Smart think­ing at state and cor­po­rate lev­els is key for GCC

In­no­va­tion is top of the agenda for the re­gion with the UAE among those push­ing hard to gain and share knowl­edge with prac­ti­tion­ers in the US. And there are sev­eral ma­jor con­sid­er­a­tions to take into ac­count,

The National - News - Business - - Front Page - K Balkhi and Kathryn Sem­cow write Khadeeja Balkhi is a sus­tain­abil­ity spe­cial­ist and CNN & CSR-Europe jour­nal­ist; Kathryn Sem­cow is a con­sul­tant and team member of the GCC In­no­va­tion Ecosys­tem study busi­ness@then­ational.ae

Sil­i­con Val­ley has had its eyes on the Ara­bian Gulf re­gion, with a team of aca­demics from Univer­sity of Cal­i­for­nia, Berke­ley con­duct­ing on­go­ing re­search to un­der­stand cor­po­rate in­no­va­tion in the GCC.

The au­thors of the study, The In­no­va­tion Ecosys­tem in the GCC, have spo­ken with lead­ers of ma­jor cor­po­ra­tions across di­verse in­dus­tries through­out the GCC re­gion, such as Emi­rates and Jumeirah Group.

Here, The Na­tional talks to the re­search lead, Todd Mor­rill, an in­no­va­tion ex­pert who has sup­ported the de­vel­op­ment of more than 100 suc­cess­ful com­pa­nies and taught more than 800 teams of entrepreneurs and cor­po­rate man­agers how to launch prof­itable prod­ucts and ser­vices. A se­nior fel­low at the Univer­sity of Cal­i­for­nia, Berke­ley’s Haas School of Busi­ness, Mr Mor­rill spe­cialises in cor­po­rate pro­grammes, where he de­signs and de­liv­ers in­no­va­tion im­mer­sions to For­tune 500 com­pa­nies. His coach­ing has been proven to cut the time it takes new and ex­ist­ing com­pa­nies to bring ideas to market by 50 to 70 per cent.

q The Na­tional: We have seen a lot of gov­ern­ment-level talk around in­no­va­tion in the GCC lately. Are you see­ing a sim­i­lar push to­wards in­no­va­tion at the cor­po­rate level?

a We see lots of good ex­am­ples of in­no­va­tive prac­tices in the re­gion, too. Many com­pa­nies have im­ple­mented em­ployee idea pro­grammes, which shows a real com­mit­ment to in­no­va­tion from both the bot­tom up and top down. Jumeirah Group, for ex­am­ple, ex­pects all its em­ploy­ees to have a hand in in­no­va­tion and has a com­pre­hen­sive IT-based sys­tem for track­ing ideas and projects. You see the results first-hand when they come up with ideas en­tirely new to their in­dus­try, such as part­ner­ing with Google to of­fer a world first in dig­i­tal im­mer­sion with book­ing ca­pa­bil­ity for all Jumeirah ho­tels. Some com­pa­nies are even es­tab­lish­ing C-Suite-level po­si­tions fo­cused on in­no­va­tion. Emi­rates, for ex­am­ple, just named the for­mer Aer Lin­gus and Malaysia Air­lines CEO Christoph Mueller as their chief dig­i­tal and in­no­va­tion of­fi­cer, which shows their com­mit­ment to in­no­va­tion.

TN: Please share spe­cific sug­ges­tions for how com­pa­nies can cre­ate a cul­ture of in­no­va­tion, to help em­ploy­ees think more en­trepreneuri­ally?

In Sil­i­con Val­ley, we use some­thing called the Lean Startup method­ol­ogy, which is es­sen­tially an ex­pe­ri­en­tial hands-on process that works just as well for es­tab­lished cor­po­ra­tions as new start-ups. The premise of this method is that, in or­der to de­ter­mine if an idea is com­mer­cially vi­able, you must get out of the build­ing to talk to cus­tomers to find out what they re­ally need. We im­merse in­tra-preneurs in an in­tense process of cus­tomer dis­cov­ery, us­ing a coach­ing style we like to call “re­lent­lessly di­rect”. It’s a bit like an ex­tended boot camp – we see our fair share of tears.

TN: But don’t most com­pa­nies al­ready talk to their cus­tomers?

