Blog archive - June 2012

Inspiration hits at the strangest times: morning walks with my greyhound, a quiet moment sipping wine, or a busy and hectic day of running errands. It turns out solutions come more easily when I stop thinking about the problem. However, a key component of my ability to visualize solutions is having an understanding of the broader view. Telling someone else’s story can be challenging. As a designer of Best Practice Guidebooks, I am not involved in the primary research and robust storyboard discussions required to create our guidebooks. When a guidebook is passed to me the researcher must explain everything, in extreme detail and I am responsible for visualizing the story. However, I often find the details distracting and, while it is good to have them, I need the big picture. Working with researchers who have a superior understanding of the subject manner and are able to step back and explain the overall view helps me to create meaningful structures and visuals. When I step back from the details, clarity often ensues. Understanding the big picture helps me to better visualize graphical solutions to complex ideas. Once I design the concept, the details tend to slip into place within the larger, coheseive structure. Visualizing text can make presentations more interesting and help your audience grasp the core concept quickly. If you are looking to make your work more visual, more exciting, details are nice to have but if you don’t understand how they all work together, visualizing your text will not be easy. Take a step back from your page and think about what you are trying to communicate.

Background On the 23rd of January, the Minister of Trade & Industry Dr Rob Davies gazetted the draft Special Economic Zones (SEZs) Bill for public comment. The bill is a welcome move as the government has acknowledged there has been a deficiency with the current Industrial Development Zones (IDZ) framework. The major issues which have been characteristic of the existing IDZs have been highlighted and steps have been outlined for dealing with these issues. Now what is left is the translation of the good ideas which are there on paper into practical action steps by the government and other related stakeholders. Advantage of SEZs over IDZs The SEZs approach promises to be an effective path for the country to take with regard to regional economic development. IDZs were created with an export orientated approach to economic development whereby investors would manufacture goods for export from these zones. SEZs on the other hand can be used for regional development purposes with firms not having to be necessarily geared toward exports. Rather than creating an IDZ and then looking for investors, the SEZs will be created on the basis of identified opportunities for a particular economic activity. As an example, there are already talks by some participants in the Platinum industry for the development of platinum SEZ which would be focused on the beneficiation of platinum. Such a plan aligns with the New Growth Path’s drive for mineral beneficiation and will fall in line with the SEZ framework. Previously, the success of the IDZs was linked to the presence of an anchor tenant rather than having a large portfolio of investors from the onset. SEZs will bring a cluster approach to regional economic development where companies locate in an area knowing they can benefit from synergies of being close to firms operating in the same industry. Lack of coordinated planning arrangements across government departments proved to be a major challenge for the existing IDZs. The SEZ bill aims on promoting a collaborative approach between different government departments. The Department of Trade and Industry has now been able to get Treasury to come to the party by committing to establish a SEZ fund which will be used to finance the development of the SEZs. South Africa’s IDZs have also not been able to attract the targeted investment due to lack of a coherent marketing strategy for the IDZs. Rather than marketing individual SEZs (as has been the case for the IDZs), the approach under the SEZ framework would most likely entail marketing the country as a whole and the offerings of existing SEZs. Comparison with international best practice In some countries, SEZs offer a very varied regulatory environment to other parts of the country i.e. With regards to the tax regime, foreign exchange remittances, labour etc. The SEZ bill aims on providing a wide range of support measures to firms established in zones. Given the bill is still in the draft form, there are no specific incentives which have been outlined so it is still too early to gauge how the bill compares with other international SEZs in this regard. One of the differences between the South African SEZ bill and other international SEZ frameworks pertains to the labour component. Flexibility with regards to the labour employed in SEZs has not been built into the proposed South African bill. As with other international SEZs the South African bill aims on continuing with the one-stop shop approach for investors, which was being used under the IDZ framework. Investors will be able to avoid bureaucracy which is often linked with the process of registering a company and commencing operations. South Africa’s SEZ has a leaning toward greater participation of the government in the operation of the SEZ which is different from international best practice. Although the government is involved in the setup of the zones, in other countries there is minimal involvement by government Expected future global competitive nature of SEZs in South Africa Due to the highly competitive business environment brought about due to globalization, South Africa’s SEZs need to play on the comparative advantage offered by the country. Instead of trying to compete in markets which are already highly contested, SA can target development of markets which are unsaturated. The changing global economic landscape is seeing a shift from the traditional focus on the South supplying the North with raw materials and North selling finished products to the South. The drive toward value addition in South Africa and other developing economies is expected to place South Africa’s SEZs on a relatively competitive footing with international SEZs. This is especially the case for SEZs which were relying on obtaining relatively inexpensive resources (raw materials) from the developing economies. With a collaborative approach (i.e. social contract) between government, business and labour, South Africa is expected to harness the benefit of being the economic powerhouse in Africa and also being part of the BRICS group in order to becoming a major manufacturing economy in the world. A problem which South Africa currently sits with is the structure of the economy. The tertiary sector currently contributes more than 65 percent to the country’s GDP a structure which is characteristic of developed countries. South Africa’s high unemployment is mainly due to structural unemployment whereby there is a mismatch between the available skills in the country and the available jobs. Establishment of SEZs which are mainly geared toward manufacturing is expected to assist the country in reducing the unemployment levels. Contact: Samantha James Corporate Communications Africa P: +27 21 680 3574 F: +27 21 680 3296 E: samantha.james@frost.com http://www.frost.com

