To Innovate, Leave Something to Chance

An old classmate of mine since primary school days has an illustrious career in construction project management. Today, he is the managing director of a leading development company listed on the Malaysian stock exchange. I once asked him what is the single most important success factor in construction project management. "Have a very good checklist, and check it religiously", he said.

What he said resonates with several other experienced project managers I spoke with in other fields such as IT project management and event management. Their common mantra -- if you want flawless execution, leave nothing to chance.

Leave nothing to chance -- this mantra has served Singapore well. Indeed, over the years, Singapore has earned a reputation for efficiency and dependability in project execution. Whether it is physical infrastructure development projects like airport and public transport, or events like the IMF convention or F1, our project planners and managers have done well when it comes to executing according to plan.

But this formula for success is only applicable when you are dealing with projects that have two characteristics -- (1) the end-targets can be well-specified ahead of time, and (2) the means to achieve the targets are also known and well-specified. In other words, you know where exactly you want to go, and you know the available roads and means (transport vehicles, fuels etc) you need to take to get there.

Unfortunately, these conditions do not apply when you are embarking on an innovation journey. When you are trying to innovate, you may know what the end goal is (e.g. kill the cancerous cells but leave normal cells unharmed), but you do not know how to get there; or you may have a fantastic new tool, but don't know what you can do with it. Often, you have incomplete knowledge of both.

Much of the innovation literature tells us that successful innovations often come about serendipitiously, i.e. the innovative ideas are often discovered by accidents and for purposess not originally pursued. Chance encounters and unexpected occurences (accidents) feature prominently as impetus for such innovative breakthroughs as the discovery of penicillin, insulin and viagra and the invention of microwave oven, vulcanized rubber, inkjet printer and paypal, just to name a few. However, this runs counter to the mindset of leaving nothing to chance. In the latter mindset, everything is regimented to achieve the planned tasks at hand, and no wandering out of the defined activities is allowed. The chance of accident has already been minimized by meticulous planning, and even if it still happens, contingent plans have already been specified to get you back on track as quickly as possible.

To improve your chance of coming up with something really innovative, however, you need to do the opposite by leaving something to chance. Allow some time to go on an explorative mode rather than your routine exploitative mode -- i.e. broaden your knowledge search to less familiar territories instead of stomping around familiar grounds . Give your ideas room to mutate by reading and trying things outside your normal routine, and having chance encounters with people you normally do not talk to. And when something unexpected does happen, sit back to ponder what it may mean and explore where it may lead you, rather than hurrying to get back on track with whatever you were originally pursuing.

To leave something to chance, you have to leave some time to chance. One of my favourite quotes is a line I read many years ago in a Princeton University brochure when I was looking for universities to apply. It went something like this -- "There is value to time that has no direction, and that can go in any direction." I have taken to heart this advice over the years.

New opportunities are staring at our face everyday. But most of us are so focused on what we are doing (the rate race...) that we miss seeing them. Are you leaving enough time in your life for chance exploration ?


NOTES

For an enjoyable account of serendipitious discoveries in science, read Royston M. Roberts: Serendipity: Accidental Discoveries in Science. Wiley, 1989.

For a more recent listing of notable serendipitious discoveries and innovations, see the Wikipedia entry on Serendipity.

Exploration vs. exploitation is a central conceptual construct (first introduced by J.G. March) in the innovation management and organization science literatue. If you like to learn more about the distinction between the two modes of innovation and their impact on firm performance, you can read this academic journal article of mine)

Promoting entrepreneurship development in Singapore: Ideas for the Economic Strategies Committee?

As some of you may be aware, the Singapore government has recently established a high-level, inter-ministerial Economic Strategies Committee (ESC) to develop and recommend strategies to grow Singapore’s future as a leading global city in the heart of Asia. You can visit the ESC website to get more details on the composition, scope and objectives of the ESC, which aims to put forward its key recommendations in January 2010 and will release its full report by mid-2010.

