Innovation in Colombia
How to nurture creativity and growth, and what we can learn from successful systems around the world.
Ecosystem and Investment
Firstly, the general level of economic development in Colombia is not as advanced as many of the OECD industrialised nations. However, even in comparatively young countries like Israel, which is only 66 years old and lacks any significant mineral wealth, there have been great and systemic advances made in innovation, technology and broadly in the economy. Currently, Colombia remains outside of the Top 80 countries worldwide for: Research and Development; number of researchers per capita; number of patents per capita; number of university graduates per capita; and, for its tolerance and acceptance of new ideas/acceptance of different cultures and ethnic groups/acceptance or openness to change. The results of this research point to a number of challenges for innovation in Colombia.
Key to the development of innovation is investment. Without access to seed capital with which a business can invest in its staff, infrastructure and intellectual property, it is almost impossible to create a new business, especially in the technology sector, where often the investment that is required is fairly large (at least tens of thousands of dollars) and may not start generating positive returns for investors for some months, or even years. In Colombia there is very little Venture Capital (VC) activity, or startup investment on any kind that comes into the country. Hence, startups find themselves negotiating the so-called “Valley of Death,” the time between small seed financing (often from “fools, family and friends”) and large-scale investment from institutional or private equity investors, with almost no help or access to capital whatsoever. Though the Colombian government does provide some investment opportunities through “matched” contributions, tax-breaks and grants, often the startups will still be forced to find a significant amount of their working capital elsewhere.
The low-level development of the ecosystem is also reflected in the lack of institutional support from the major universities. In Silicon Valley, and indeed historically in almost all significant innovation ecosystems, the universities are critical to the support of the business success. Without a structured approach to the application of Research and Development programmes within the universities, as well as an integrated approach to the funding of new ideas at a researcher level, the ecosystem in Colombia will always struggle to nurture the best young students graduating from the best universities.
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Education and Inequality
Apart from the lack of an integrated approach to funding, research and development between businesses and the universities, there is a significant shortfall in the number of university places available within the public system. With only 32 public universities offering around 600,000 places, over 3,200,000 students do not continue on to tertiary education in Colombia. This means that a huge number of intelligent students from poor backgrounds are being lost by the system without ever fulfilling their potential.
At the secondary education level (high school), there are significant and systemic flaws in public schools in Colombia. Massive variations in quality, student attendance, resources and teaching standards have created a perfect storm within public education. The private schools, in contrast, offer a much more structured and higher level of education, further reinforcing socioeconomic divisions within the system. Unlike in the U.S. and U.K., where there exist similar socioeconomic inequality, many of the students who graduate from the prestigious private schools and universities are actively discouraged from innovating aggressively because they are more inclined to take over traditional, family-run businesses that are less inclined to make radical or innovative changes to the economy as a whole due to market inefficiencies.
The education system in Colombia also persistently uses quantitative, rather than qualitative, metrics to gauge student progress at every level of the system. These systems of “standardised testing” favour multiple-choice questions, constant grading of quantitative rather than qualitative tests, and research shows that they actively prevent students from developing original and creative thought. This checklist-learning approach is precisely the opposite to what is needed for technological and business innovation, which requires adaptive, creative, lateral thinking and problem-solving skills. Innovators must break free from these rigid systems and think outside of the box in order to create new ways of doing business.
The Human Development Index (HDI) figures for Colombia offer some insights into the problems faced at a societal level. Colombia is ranked 91st in the Human Development Index by the UNDP, and forms part of the so-called CIVETS group of countries (who are expected to drive global growth between 2010 and 2020; Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa). However, the results are then adjusted for socioeconomic inequality in order to provide a clearer picture of the country as a whole. The UNDP says that, “The HDI can be viewed as an index of ‘potential’ human development and the IHDI [Inequality-adjusted Human Development Index] as an index of actual human development.” The numbers show that Colombia’s HDI is second to Turkey’s in the CIVETS group, however, when adjusted for societal inequality, it falls disproportionately by 27.8% — the highest fall of any country in LATAM and the Caribbean, showing significant inequality in the society. When one looks at the individual metrics, the results are alarming; Colombia loses a massive 44.5% of its development potential due to income inequality, and 21.5% due to education inequality. These problems are not going to be solved overnight, but there is progress being made both by the government and in schools. The faster those changes can be made, the more quickly young Colombians will be empowered to create world-changing ideas.
