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Asia is using technology to build new models for delivering goods and services to its vast low-income populations. Many of those models will lead to powerful innovations for global markets. -
The US relies on market forces to spur innovation, but it's starting to lag behind nations that make innovation a national priority with policies that support research and education.
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Iqbal Z. Quadir
Why Asia can take the lead
Asia is positioned to generate a torrent of new products and services that could make it the global leader in innovation. China and India are fast adopting modern technologies and making great economic strides. South Korea, Taiwan, and Singapore have already leaped forward. Yet all of these countries were among the world’s poorest only a few decades ago. With this momentum, Asia could become the center for innovation in the 21st century.
But that outcome is hardly certain. Asia has much to overcome: the region has adopted innovations primarily from abroad; about 45 percent of its four billion people live on less than $2 a day; the average Asian income is only 40 percent of the world average; other than Japan, successful Asian economies are newly industrialized; and many Asian governments are weakly democratic or nondemocratic.
Yet adversity can foster innovation, and innovations can convert adversity into advantage. Indeed, Asia has been doing just that. The region has generated innovations—defined here as new ways of doing things that have actually been put into practice, not patents or good ideas that haven't—in at least five ways. Each could generate innovations at an even faster pace in the not too distant future.
First, innovations often emerge from existing technologies. Electricity, for instance, was not harnessed originally to facilitate computing or wireless communication, but it led to these transformative innovations. Likewise, Filipinos and Indians are innovating in ways to transfer money through mobile phones, which were originally invented in Western countries for other purposes. Thus, when technologies—no matter where or why they were invented—are applied to diverse contexts, they provide a foundation for previously undreamed-of permutations and combinations.
Second, 1.8 billion people in Asia live on less than $2 a day. Although India is considered an IT powerhouse, more than one billion Indians lack Internet access. However, the self-interest of Asia's considerable commercial entities will compel them to engage vast low-income populations in serious commerce. That will require new products, approaches, and forms of employment and participation. Microcredit and innovative distribution schemes for solar panels, cell phones, and drip irrigation systems in rural communities are examples of ways to engage the traditionally unengaged.
Third, Asia's companies know that by addressing low purchasing power, they can reach vast markets. The lure of these markets is pushing them to search for ways of achieving dramatic savings in energy and materials. Tata's affordable, fuel-efficient Nano automobile, for example, caters to low-income markets, but its impact may extend well beyond them. Admittedly, the environmental effects of the Nano remain to be seen because it will probably translate into more cars on the road and the product itself has yet to mature. However, the thinking behind the Nano and the practical experience that will result from its use could lead to innovations for global markets that increasingly must reckon with climate change.
Fourth, while Asia's late industrialization implies a weakness in fundamental research, it also means that the region is less locked into old infrastructure and legacy technologies and more willing to adopt new ones. For instance, 95 percent of South Korean households have broadband Internet access, while only 60 percent of US households do.
Fifth, though vast amounts of human energy and ingenuity remain dormant beneath Asia's weakly democratic or nondemocratic regimes, this is changing rapidly. Recent events in Iran—whatever their eventual outcome—demonstrate the potential for the Internet, mobile phones, and Twitter to bolster democratic pressures. As democratic forces gather steam and people become more empowered, new entrepreneurial activities and innovations will follow.
These forces of innovation are self-reinforcing, their effects cumulative, and their impact exponential. Together, they can make Asia this century's global center for innovation.
Robert Atkinson
America's policy problem
Investment literature warns that “past performance is no guarantee of future results.” This advice should be attached to anything written about the innovation position of the United States vis-à-vis Asia. All too often, defenders of the status quo dismiss Asia’s prospects as an innovation leader because the United States has been the leader for so long—and they assume it will continue to be. But past performance in innovation is no guarantee of future performance, as we have seen with one-time leaders that have lost their advantage, such as Germany and Great Britain. In fact, while the United States once led the world, it no longer does by many measures, and absent significant changes to public policy, it won’t in the future. Asia will.