One of the sub-committees (Sub-committee 2) set up under the ESC is tasked to look into "Developing A Vibrant SME Sector And Globally Competitive Local Companies". Co-chaired by Mrs. Lim Hwee Hua (Minister in the Prime Minister’s Office and 2nd Minister (Finance and Transport)) and Dr. Ricky Souw (CEO, Sanwa Group and President of Singapore Precision Engineering and Tools Association), this sub-committee will recommend strategies to:

* Develop a vibrant landscape of entrepreneurial activity
* Foster the growth and internationalisation of Local Globally Competitive Companies
* Strengthen synergies between small and large enterprises

The above issues are highly relevant to the future development of the entrepreneurial ecosystem of Singapore. In addition, there are several other ESC sub-committees that may cover issues of relevant interest to the entrepreneurial community, including Sub-committee 1 (Seizing Growth Opportunities), Sub-committee 4 (Growing Knowledge Capital) and Sub-committee 5 (Making Singapore a Leading Global City).

I would like to strongly encourage everyone in the entrepreneurial community of Singapore to contribute your ideas. You can do so directly by going to the online consultation page of the ESC website to submit your suggestions and feedback. If you like to share your ideas with others in the community so as the solicit comments and feedback from others, can I suggest that you also submit your thoughts as a response to this blog post -- hopefully we can then generate a healthy online discussion among the community.

I happened to be involved in a task force set up within NUS to provide inputs to the ESC, and so will be more than happy to not only participate in this online discussion myself, but also to champion some of the best ideas emerging from this online discussion (with appropriate attribution of course) through this channel as well. I look forward to your active contribution !

Exploiting the overlooked market niche -- how about the market for left-handers ?

One of the ways to identify business opportunities is to focus on niche, minority markets that may be overlooked by the big established players who tend to target the mass, mainstream market. One example of a minority market is the market for products designed for left-handed people. Ok, I confess this market is of personal interest to me, as I'm a left-hander myself. Actually, I'm inspired to write this blog because the official International Lef-Handers Day is coming very soon -- August 13 to be exact (that's right, there is actually such a day).

Because lefties account for only about 10-15% of the world's population, most mass consumer products are designed for right handers. While left-hander version do exist, they usually are very hard to find in the mainstream consumer outlets, and usually for high value products only (e.g. golf club, hockey stick, guitars). If you are looking for left-hand scissors, peelers, knives, mugs or can-openers, you will often be out of luck. My own favourite beef is actually the cheque-book that I get from the banks.

I have come across a shop in San Francisco, and one in London, that specializes in goods for left-handers, but I am not aware of any retail shop in Singapore that specializes in this niche market. There are of course quite a few online shops that specialize in left-handed goods, e.g. www.anythingleft-handed.co.uk, thelefthand.com, lefthanded.dk, sinistershop.com, etc but even these are mostly based in the US or Europe, so you incur hefty shipping charges if you are based in most parts of Asia.

Obviously, many of the factors that cause left-handed goods to be more expensive and less efficiently distributed apply to minority products in general -- economy of scale in production, the logic of fast inventory turnover in mass consumer outlets, higher marketing costs to target a niche customer base etc. But clearly, advances in internet and web2.0 marketing technology ought to be able to help improve the market efficiency in matching left-handed consumers with suppliers -- the long-tail argument of Chris Anderson. Notwithstanding some of the online shops I mentioned, I have not really seen this particular long-tail being exploited in most part of Asia though. It may be that, while other minority consumer markets have a higher degree of physical clustering (think of Chinatown in Western societies), left-handers are not geographically concentrated. Or it may be that it is harder to identify and hence target the left-hander consumers, since you can't readily do the segmentation based on the kind of easily available demographic or socio-economic data that marketers capture (when you fill up an application form for any service, they ask you your income and occupation, etc, but did you ever get asked whether you are left or right-handed?).

Still, 10-15% is not exactly a small market segment, so I do believe that there is an under-exploited market opportunity here. Moreover, unlike trying to customize product for other minority market, where you really need to thoroughly understand what features to customize (e.g. color preference, size, packaging) and hence there is considerable product design risk, the cost for customizing product design for the left-handers should be quite low, as it usually involves nothing more than a mirror reflection of the standard product design.

So for the entrepreneurs out there, especially if you are left-handed yourself (or have loved ones who are), why don't you start thinking of ways to exploit this niche market opportunity?