Economic, Social and Cultural factors
The legislative and regulatory environments in Colombia strongly favour the status quo, and often make it extremely difficult for businesses to innovate effectively. Companies must operate within strict regulatory frameworks that often support and maintain the dominance of the existing corporate structures. Obviously, this is a clear and definite enemy of technological and economic progress, as it stifles the capacity for startups to create and deploy much-needed disruptive solutions too old, inefficient systems.
Socioeconomic inequality in Colombia presents another barrier to innovation and technological advancement. In the vast majority of developed economies (with the U.S. and U.K. as partial exceptions), the more equal a society is, the more advanced it becomes, and the faster it grows. This is especially true when it comes to innovation in business, as the more people who are able to take risks and develop their ideas, the more of them are able to succeed in generating value in the economy, employment opportunities for the people, and tax revenue for the government. However, Colombia remains deeply segregated and unequal, thereby reducing the number of individuals who are able to take risks, get funded and start companies to seek out inventive solutions to the challenges that the society faces.
Culturally there are also some significant differences between Colombia and high-innovation economies. In places like the United States and Israel, risk-taking is a core part of the shared cultural and national psyche. It forms a significant element of the American Dream along with the other things that make up the deep-seated entrepreneurial spirit. Although there is undoubtedly a strong resilience in the hearts and minds of the Colombian people, it does not often enough take the form of entrepreneurial risk-taking — especially in disruptive ideas.
Trust is also an important part of the process of innovation. Without the capacity to share and build ideas, technological advances are near-impossible, building business become infinitely harder, and the culture within companies never achieves a level beyond the employer-employee. There is also a strong urge in the Western cultures to question and challenge authority, not just to do as one is told to do, but to ask why and to offer suggestions and use creativity to solve the problems being faced. This requires two-way trust, and is exemplified in the developed markets by the “Best Practices” used by startups in order to incentivise their staff. New employees are rewarded with shares of the company, and immediately become part-owners of the business. This radically changes the mindset of the new worker and incentivises them hugely to perform at their best and stay with the company in the long-term.
The way in which startups incentivise their staff is critical. In Colombia, many jobs require 10–12 hours of attendance every day — indeed Colombians work more hours per year (over 2000) than almost any other nation on earth, yet national productivity remains staggering low. Research shows overwhelmingly that working fewer hours increases productivity across all sectors (except in the case of manual labour and, curiously, investment banking). This is especially true in startups and technology, where high skill levels are required, it is detrimental to the efficiency of the business to force staff to work long hours. The same is true of wages; paying good salaries and demanding reasonable hours in return actually incentivises staff to put in extra effort, whilst removing stress from their lives and creating happier, more productive, more creative, more profitable businesses.
The Colombian capacity for innovation and creativity is enormous, however there remain significant barriers to the continued economic success of technology and new, disruptive ideas. To succeed in this new technological world, one must be prepared to: take risks, be creative, trust in others, be accepting, and always be prepared to challenge authority. The power of the individual to make a difference is essential to the mindset of the modern entrepreneur. By taking on challenges, pushing the boundaries of education, and demanding opportunities to change the status quo, young Colombians are creating the movement for innovation out of themselves. Alongside the development of the ecosystem at an institutional and a governmental level, there are huge opportunities for Colombian innovation in the future. As more people are empowered with education, more ideas are allowed to flourish, and in a growing economy, one can be sure that both domestic and international investors will be waiting to support innovation and disruptive technology at every stage.