The minister of Trade and Industry, Dr Rob Davies, announced the establishment of the holding company, Saudi Arabia South Africa Holding (Sasah), which would aim at creating opportunities in mining, petrochemicals and agriculture. According to statistics from Trademap, in 2011 total South African Imports from Saudi Arabia amounted to $4.45 billion (R35.6 billion at R/$ of 8) of which 84.0 percent of the imports were for crude oil. South African exports to Saudi Arabia amounted to $360.5 million (R2.88 billion). This represents approximately R38 billion of trade between the two countries, estimates Frost & Sullivan. “South Africa’s main exports to Saudi Arabia have been predominantly agricultural produce and metals”, states Chemicals Materials and Food Research Analyst Tatenda Zingoni, at global consulting firm Frost & Sullivan. “Fruits (with oranges being the main) accounted for 28.7 percent of total 2011 exports. Metals which encompasses ores, slag and ash, iron and steel along with aluminium and article of aluminium, contributed 38.6 percent of total exports”. Saudi Arabia is South Africa’s fifth largest import source. China, Germany, USA and Japan are the top 4 import source regions. The top five import sources account for 42.1 percent of South Africa’s $41.9 billion 2011 imports. South Africa’s main export destinations were China, USA, Japan, Germany and the United Kingdom. These countries accounted for 41.0 percent of the countries destination of exports. South Africa is the continent’s leading economy, with a 2011 Real GDP of $422.0 billion, and the services sector contributing 65.6 percent of the GDP. Although the country has a more developed industrial sector relative to other countries, the major exports of the country are still mainly primary products, and imports are predominantly value-added products. South Africa’s balance of trade, therefore, mirrors other African countries. The collaboration between South Africa and Saudi Arabia is anticipated to see doubling of trade between the two countries in the coming five years, according to the Ministry of Trade and Industry. “South Africa needs to step up its value addition (beneficiation) of primary produce, such as food products, minerals and metals, in order to significantly benefit from the partnership with Saudi Arabia” concludes Zingoni. Contact: Samantha James Corporate Communications Africa P: +27 21 680 3574 F: +27 21 680 3296 E: samantha.james@frost.com http://www.frost.com

The minister of Trade and Industry, Dr Rob Davies, announced the establishment of the holding company, Saudi Arabia South Africa Holding (Sasah), which would aim at creating opportunities in mining, petrochemicals and agriculture. According to statistics from Trademap, in 2011 total South African Imports from Saudi Arabia amounted to $4.45 billion (R35.6 billion at R/$ of 8) of which 84.0 percent of the imports were for crude oil. South African exports to Saudi Arabia amounted to $360.5 million (R2.88 billion). This represents approximately R38 billion of trade between the two countries, estimates Frost & Sullivan. “South Africa’s main exports to Saudi Arabia have been predominantly agricultural produce and metals”, states Chemicals Materials and Food Research Analyst Tatenda Zingoni, at global consulting firm Frost & Sullivan. “Fruits (with oranges being the main) accounted for 28.7 percent of total 2011 exports. Metals which encompasses ores, slag and ash, iron and steel along with aluminium and article of aluminium, contributed 38.6 percent of total exports”. Saudi Arabia is South Africa’s fifth largest import source. China, Germany, USA and Japan are the top 4 import source regions. The top five import sources account for 42.1 percent of South Africa’s $41.9 billion 2011 imports. South Africa’s main export destinations were China, USA, Japan, Germany and the United Kingdom. These countries accounted for 41.0 percent of the countries destination of exports. South Africa is the continent’s leading economy, with a 2011 Real GDP of $422.0 billion, and the services sector contributing 65.6 percent of the GDP. Although the country has a more developed industrial sector relative to other countries, the major exports of the country are still mainly primary products, and imports are predominantly value-added products. South Africa’s balance of trade, therefore, mirrors other African countries. The collaboration between South Africa and Saudi Arabia is anticipated to see doubling of trade between the two countries in the coming five years, according to the Ministry of Trade and Industry. “South Africa needs to step up its value addition (beneficiation) of primary produce, such as food products, minerals and metals, in order to significantly benefit from the partnership with Saudi Arabia” concludes Zingoni. Contact: Samantha James Corporate Communications Africa P: +27 21 680 3574 F: +27 21 680 3296 E: samantha.james@frost.com http://www.frost.com

