Tuesday, June 19, 2012

Importance of Innovation in Emerging Economies:
The Republic of Georgia

Georgian Wine
The Republic of Georgia is a small country just east of the black sea. Bordered to the north by Russia and to the south by Turkey, Armenia, and Azerbaijan. It is known for its rich heritage of wine making and has started developing a tourist industry that revolves around its expertise in wine making.

When it comes to innovation Georgia faces many challenges though. Recently I was speaking with a firm about consulting and the topic of innovation came up. The response to my inquiries on innovation in Georgia were not very well received. What I was basically told by this consulting firm was that innovation is not important in Georgia because it is a society of copy and paste business. Basically the way you create a business here is just to copy a western business and its business model. There is nothing wrong with this if you are the first to market but the challenge comes when you start an organization that needs to compete with an existing player.

This concept of copy and paste business is ripe for incremental innovation. By using a more evolutionary innovation approach businesses in Georgia could find serious competitive advantages. This evolutionary approach would possibly even lead to a few revolutionary innovations that could provide Georgia a means of acquiring a competitive advantage in other markets.

Currently I am working on an architectural evolutionary innovation that is doing just this. This project relates to adding transparency to face to face interviews being conducted by market and social research firms. When it comes to face to face interviews for social research or censuses methodology is extremely important and that is where this system comes in. It has been piloted in Georgia and is currently being piloted in Algeria, Armenia, Belarus, Russia, Ukraine, and Moldova. Although I will not go into to much detail about the system until it is released commercially, I did want to use it as an example of how Georgia can use incremental innovation not only to compete in Georgia but also provide products and systems that can target markets outside of Georgia and a means of further developing its growth.

The concept that in a copy an paste business society innovation is not important is seriously flawed. It is in this type of environment that incremental innovation can be significantly harnessed to generate competitive advantage. I have seen several companies in Georgia that take advantage of this concept. One was created by a colleague of mine and uses e commerce to deliver everything from food to catering to clients. This might not sound that innovative for western business models but it faces many serious and unique challenges in Georgia. My colleague has successfully found innovative ways of overcoming these challenges and is in the process of developing a new market in Georgia. Another organization that I have seen that uses innovation is UGT. I have even had an opportunity to discuss how they use a funneling model for their ideation phases. It is no surprise to me that UGT has won several awards for innovation in Georgia. It is businesses such as these that do understand and harness innovation that will build this economy and they will be the market leaders of the future as this market continues to develop.


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