I believe the key challenge is in developing the right marketing strategy. For starters, you could probably target your marketing pitch to parents of young left-handers. During my time, I get punished by some of my primary school teachers for using my left-hand in writing -- that is why I developed stammering as a child, as I was forced to write with my wrong hand for a number of years -- but these days adults are more understanding, and indeed parents with left-handed children (like me -- I have a left-handed daughter, although my son is right-handed) are usually anxious to ensure their children are not handicapped because of their handedness. And in case you do not know, there is no shortage of famous left-handers that you can draw upon for your marketing pitch -- for the artistically inclined, there's Michelangelo, Leonardo Da Vinci, Picasso and Mozart; for the scientist to be, there's Albert Einstein and Marie Curie; for the entrepreneurial, there's Henry Ford, John Rockefeller and of course Bill Gates; and for the politically inclined, there's Julius Ceasar, Napoleon, Alexander the Great and in more recent times, Mahatma Ghandi, Bill Clinton and - yes, Barak Obama. (For those of us who are Singaporean, I'm told that our very own Prime Minister, B.G. Lee, is also a left-hander.)

Do contact me if you know of any interesting venture that targets this niche market opportunity, or if you just want to share with me your own favourite grouses about wrong-handed products.

Silicon Valley-Southeast Asia Entrepreneurial Links

(Note: A slightly abbreviated version of this was published in The Bold Entrepreneur --TIECON 2009 Special Edition (May 2009), p. 16)

Much has been written about the growing entrepreneurial links between Silicon Valley (SV) and Asia. Up until the late 1990s, the links have been mainly one-way – from Asia to SV. A significant reverse flow has developed since then, with many SV-based Asians returning home to start ventures. In addition, the phenomenon of entrepreneurial circulation and cross-continent venturing has also emerged strongly. Many SV-based VCs have also started operations in Asia.

Much of the public media attention on the growing SV-Asia entrepreneurial links has centered on India and China (including Taiwan), and rightly so. Although the overseas diasporas of Southeast Asia – especially Vietnamese and Filipinos -- have already become sizable in SV since the 1990s, the phenomenon of reverse flow of entrepreneurial talents to Southeast Asia remains nascent. Nevertheless, I predict that entrepreneurial links between SV and Southeast Asia will gain much more visibility over the next decade. In particular, I believe that one spot in Southeast Asia – Singapore -- will play a prominent role in this process. This belief stems not only from my on-going research on SV-Asia entrepreneurial links, but is also bolstered by my own personal experience working on the ground, both in my role as the director of entrepreneurship promotion programs in a leading university in Southeast Asia (the National University of Singapore) as well as in my capacity as an angel investor.

Since the beginning of 2000s, the National University of Singapore (NUS) has established a new entity called NUS Enterprise with the mission to inject an entrepreneurial dimension to NUS education and research. An incubation ecosystem has been established to nurture technology spinoffs by NUS professors and students. Besides physical incubation space, we have established several seed-funding schemes to give promising ventures a head-start. A mentoring scheme has also been developed, involving not only local experienced entrepreneurs and investors as mentors, but also a number of mentors who are SV-based.

Since 2001, we have also started a global entrepreneurial immersion learning program. Each year, about 50+ NUS undergraduate students are sent to SV to intern in early-stage high tech start-ups for one year, while taking entrepreneurship courses at Stanford University on a part-time basis. This NUS Overseas College (NOC) program has since been extended to Philadelphia, Shanghai, Stockholm, Bangalore and Beijing.

As a result of the foundation laid by these and other NUS Enterprise programs, as well as various new support schemes for start-ups by the Singapore government, I am now witnessing a growing stream of new start-ups by our NOC returnees, particularly those returning from SV. Some of these have begun to explore expanding their ventures back in SV. Our incubator has also been receiving increasing enquiries from SV-based ventures to start their Asian operations in Singapore.

As an angel investor and the founding chairman of Business Angel Network Southeast Asia (BANSEA), I am also seeing a growing number of business plans coming from outside Southeast Asia, including from North America. Personally, I have invested in a SV-based venture several years ago to help it establish its Asian regional headquarter in Singapore, and am finalizing a second such deal.

