Innovation is only way forward for Arab world

Innovation, it seems, is everything that it is cut out to be. Done right, it can take a company, government or country from mediocrity to greatness. But innovation does not 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," said 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 the 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."

But innovation is not always so protracted. For 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 said 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, agreed that the innovation cycle differs by industry. He added that while technology underpins much of today's innovation, there exists, outside those parameters, innovation relating to products such as 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 said 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 about 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 cautioned, can also be stifled by what he called educational and 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," he said.

Najla Al Awadhi, Deputy Chief Executive Officer of Dubai Media Incorporated, 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 said.

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

For Al Awadhi, innovation in the media sector "has really been in increasing the numbers of 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 that desperately want to get a head start.

Humer explained: "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 it 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," said Humer.

He added that innovation should always be top of mind for any country seeking to improve itself. "A country is like a company, if it doesn't innovate, it 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 Emiratis, even more important," said Humer.

Untapped market

One of the reasons why the Middle East is experiencing a shortage of workers is the untapped youth market, said David Arkless, President of Corporate and Government Affairs at Manpower Incorporated.

"All of the young people being born are not automatically or necessarily going into the workforce. So we have an average unemployment rate of young people in the Arab World of more than 30 per cent. Now that is a serious problem. If you come to somewhere like the UAE, it's not as much of a problem – less than seven per cent. If you go to Egypt, it's 47 per cent," Arkless told Insead Knowledge at the summit.

"It's the potential for social unrest when 50 per cent of the unemployment in this whole region is young people – because what do young people do when they've got nothing to do? So one of the biggest issues I see for this region is, first of all, how do we get long-term unemployed young people into the workforce?"

Women could also help boost the pool of non-expat talent workers.

"There is an increasing number of women in the advanced education stages, which is – it seems that at first glance – an encouraging trend," said Sherif El Diwany, Director, Head of Middle East and Arab Business Council, World Economic Forum.

"However, if we look at this objectively and calmly, we can realise that this is also a reflection of certain social transformation that this region is going through."

He was referring to the cultural dilemma faced by working women in the Arab World, about whether they should put career over family, though the latter is highly favoured by society.

"I think we'll continue keeping our guard up and be attentive to this phenomenon and to understand additional circumstances or variables that will actually effectively open up opportunities to be equal between young men and young women in society, to allow them to compete on an equal footing," he said.

Insead, El Diwany added, could "play a role inviting this kind of celebration of successful women in society".

Likewise, Arkless believes that Insead can help play a role in addressing the problem of youth unemployment. "I think there is a role in this region because we don't see too much great research going on in this area of what is the future of the workforce. Because if people get into a job, then they get some pride and they start to develop. It's a good cycle all around."

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