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Economics & Finance

Innovating in the Arab world

Karen Cho |

Innovation, it seems, is everything that it’s cut out to be. Done right, it can take a company, government or country from mediocrity to greatness. But innovation doesn’t come easy, and in some industries, the road to innovation is a long and arduous one.

Take the pharmaceutical industry for instance, which according to Franz Humer, Chairman of Roche Holding, needs about 20 to 25 years from the germination of an idea to the “possibility” of a medicine. Suffice to say, “enormous amounts of money” are also required, as it takes “north of a billion dollars” to develop a new drug today.

“We do not understand the human body; we’ve got to do experiments on 15,000 people before we know if a drug works,” says Humer, who was a panellist on ‘Leading Innovation’ at the INSEAD Leadership Summit Middle East held recently in Abu Dhabi.

“Part of innovation is failure; there is more failure in innovation than there is in success. If I look at our 10,000 scientists who work for us, their chance of ever participating in creating a successful product is zero -- but it is more important for them to determine what doesn’t work than to find what works.”

Innovation is not always so protracted. For the Abu Dhabi Tourism Development and Investment Company (TDIC), innovation is pegged to a specified timeline -- 2018 to be precise. Tasked with developing the Saadiyat Island project, hailed to become the cultural centre of Abu Dhabi, Chief Executive Lee Tabler says they were “challenged” to optimise the 27 square kilometres of undeveloped space and transform it into a sustainable development, which would be environmentally-friendly and commercially viable. He is confident, however, that his 500-strong staff of “creative professionals”, encompassing economists, writers, artists, architects, marketers, photographers and designers, can rise to meet this daunting exercise in innovation.

Joe Saddi, Chairman of management consulting firm Booz & Company, agrees that the innovation cycle differs by industry. He adds that while technology underpins much of today’s innovation, there exists, outside those parameters, innovation relating to products like the Tata Nano; innovation centred around Starbucks where coffee is not just coffee but a lifestyle; and process innovation or outsourcing, which is in itself another way to do something completely differently.

To help foster that innovative streak in the Middle East, Saddi says that the region must make a concerted effort to boost its research and development (R&D) activities. “Where the Middle East lags behind is R&D funding. By some measures, R&D funding in the region is somewhere around 0.1 per cent compared to 1.5 per cent globally. And so companies and governments will need in the future to invest more into R&D or provide the right incentives and government frameworks for it,” he told INSEAD Knowledge on the sidelines of the Summit.

Innovation, he cautions, can also be stifled by what he calls educational and the diversity challenges, though measures are in place to address them. Schools such as KAUST, or the King Abdullah University of Science and Technology, he believes, will go a long way towards fostering an environment where innovation happens. “Unless we have education modernisation, we will not get to what we want.”

Ms Najla Al-Awadhi, Deputy CEO of Dubai Media, concurs that quality education can indeed pave the way for innovative thinking. “(If) you want people to innovate, you need to have people who can think critically, and this is extremely linked to our education system ... the innovation germ, if we want to spread it in our society, it has to start in our schools.”

She also believes that the diversity challenge is being managed well by the innovative leadership of the United Arab Emirates. Although the UAE has a high percentage of female parliamentarians, she says this was not an accident, but a result of the leadership’s innovation.

For Ms Al-Awadhi, innovation in the media sector “has really been in increasing the numbers of Emirati women in our business, and really increasing their numbers in key roles.”

Yet for all its virtues, the innovation process needs checks and balances in place. This is especially evident in developing countries who desperately want to get a head start.

Humer explains: “One of the biggest dangers is when new emerging nations embark on the process of trying to become players in research and development, that they do not conform to the same rules of the game. And the only way to do that is through international peer reviews.”

“I think the science community has to regulate that (itself). It is working to some extent, perhaps sometimes belatedly. Look at the cloning issue in South Korea, which was hailed initially and then, piece by piece, peer reviews in leading journals internationally led to the discovery that that was falsified. And I think those were red flags also to the Chinese. I think that is one of the tasks of the scientific community worldwide to self-regulate in that area.”

Regardless of the motivation, all forms of innovation have one thing in common --the cycle never stops. “If you look at the way medicine is practised, in 50 years from now, people will look at the year 2010 and classify it as the Middle Ages,” says Humer.

He adds that innovation should always be top of mind for any country seeking to improve itself. “A country like a company, if it doesn’t innovate, will go backwards in the end, so innovation for society is the only way forward -- and that is probably for a young society like the Emirati, even more important.”

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