As the saying goes, the best way to predict the future is to create it. I look forward to the opportunity to work with the entrepreneurial community in SV to build stronger links with Southeast Asia.

The virtue of diversity

It's been a few months since I last blogged. This is partly deliberate, as I tried to experiment with diversifying the media channels to share my ideas. Besides the usual academic journals and conferences that I continue to pursue as an integral part of my day job as a professor in NUS, I have gone back to writing for the traditional print broadcast media (2 articles in the local newspapers & 2 in niche overseas magazines), done 2 overseas radio interviews, taken on more overseas speaking engagements than perhaps I should have (Hong Kong, Paris, Penang and Barcelona...), tried a couple of international webinars, and dabbled in more social networking sites (besides Linkedin, I've added Facebook, Academia, and Twitter).

In reflecting on my experiment with diversifying media outlets over the last few months, I came to 3 basic conclusions. First, different media are good for different purposes, so maintaining a mix of media presence is necessary. The local dailies remain the most effective in local reach; I have acquaintances whom I haven't been in touch for years contacting me after reading my articles in the local newspapers. Face-to-face speaking engagements are still the best mechanisms for reaching new, high power contacts; I not only generated a number of instant consulting/ collaboration invitations from these, but a steady stream of referrals as well. Social networking sites are good for consolidating prior contacts, although not that good for generating new ones.

Second, the diverse channels do have complementary effects. People who met me face-to-face at my speaking engagements subsequently visited my Linkedin homepage and asked to be connected. People who read my newspaper articles searched and downloaded my academic publications online.

Last, but not least, openness to exploring diverse channels is important to develop the kind of novel learning & discovery experiences that lead to what Johansson has aptly called the intersection ideas in his book, The Medici Effect. Basically, intersection ideas are novel ideas that emerge from combining and synthesizing ideas from diverse & unconnected sources, vs. directional ideas that incrementally refine or extend existing ideas within a single field or paradigm. As he persuasively argued in his book, truly radical innovations tend to come from intersectional ideas, not directional ideas.

Some of the more intriguing ideas I have generated over the last few months have emerged from the less common channels I experimented with. For example, I spoke in April at a World Bank-INSEAD forum in Fontainebleau (near Paris) which was primarily targeted at innovation policy makers & practitioners from the former Soviet Union. Although I had spoken in Estonia, Hungary and the Czech Republic and lectured senior Kazakhstan officials before, I claim no real expertise in these transitional economies, and had no intention to do research or make angel investment there. I was amazed, however, to find people from some of these economies who have actually read my stuff, and one of them raised interesting questions that gave me new thoughts about the role of entrepreneurship in economic development. The interactions also convinced me how important Russia is, even though no one from Russia was even there. Two serendipitous outcome emerged: one, I now have Moscow as one of the dots I plan to connect in the near future, and two, I'm now doing new research on the role of entrepreneurs as differentiation agents in complexity economics.

The bottom-line, then, is that if you want to have an innovative edge in what you do, try pursuing diversity of information channels. Explore more dots. You may be surprised by the connections that can emerge.

"Innovated in Asia" – Globalization’s Next Tidal Wave

[NOTE: An edited & abbreviated version of this post appears in Singapore's Straits Times today]

A key feature in the last two decades of globalization of the world economy has been the massive shift of production activities to Asia. This “Made-in-Asia” wave is most pronounced in the case of electronics/IT manufacturing activities: my research shows that non-Japan Asia accounted for only 8% of world production in 1985, but increased its share to one-quarter by 2000 and as much as 45% by 2007.

I predict that the next twenty years will see a similarly massive shift of innovation activities to Asia. Just as the “Made-in-Asia” wave of the last twenty years has profoundly re-shaped the global economy and indirectly contributed to the massive trade imbalance that is one root cause for the current financial crisis, this “Innovated in Asia” wave will have an even more profound impact on the world.

