefit when it is managed as a balanced, systematic, coherent and integrated effort.
In conclusion, although many studies of innovation have focussed on the factors that enable technological learning to take place, insufficient emphasis may have been placed on exploring how developing country firms can become more effective in technological learning.
As this study confirmed, however, some key critical factors and guidelines do exist. Businesses in developing countries must learn to master internal approaches to learning and capability development similar to those used by world-class firms, while putting in place specific mechanisms to cope with the challenging local environments in which they have to operate, and with rapid technological change.
Gillian Marcelle is principal consultant, Technology for Development (TfDev), South Africa, and a visiting fellow at the University of Sussex, SPRU. She is the author of 'Technological Learning: A Strategic Imperative for Developing Country Firms'. Cheltenham: Edward Elgar, 2004.
 Marcelle, G. M. (2004). Technological Learning: A Strategic Imperative for Developing Country Firms. Cheltenham: Edward Elgar.