This archive report was first published on 21 October 2019.
On October 21, 2019, a study by Nairobi-based firm Viffa Consult revealed that nearly 80% of companies listed on the Nairobi Securities Exchange (NSE) and those that are members of the Kenya Private Sector Alliance (Kepsa) allocate up to 5% of their turnover to innovation.
The research, which targeted 60 companies, used stratified sampling to ensure all types of firms were covered. It found that 14% of the companies allocated between 6 and 10% of their turnover, while 7% allocated 10% or more.
According to the report, companies in the financial services, retail, and hospitality sectors are the most innovative, adopting a fast-follower approach that involves incremental improvement in existing products based on market analysis.
However, the innovation strategy was undermined by rapid change in consumer preferences. The report noted that despite the fast-follower approach being a safe and cost-effective option, it is not the optimal strategy in today's market, where consumer tastes and preferences change rapidly and product life cycles are short.
On the other hand, 35% of respondents indicated that they applied a first-mover approach to innovation, led by companies in the media, ICT, telecommunications, and manufacturing sectors. This strategy involves being the first in the market with new products based on superior user understanding.