In many ways, innovation has been among the least globalized economic activities in the world economy, with most forms of innovation activities – whether measured in terms of R&D expenditure, scientific publications, intellectual property (IP) creation, and sales of new products embodying such IPs – still being dominated by North America, Western Europe and Japan. But the picture is changing fast. For example, my own research shows that, while only 0.6% of the cumulative number of patents granted by the US Patent Office between 1976 and 1990 involved a first inventor based in non-Japan Asia, this had increased to 4.1% for patents granted over 1991-2000, and 9% for the 2001-2007 period. While indigenous Asian firms have been a strong driver of this shift, so too have global high tech firms from the western nations: my research shows that, among the top 500 global firms in terms of US patent ownership, over 6% of their patents granted since 2000 were invented in non-Japan Asia, vs. just 0.1% for the period 1976-90.

The surge in innovation activities across Asia is not evenly distributed. The three Asian NIEs (Korea, Taiwan and Singapore) led the first wave of growth in the late 1980s; today, these three NIEs have all spent a higher share of their GDP on R&D than UK and France. Since the late 1990s, China (and to a smaller extent India) have been leading the second wave of growth. Although China’s R&D expenditure to GDP ratio is still less than 1.5%, after adjusting for Purchasing Power Parity (PPP), China is now spending almost as much as Japan in R&D.

The drivers for the recent surge in innovative activities in Asia are many. One is the shift towards Made-in-Asia itself: before one can learn to innovate, one needs to learn how to master the use of existing technology first. The massive growth of increasingly technology-intensive production activities in Asia – especially manufacturing in China and software programming in India – has thus built the foundation upon which many innovative activities can be carried out. While it is true that much of these new innovation activities are still incremental in nature, they do contribute significantly to enhancing Asia’s competitiveness.

Another contributing factor has been the dramatic spread of internet access around the globe and its substantial impacts on lowering the geographic barriers to information flow. This not only shortens the diffusion time-lag of new knowledge from the advanced nations to Asia, but also hastens cross-border research collaboration. Increasingly, Asia is becoming integrated not just in terms of physical supply chains linking components production to final assembly, but also in terms of product design and its manufacturing. For example, two of the top three creators of US patents in China are Taiwanese firms, which also have substantial manufacturing operations in China.

A third factor is the surge in educated talents across Asia. Today, Asia graduates more technically trained manpower than Western Europe and USA combined. Although much of the tertiary-education in Asia remains of lower quality, peaks of excellence are emerging as many Asian governments increasingly pursue policies to make their leading universities globally competitive.

I predict that the current global economic recession will hasten the shift of innovation activities to Asia. Firstly, the severe financial meltdown will accelerate the return flow of the Asian diasporas in the advanced economies back to Asia. Already, many Asian high tech entrepreneurs are leaving Silicon Valley to look for venture funding and market opportunities back in Asia.

Secondly, the market demand for innovation will shift more rapidly to Asia. As highlighted by my other NUS Business School colleagues in earlier articles, while poor governance of the banking systems in the US and Europe has been the proximate cause for the dramatic collapse of the global financial system, it is the massive build-up of huge and rising imbalance in global financial flows that makes the current global system unsustainable.

In essence, while easy consumer credit has fueled the demand for a wide range of consumer goods-related innovations in the rich economies, over the next decade, I believe that we will see a substantial re-balancing of the global economy, with domestic market growth in Asia becoming a much bigger part of world demand.

This will in turn not only drive more innovations in Asia, but more importantly, it will also transform the nature of innovation activities on a global scale. “Innovated in Asia” will not be just about shifting innovation activities to Asia; it will be about creating new organizational models and financing methods of innovation to create new products and services that are more appropriate for the Asian socio-economic context. For example, innovation to meet the needs of low-income population in emerging economies – what C.K. Prahalad had called the “bottom of the pyramid” – will feature more prominently in the future. So will the “Open Innovation” model, especially the use of open source technology for disruptive cost innovation.

Bangladesh pioneering micro-financing. The Aravind Eye Hospital in India overtaking the leading hospitals in UK in eye surgery operations. Korea’s NCSoft and China’s Shanda dominating the global online game industry. Taiwan’s Giant becoming the world’s leading bicycle innovator. And Slumdog Millionaires winning the Oscars. These “Innovated in Asia” wavelets will gather momentum and coalesce into tidal waves over the next two decades.