I think my exasperation lies in this observation- that Singaporeans are only hung up over "innovations is good to have, we believe its the next tipping point, we know it drives change,...." and the wonderful list goes on. YET, it leaves many to wonder, what worked for the thriving firms on innovation or why didn't it work for us? I wish to probe deeper then that we need to re-examine- how many truly embraces this level of change? What does this change management entail? How can we contextualise innovation for ourselves?
'Singaporean managers and employees may be exceptionally creative. But Singaporean institutions foster conflicting innovation styles, their efforts do not produce any sustainable innovation activities of either type.'
- Singapore face a 'considerable difficulty in building a durable base of entreprenuerial activity- despite being richer than France, Germany and Japan on per capita basis and numerous government efforts to spur innovation.
- Is our culture is simply too risk adverse or do we lack creativity? Or could the writers rightly identify it as the fault of institutional arrangements?
- What are the types of incentives of institutions that will allow both incremental (or small scale improvements to products or services) AND radical innovation to take place?
- For long term focus, incremental innovation matters most. It involves cumulative learning with specialised training of workers to prevent other companies from "poaching" these skilled workers. With clients and major suppliers, investment into specific physical assets in important. Such practices establish a culture of 'trust, certainty and camaraderie throughout the value chain'- thus spreading the benefits of costs, benefits and risk of R&D for all to grow in the process and generally uninterupted by the 'occasional difficulty of the individual firms'.
- Role of dominant owners: shield from short-term capital market pressures and producing long term productivity goals. Impact on managers: focus on 'low-risk strategies and continous improvements on established products, ... to build a competitive edge.'
- Conversely, radical innovation focus on the short term- 'hit and miss' of seeking the next 'blockbuster' product, which would 'recover the cost of all other unprofitable endeavours'.
SO here's the big argument...
Firing of employees with the requsite skills and the knowledge after if a product does not materialise, essentially is no big deal! In fact, writers opined that 'arm-length relationships also enable such firms to poach the highly valuable 'drop-outs'. The writers argue that since fast evolving sectors' success depend on speed and flexibilty, our strong commitment of inter-firm relationship is thus a reliablity.
Paradoxically, since the nimbleness to mandate only fall on managers, and require little consultancy with the workers OR even the owners, the tendency for managers to 'wield greater powers' disperses the ownership. This frees up firms with 'liquid and virbrant equity market' to better to 'coping with novelty and catering to investors with heterogenenous risk appetite'. On investment, the stock market then allows venture capitalist to exit easily after IPO. It then suggest that this key to driving a bigger thrust for innovative companies to emerge with this constant flux of knowledge spillover to renew itself through the formation of new firms and new R&D competencies. In fact, some of my friends that visited US recently commented that the park/garage of temp 'car-stayers', was a highly regarded as anyone in there could be jolly well the next Bill Gates or Steve Jobs.
Our BIG problem then would be....
when we want encourage both incremental and radical approaches, we are at a fix then with how to set the incentives for innovation. Also, since coporate ownership is so high, we also then tend to focus more on the low risk strategies for improvements.
The authors thus challenges companies to either choose ONE of the following:
- Create longer term employment and stronger inter-firm relationships
- Disperse coporate ownership and cultivate a thriving venture capital market
Which then would be approach that best suits our 'unique cultural and economic circumstances'?
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