Already, the United States lags behind other countries in innovation-based competitiveness. The Information Technology and Innovation Foundation (ITIF), which I head, recently published a report called The Atlantic Century. It used 16 indicators to examine the innovation-based competitiveness of 40 nations, including the United States and five Asian nations (China, India, Japan, Singapore, and South Korea). We found that the United States is sixth, not first—behind Singapore, Sweden, Luxemburg, Denmark, and South Korea.
Strikingly, the ITIF found that all of the 39 other countries studied have made faster progress toward an innovation economy over the last decade than the United States has. Dead last is not good either in sports or in innovation-based competitiveness. Among Asian nations, China made the most progress, followed by Singapore (2nd), Japan (10th), India (14th), and South Korea (17th). While the United States ranked 30th in the rate of growth of corporate R&D as a share of GDP, China ranked 4th and South Korea 10th. The United States ranked 29th in growth in the number of scientific researchers as a share of total workers, while China ranked 1st, South Korea 4th, Singapore 5th, and India 10th. If these different rates of improvement continue, as they are likely to, without significant policy changes in the United States the US position will probably continue to fall and Asia’s will likely rise.
One reason many observers maintain their faith in US innovation leadership is that they focus only on the core strength of the United States: its strong market and business environment, which are conducive to innovation. The culture of the United States is more entrepreneurial than that of many nations, including China and Japan. Many US firms continue to be leaders in innovation. But national innovation leadership also depends on having a strong innovation policy system, and on this score the United States is at risk.
Unlike most leading Asian nations—including Japan, South Korea, Singapore, and China—the United States does not have an explicit national innovation policy. Other nations have developed explicit and strategic national innovation policies that, among other factors, include generous tax incentives and direct funding for innovation. In the United States, the continued dominance of neoclassical economics doctrine, which holds that the market will take care of everything, means that efforts to develop similar strategies here are attacked as heavy-handed industrial policy. In fact, the emerging field of innovation economics makes it clear that markets, left to themselves, will underperform with regard to innovation and that they need to be complemented by strategic innovation policies: generous R&D tax credits and capital investment incentives, strong support for science and technology (including efforts to ensure an adequate supply of scientists and engineers), and other related policies. The short answer to the question of whether Asia will lead is that it will do so if the United States lets it by continuing to rely on market forces alone to generate innovation leadership.
07 May 2010 · 08:42:14 PM GMT
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Let us also think from other directions on this issue.
Let us think, from where the new ideas will come and which country/continent/county/component/city and finally individual will dominate?
In fact ideas and innovation always comes from eclectic sources and no one can say that one particular idea may not come from Antarctica or from Arctic Circle, these continents may not dominate but that idea generated will dominate the world.
Any how, there are infinite angles to discuss here.
Asia with sheer population, educated population, may dominate a bit, however, when it comes to implement USA, Europe and Australia could dominate 21st century.
Also, why now Africa in picture? It could dominate at the human resource supply chain to the developed nations who could generate innovative ideas for their firms.
On more point, in fact the biodiversity Africa has no other continent has, hence, in the field of Biotechnology, Biosciences, Life Sciences, Africa has capability to take lead.
In the field of technology Japan and India could compete with USA and Europe.
In Manufacturing even China could get strong challenge from lesser known but cheaper cost countries.
Thus I mean to say the market it still open and competition is still open on manufacturing front.
Finally, there is one more possibility that, some one or two or some firms/organizations, will come with all inclusive model and will take a lead. Thus, it may not be a country or continent that will dominate. Already it has happened in the field of Automobile in the 20th century that only top 10 organizations dominated the Automobile Sector all around the world, irrespective of which country they were.
Hence, I firmly believe that still anything and everything is possible.
Posted 20 September 2009, 06:38 by Dr. Ashish Manohar Urkude
The definition of innovation is tautologous in the following sense “we assume that if a company consistently outperforms … in the long term… it must be innovating”.
“we eliminate the short term effects of marketing campaigns”. How would you do that if a company consistently & effectively engaged in these activities over the long term?
