Most GCC companies focus on innovation

A majority of GCC business leaders plan to put a much higher emphasis on innovation in the year ahead, a new study reveals.

The research, conducted by global management consultancy PRTM, notes a shift from the traditional approach of importing innovation to its home-grown creation.

Based on the study titled ‘The Revival of Innovation in the Middle East,’ the research shows that virtually all GCC participants (95 per cent) are looking beyond the current economic crisis, and the majority are focusing on innovation for growth opportunities.

The study also shows that local executives are taking a long-term, sustainable approach and placing much greater emphasis on the need to build organisational and human capital to support innovation.

“The growing focus on innovation is evident throughout the region. New knowledge-based industry clusters have emerged, such as the education cluster in Qatar and the aerospace and green-energy technology clusters in Abu Dhabi. Engineering services firms in Egypt and the UAE have developed regional innovation specialties that address the construction challenges of intense heat and high salinity in ocean water,” said Dr. Anil Khurana, lead director of PRTM’s Middle East region, and co-author of the study.

“The GCC’s ability to secure an advanced ranking, regionally and globally, with respect to the quality of infrastructure, their governments’ provisions of high-technology products, and other variables, is a result of the region’s commitment to the development of infrastructure and building new economic sectors based on innovation,” he added.

The study found that the innovation landscape in the region is changing rapidly along two major dimensions. First, GCC executives are reformulating their innovation goals. More than 66 per cent of the survey respondents, 10 per cent more than their global colleagues, said they had revised their innovation goals in the past year.

And over the next 12 to 18 months, over 63 per cent of local executives expect to make changes to the strategies they use to pursue these innovation goals.

On top of that, more than one in five (21.7 per cent) of Middle East respondents say they are using innovation to create entirely new products and services compared with just 3 per cent of their global counterparts, while another 21.7 per cent of ME respondents say that they use innovation to drive into new markets or areas of public service while only 12 per cent executives globally believe so.

When devising their innovation goals, GCC executives, like their counterparts in other regions, indicated their awareness that innovation pertains to far more than just technology and patents; it is about formulating solutions to customer needs. It also involves the business model – the ways in which companies focus on what value is delivered, how it is delivered, and who the target audience is.

The second changing dimension of the region’s innovation landscape concerns how innovation is conducted. A number of executives surveyed mentioned the transition from buying innovation to doing innovation. Although buying innovation – the practice of importing most products and services – has helped modernise the local economy over a relatively short period, it has not enabled the GCC to grow strong indigenous innovation capabilities.

For these reasons, many executives in the report believe buying innovation will soon run its course. In contrast, doing innovation emphasises the generation of value, rather than its consumption. Executives realise that building a strong, sustained experience in doing innovation is essential for GCC countries to build their own innovation ecosystems.

Some of the GCC countries have already started making progress toward that goal, with aspirations of becoming innovation hubs like Silicon Valley, Ireland, or Singapore. For example, Abu Dhabi’s Mubadala Development Company, a government-owned investment vehicle, is helping change the innovation landscape in the region with its ambitious innovation agenda.

Dr. Khurana concluded: “Clearly, organisations in the Middle East are at an inflection point. Ambitious to grow, many executives in this naturally resource-rich region are uncertain of how to integrate government and private efforts or of how to best accomplish the substantial shift in mindset, culture, and resource allocation required.

“To develop the innovations needed for profitable growth, Middle East executives need to draw on the unique strengths of the region’s institutions. That has already begun; it won’t be long before some Middle East companies rank among the top 100 global innovation leaders.”

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