3 Feb 2014
The talk of the town is all about how successful businesses depend on providing a good product that attracts and keeps customers. Estonian developers who created Skype, an online communication service used by millions of people worldwide, never imagined that using small and cheap experiments to test new ideas would lead to an extremely profitable business.
Innovative business insiders recommend Georgians seek out innovations that are easily understood and adapted by consumers and don't require huge investments, and also creates jobs in the country.
Innovative businesses are profitable
Citing the example of the Estonian developers who created Skype, Angela Prigozhina of the World Bank Country Sector Coordinator for Financial and Private Sector Development in the South Caucasus region, recommended future Georgian entrepreneurs that instead of entering the same segments without innovations it would be better to open a web design studio.
Therefore, Prigozhina believed Georgia had to focus on innovation which was driven by entrepreneurship.
She believed it was the right time for Georgia to discuss entrepreneurship development, citing reasons including the slowing of the economy and growing unemployment in the country.
"This requires the Government together with civil sector to rethink the strategy and make reforms accordingly,”|/ she added.
Moreover, the World Bank’s Fostering Entrepreneurship in Georgia 2013 Report identified entrepreneurship and innovation as an important tool in addressing job creation and sustainable growth of the country.
By analyzing the innovative activity in Georgian firms, WB experts found company innovation was lower than in the South Caucasus, and the 10 Europe and Central Asian (ECA) countries as well as 25 ECA countries.
According to the report, most of the firms were "non-innovators” and had low productivity rate. Most of the firms sold non-innovative products including 90% domestically and only 10% internationally.
The report stated a firm’s innovative activity reflected positively on the annual sale and employment growth rate of the firm. Georgian innovative firms created 30% more jobs and were much more competitive in the domestic small-to-medium enterprise global markets than the non-innovative firms.
Irakli Kashibadze, the Head of the Communications, IT and Innovations Department at the Ministry of Economy and Sustainable Development believed jobs in IT sector could be created in a simple, fast and cheap way, which was crucial to economic growth.
"IT developers can create one mobile application in two days without significant expense and at the same time sell it to local and international markets. Could you tell me any other product that you can create, export in two days and receive the income, of course not,”|/ Kashibadze said.
The Co-founder of Happy Group, a Tbilisi-based interactive application producer company said last year he and his friends created game applications for tablets "just for fun”. Nika Rostomashvili said they found this market was rapidly growing.
"Daily we sell more than 700 School Soccer applications, a game application for tablets. That is not a bad income,” Rostomashvili said.
Official statistics of Georgia reveal only 40 companies were registered in the virtual IT business sector. Georgia’s Ministry of Finance is currently in the process of calculating the annual turnover of such firms.
Aimed to stimulate the innovation IT sector, in 2011 the government introduced amendments in IT Virtual Zone law to enable firms operating in this sector to use preferential corporate taxes.
The snapshot of School Soccer, a game application for tablets.