So we look at growth compared to competitors & conclude the difference is innovation but you say in the first paragraph “the role of execution .. is often not taken into account” & then this parameter is conveniently forgotten!
The sectors consumer goods… Clearly very driven by the need to bring forward new products models or features. What about the boring more traditional sectors? Or is this model simply not applicable there. Where is it applicable then?
Business model innovation is said to be the most important but is not defined & neither are any convincing examples given.
I greatly respect & admire what is being done & attempted here but this analysis is clever but unconvincing.
Final word. Running a successful business is a complex holistic task. This reductionist approach focuses on one parameter & as such is fundamentally flawed. We need to know when innovation is the key is the most important factor in any particular instance where ´business performance needs to eb improved. Otherwise this is merely a form a executive entertainment.
Posted 19 September 2009, 03:24 by Frank Moffatt
I do not believe Asia will ever innovate like USA does.
Why? Because there is a difference between research and re-search.
Innovations are achieved by entreprenuers who can take an idea and devote their life, their money and their hardwork to see it through.
New ideas do not breed on lands that do not take risks. Optimizing manufacturing (China), Services (India) or Quality Control (Japan) does not mean conditions are optimum for new ideas to prosper. In fact, it is just the opposite, mass producing or optimizing an existing product is the recipee that risk-averse people follow.
Posted 10 September 2009, 23:26 by Vivek Sharma
One must not write-off Europe from this possibility. East European nations like Romania et al are already giving Asia a run for their money.Take the case of the IT outsourcing induastry, where East European nations are besting India.
Also, one cannot write off nations like Brazil, Egypt etc. , who may be dark horses.
All things considered, I think there will be no specific Region or continent which will prevail — it will be a mix of countries from Asia, Europe, South America, and even Africa.
Posted 9 September 2009, 02:41 by Siddharth Chatterjee
The center of economic gravity will shift to Asia, unless China and India stumble. In our branding work in India, I am struck with the level of intelligence and energy of the people we meet.
There is a stark contrast between India and the West. India displays a tremendous curiosity, drive and energy. But it is often insufficiently channeled and focused. In Europe, everything is channeled and focused but there is often insufficient energy. The point is, finding direction is probably easier for India than finding drive and energy is for Europe.
The possibility of upward mobility and the sense that this is now a real option, regardless of class or background, seems to be uniting this diverse country. Moreover, it already had the major social reforms needed to accommodate the growing middle class 60 years ago.
Posted 8 September 2009, 09:40 by Tjaco Walvis
It is impossible to plan for breakthrough innovation – it occurs when knowledge and unique variables form a pattern in the imagination within a split second during a situation that provides enlightenment – the “Ah Hah!” moment. The issue is the ability for large enterprises to allow for the future materialization of the Ah Hah – it is never in “the plan” and what isn’t in the plan will not see the light of day. Developing and feeding an all-inclusive innovation culture has to be driven by the Chairman and CEO. When BOD’s begin to focus their attention on the ideas and loose their insatiable addiction to a concentration on dollars – the dollars will follow. This paradigm shift is unlikely for most corporations regardless of where they are headquartered. They must have a Chief Innovation Officer whose job is to design and install the requisite infrastructure to foster, identify, select, and develop the unplanned “Ah Hah”. Then they must recognize and compensate the people who consistently contribute their imagination to innovation.
It is the unusual suspect who usually has the imagination capacity to contribute on a consistent basis. Enabling them is the task at hand. The imagination is like any other muscle in the body – the more you exercise it the better it gets. Unfortunately people with active imaginations are an annoyance to those on the executive team who find safety in rational, linear thought and routine entrenchment.
Until “creative” people are positioned at the top of organizations, shareholders can not expect any significant organic growth.
Posted 3 September 2009, 09:17 by dave campbell
“NECESSITY IS THE MOTHER OF INVENTION”
I fully agree that Asia would become the centre for innovation in the 21st century.
Countrie like china all these years followed the production concept i.e mass production & distribution.
