An Evaluation of Innovation Management at Eskom

Abstract

Organisations are continuously striving to attain and maintain a competitive advantage and efficiencies through innovation. This is largely due to the fact that the innovation process provides an excellent vehicle for driving the sustained quest for competitiveness and efficiency, whether on the product, process or strategic level. The low rate of implementation of a company’s innovation strategy may be as a result of misalignment of management’s intentions in regards to innovation, and to the realities on the shop-floor. Employees are often not well informed, incentivised or motivated to contribute to the company’s innovation efforts due to, among other issues, a lack of innovation at management level, as well as unclear and misdirected innovation strategies and programmes. The study aims to identify synergies between the strategic innovation intents, goals and processes at Eskom and actual employees’ experiences and understanding of innovation at the company. In addition, the research seeks to ascertain whether Eskom has the appropriate strategies, resources and networks, as well as the internal and external resources required to be an innovative company. The study involves a detailed data review of the history, successes and challenges of innovation at the company. A detailed understanding of existing innovation processes and framework is introduced through various literature sources and interviews with innovation practitioners. This is intended to create an understanding of strategic innovation management, critical success factors and barriers of innovation within the company. An online survey is used to garner employees’ understanding about innovation at the company. Employees are asked to detail their experiences on the three keys issues and their views are contrasted with the perceptions of innovation from a strategic and management level within the company. The company has a well-documented innovation strategy that sets out the innovation goals and programmes. It has also a considerable history of innovation success, mainly from its world class Research and Development (R&D) division. Eskom acknowledges innovation as one of its core values. iii This is necessary to meet the company’s objective of developing a reliable electricity supply and developing renewables required to contribute to South Africa’s economic growth and that of the region as a whole. However, lack of broad internal communication on the company’s innovation strategy and little engagement of employees on all professions levels have resulted in innovation being limited to the area of R&D and to a select number of employees. In addition, there is limited, external engagement on innovation, with relatively few numbers of suppliers, customers and various stakeholders playing any significant role in the innovation process within the company. The main reason for these challenges is the lack of top managements’ efforts to drive and inculcate a culture of innovation internally and external, resulting in innovation being largely championed internally by a core group within the R&D department and having limited external reach and impact. The study revealed that innovation at Eskom is more focussed towards cost efficiencies with little focus on the end-users. Therefore, cost is identified as a major driver of innovation at the company, along with an obligation to comply with climate and environmental pressures exerted from government and local and international bodies Despite the noted challenges, the study highlighted a number of opportunities such as the employees’ beliefs that the company had the right characteristics in terms of size, culture, ownership, etc. and networks of external solution providers at its disposal to be more innovative. That innovation be incentivised both internally and externally was a sentiment strongly articulated by most employees. Eskom, similar to the majority of power utilities in the world, finds its innovation efforts limited by the shortage of the appropriate skills and capital intensiveness, as well as by the high levels of risk associated with innovative projects. The study concluded that within Eskom, barring the skills and costs barriers, the critical factors required for successful innovation programme are present. However, the lack of top management support and commitment necessary to drive and create a sustainable innovation culture, coupled with the failure to engage all levels of staff in its innovation programme, greatly limits innovation success levels within the company.