It’s always nice to have your work enjoyed and shared by others. This is a primary reason for getting excited about my job, which is to document best practices executed by companies against a variety of challenges. Recently we created an infographic to tell the story of our research that covers a variety of approaches to leveraging social media effectively, entitled “Mastering the Social Media Universe” – for the record I came up with that title while sitting in a fast food restaurant with my kids. :) See a pasted version below: [INFOGRAPHIC] Mastering the Social Media Universe View more documents from Frost & Sullivan So I mentioned that this infographic has been shared far and wide. Indeed, it has been retweeted and posted in various blogs, dissected and interpreted. All of this is great news in that we were able to connect with others using this visual format, and address challenges that others are commonly facing. Wonderful. As in many aspects of social media, the benefit generated is simultaneously hard to dispute, yet hard to calculate. Wouldn’t it be great to know how this research materially changed the thinking of the reader, and by extension generated value for that reader’s business? We would love to know. So now’s your chance – reach out to us with any kind of feedback, positive or negative on how the infographic has influenced your thinking. We will welcome it with open arms! Kudos to our graphic designer, Jannette Whippy, who is the artistic genius behind this infographic. Austin Pullmann Austin is the North American Program Manager for the Growth Team Membership, a best practices research group within Frost & Sullivan.

The survey reveals that R&D executives in Asia Pacific are focused on challenges surrounding two topics: (1) managing the product portfolio and (2) integrating inputs from an array of sources outside of R&D. In regards to the first topic, R&D executives are struggling to generate an accurate technology map—that outlines customer needs, the current technology landscape, and gaps. Developing an accurate technology map is the first step to addressing R&D’s other portfolio management challenges—prioritizing and funding projects within the portfolio. A technology roadmap allows R&D executives to develop a portfolio strategy—that pinpoints which needs match company capabilities for development. Furthermore a formal portfolio strategy is necessary for an effective portfolio management process and measuring project ROI. Customer-facing functions such as Sales and Marketing are a rich source of innovation information on everything from customer needs to feedback on current products. However, R&D executives struggle with establishing a method to consistently capture and integrate this information with their product development process. Some solutions to this dilemma include establishing regular cross-functional exchanges of ideas, or interacting with customers directly—via crowdsourcing or a formal open innovation process. To examine these challenges in more depth, the survey asked respondents to “root cause” their top challenges by indicating if they stem from issues with staffing, process, technology/systems, or strategic alignment. R&D executives attribute their challenges to two causes: limitations in staffing and processes. Fortuitously R&D executes foresee additional resources to address their challenges—both staffing and budgets are expected to increase. In view of open innovation’s (OI) growing prominence and potential to systematically capture ideas from a broad network, the survey asked respondents about their use of OI. The majority of respondents include OI in their product development processes. Open innovation is largely employed for idea generation and concept testing and customers are the primary source of ideas. Most of the respondents have a dedicated OI team within R&D. Even though companies are committed to using OI—a concept that is founded on tapping into multiple sources for ideas—respondents still cite struggles with gathering and integrating insights from Sales and Marketing and customers. This may be attributed to respondents’ challenges with the fundamentals of establishing an OI program: overcoming the fear of lost IP, establishing a framework for collaboration, and garnering the resources needed to test incoming ideas and technologies. 2012 APAC Portfolio Management and Open Collaboration View more presentations from Frost & Sullivan

One of my roles in my household is mediator between my son and husband. Like many a father and son, they are so much alike that sparks fly on a fairly regular basis. Not surprisingly, nine times out ten, their frustrations stem from a lack of communication. Needless to say, pointing this out results in an emphatic eye roll from my son and gruff sigh from my husband. However, once they do talk, there is peace in the house for at least 24 hours. So what does this have to do with business? Part of my job is to conduct annual priorities surveys, to pinpoint role-related challenges for executives in Marketing, R&D, Corporate Strategy and Development, Market Research, Competitive Intelligence, and Sales. Some challenges that come up year after year include: How do we get buy-in at all levels of the company for strategy adoption? What’s the best way to get support for that promising innovation? How can we get the strategy team to integrate our insights into the annual planning process? Why won’t Sales use the collateral we developed? Any of these sound familiar? In addition to picking their top challenges, the surveys also ask respondents to pinpoint the root cause of each challenge. In addition to limited resources, there are three recurring culprits—ineffective processes, a lack of common objectives, and inadequate communications. Another key part of my job involves creating best-in-class case studies (Best Practice Guidebooks) that address the challenges identified in the surveys. In almost every case study our team produces, the best practices require developing communication mechanisms—to generate buy-in, break down silos, tap into out of the box ideas, and create transparency and trust between stakeholders. Here are two common methods we have found for creating sustainable communications: Formal cross-functional committees—these committees tend to meet monthly and include representatives from all the relevant stakeholder groups/functions. These committees are useful to discuss resources, create transparency on project milestones, and supply information on project status prior to hand-off. Informal monthly meetings—these meetings tend to include staff from related functions (such as Marketing and R&D) and are particularly useful for sharing best practices, breaking down silos, and brainstorming long-range or disruptive ideas. Much like with my son and husband, when left to their own devices, business communications tend to break down or be shifted aside for more pressing priorities. Communications are vital to ensuring the health of any project or process and require commitment and nurturing equal to the multitude of benefits it offers. Holly is the Research Lead for the Growth Team Membership, a best practices research group within Frost & Sullivan. Follow her on twitter at @hlykehogland.