But,as the Marketing concept evolved it shifted the threshold to Product centred “Make & Sell” concept to Customer “Sense & Respond”. This started the beggining of innovation era.
-India,earlier lacked in R&D approach,but during these years certain organisations have changed,& innovation is the new mantra for success.
*Biotech firms like Biocon & Dr Reddy have established core competency in these areas & are creating new defitions for innovation.
*A perfect instance of innovation in automobile industry,is presented by Tata Motors with the release of 1 lakh dream car.
#The main point to be considered here is that the current market is a global market.Until & unless an organisation doesn’t innovate or add on innovative features,it would succumb in the hands of some other organisation having strong R&D.
#The current market is driven by technology,which is defining newer ways of providing comfort,making life more easier & safer.To,cater all these needs innovation is needed.
GENERIST & STRATEGIC APPROACH-
*US totally depends on the market forces for innovation,but asian countries have segmented the markets,understood the needs & wants of customers & deliver the products that caters t0 their needs.
*The change can be bought by changing the generist approach to strategic.
strategic approach-concentrate on few products,innovate,provide superior qualities.
MILES & SNOWS APPROACH:
us markets can apply the miles & snows strategy-
1.PROSPECTOR-this strategy deals with innovation,taking risks which is suitable in a dynamic ,growing environment like U.S.
example:MICROSOFT.
2.ANALYSER-U.S. markets can apply this strategy which deals with maintaining a stable business while innovating.
example:SONY.
Posted 30 August 2009, 03:14 by Ashish Mishra
Last week, the San Francisco Business Times hosted an “Innovation Summit” to address these very issues. The basic issue, as expressed by Reg Kelly, director of the California Institute for Quantitative Biosciences (QB3), is how to create wealth in a knowledge-based economy?
Speakers from industry and the public sector agreed that the US is falling behind because of the lack of a national innovation policy that addresses a full range of issues from innovation zones that offer tax credits and other incentives to investing in public education. John Kao, author of “Innovation Nation,” discussed the need for an ecosystem — a community and a culture of creativity — that enables creative thinkers to challenge one another and thrive.
One aspect that was striking to a broad range of participants/audience members, was the tremendous advantages of scale in places like China.
Posted 20 August 2009, 15:31 by Carol Piasente
Depends upon how you define innovation( Not going to specify all but few Important)
Asia
1)Smart Production in New Areas
2)Consumer Innovation ( Thinking/Spending/ Knowledge)
3)Infrastructure Innovation in Government & People Thinking
4)Business Confidence
US
1)Banks- New Investment Vehicles
2)Auto Industry
3)Consumer Spending
4)Internet Services
5)Energy
US & Asia
1)Mckinsey Thinking
A
Posted 16 August 2009, 00:44 by Abhi
“Let us applaud for ourselves” and thank to the globalisation which has brought a magnificant change in the business arena of asian continent.In 90s, at the end of the nineteenth centuary asian markets were opened to the global markets,where the trade barriers had become flexible and the exchange of people,expertise were also increased. starting at a lower magnitude some countries like japan, china, ofcource india are playing a big role in technology, energy, spaceresearch, nucleardeals etc.These nations started spending billions on research and developement which gradually lead them to new innovations in diversified areas and handling technology with a great expertise at this point of time countries of world are no match with the asian countries in their technology. Each and every area has been substituted with local technology and innovations prices has become less and people started spending more. This as a cause the world markets turned their way to india where they noticed a huge opportunity to extend their networks, at the other side indian started thinking wisely so started searching among the choices. This paved a way to provide products and services for a resonable sums due to this monopoly is reduced and supply increased due to competition. coming to the educational status institutions are filled with knowledgeable students making their debuts into the business world with new ideas and strategies. There wouldn’t be any wonder if india becomes a super power in the upcoming future.
Thanks for the leaders and the people who powered india and made me to agree that india will be a super power in future.
Posted 15 August 2009, 01:40 by Ramisetti.Raghavendra