Nearly 80 percent of companies listed on the Nairobi Securities Exchange (NSE) and those that are members of the Kenya Private Sector Alliance (Kepsa) are allocating up to five percent of their turnover to innovation.
A research carried out by Nairobi-based firm Viffa Consult shows 14 percent of the companies allocated between six and 10 percent of their turnover. The other seven percent allocated 10 percent to the function.
The research targeted 60 companies and used stratified sampling to ensure all types of firms were covered.
“[The researched showed] 79 percent of respondents indicated an allocation of 0-5 percent, 14 percent indicated 6-10 percent with seven percent indicating over 10 percent,” said the firm in the report.
The survey further showed the companies that are most innovative are in the financial services, retail and hospitality, which adopted the fast-follower approach which involves incremental improvement in existing products based on market analysis.
The innovation strategy, however, was undermined by rapid change in consumer preferences.
“Despite fast follower being a safe and cost effective innovation option, it’s not the optimal strategy cognisant of rapid change of consumer taste and preference underpinned on current phenomenon of short product life cycles as well as pressure exerted by the global supply markets,” said the survey report.
“Thirty-five percent of respondents indicated that they applied first movers approach to innovation led by companies in media, ICT, telecommunication and manufacturing sectors.
“The strategy involves being first in market with new products based on superior user understanding,” said the report.