You’d be sur­prised. Many in­no­va­tion pro­cesses in­volve engi­neers and sci­en­tists brain­storm­ing ideas they think are fab­u­lous, or as­sign­ing only the sales and marketing teams to talk to cus­tomers. Wrong, wrong, wrong. Com­pa­nies spend a lot of money on re­search and de­vel­op­ment for prod­ucts they be­lieve will be a suc­cess, then market and at­tempt to sell the prod­uct only to find that it is not what cus­tomers want, or not what they are will­ing to pay for. You need to talk to hun­dreds of cus­tomers be­fore de­cid­ing if a prod­uct is com­mer­cially vi­able. The most suc­cess­ful Lean Startup teams are mixed func­tion (not just cus­tomer-fac­ing peo­ple, or just engi­neers) and di­verse. They run ex­per­i­ments test­ing new ideas, of­ten sev­eral per week, to re­ally un­der­stand what cus­tomers want. They demon­strate that all as­pects of the busi­ness model, from the lo­gis­tics to the marketing, will work. Only then do they re­ally start full prod­uct or ser­vice de­vel­op­ment, with its associated costs and risk. And I’m not talk­ing about “beta test­ing!” By then it’s al­ready too late. I’m talk­ing about in­ter­view­ing hun­dreds of cus­tomers, face to face, while the idea is be­ing formed, and with pro­to­types still so ba­sic that they can be made out of pa­per or sketched on a nap­kin.

TN: How can com­pa­nies elim­i­nate or min­imise costs and risks around in­no­vat­ing?

The trick is to ac­knowl­edge that any in­no­va­tive idea you have starts as a hy­poth­e­sis – ei­ther a very good, or very bad, guess. You then treat the in­no­va­tion process as an ex­per­i­ment, val­i­dat­ing or dis­prov­ing your hy­poth­e­sis from the data you gather from your cus­tomers. At this stage, you do not de­velop the idea be­yond what we call a “min­i­mum vi­able prod­uct”, or MVP, which has just enough fea­tures to sat­isfy early cus­tomers, and to pro­vide feed­back for de­vel­op­ment in the fu­ture. If your MVP does not fly with po­ten­tial cus­tomers, then you are free to throw it out and come up with a bet­ter one.

TN: Is this akin to “piv­ot­ing”?

Yes, test­ing an idea right away with cus­tomers is the essence of a “pivot”. By piv­ot­ing quickly when an idea is proven non-vi­able, you save money on un­nec­es­sary prod­uct de­vel­op­ment and min­imise risk. The method is called Lean Startup, be­cause you only spend money for an idea’s full de­vel­op­ment once you are sure the prod­uct will earn profit. For ex­am­ple, I re­cently ran a Lean 2.0 Startup pro­gramme with a For­tune 100 manufacturer. They were able to bring prod­ucts to market in about 25 per cent of the time – and at about 5 per cent of their typ­i­cal cost. They were pleas­antly sur­prised at how fast and in­ex­pen­sive the prod­uct de­vel­op­ment cy­cle be­came.

TN: Are there traits spe­cific to Mid­dle East busi­ness cul­ture that makes it eas­ier or harder to in­no­vate?

I would say the cul­ture cre­ates both op­por­tu­ni­ties and chal­lenges. I see Gulf busi­nesses as very dy­namic, very ea­ger to lead glob­ally and very open to best prac­tices. We only need to look at the progress made over the past 30 years to see that this is a re­gion that knows how to in­no­vate. At the same time, learn­ing to talk to cus­tomers can be a chal­lenge – al­beit one that can eas­ily be over­come. I re­mem­ber work­ing with a group of Kuwaiti entrepreneurs who were hor­ri­fied at the idea of ap­proach­ing strangers to con­duct cus­tomer in­ter­views. The process took a bit of coax­ing from us train­ers, and some creativ­ity on their part. In the end, they de­vised a strat­egy to stand in the mall with signs in English and Ara­bic that said, “Talk to me, please. I am do­ing re­search”. The strat­egy worked – they man­aged to get enough in­ter­views, with­out freak­ing out any strangers. It was a good ex­am­ple of a re­gional in­no­va­tion in it­self.

TN: You have said a “copy-cat” ap­proach has been the tra­di­tional way of launch­ing new prod­ucts and ser­vices in the re­gion. What do you mean by this?

His­tor­i­cally, be­cause of their rapidly grow­ing con­sumer base, Gulf economies have held a lot of room for a va­ri­ety of new busi­nesses. This has al­lowed for the easy trans­fer of brands and busi­ness mod­els that have worked well in other coun­tries, with min­i­mum risk – a strat­egy that is some­times called “cloning”. There is noth­ing wrong with this, if it works. But, over time, as more com­peti­tors en­ter the market and con­sumers be­come more se­lec­tive, you need to adapt and de­velop busi­ness mod­els to at­tract and re­tain cus­tomers. If busi­nesses and economies want to be sus­tain­able, they have to in­no­vate – they have no other choice. As the GCC mar­kets and con­sumers de­velop, they will need market-spe­cific prod­ucts and ser­vices, not simply clones. GCC com­pa­nies have a wide-open field for in­no­va­tion for both home mar­kets and for ex­port, but they need to re­ally dig in, to in­no­vate more.

Cour­tesy Todd Mor­rill

Todd Mor­rill says busi­nesses in the Ara­bian Gulf are ‘very dy­namic, very ea­ger to lead glob­ally and very open to best prac­tices’.

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