Hothouse Innovation requires more than just heat

Found a nice article on wikinomics on Hothouse Innovation which summarizes the concept of a “hothouse innovation” from Asian countries that are built under fertile conditions of accelerated growth.

Cheap yet high skilled labor, domestic customers with buying power and no brand loyalty, government handouts, greenfield infra with no legacy infra, add to that cash-rich M&A, innovating for the poor, and western FDI pretty much summarized the characteristics of a typical Chindia strength in technology innovation.

I begin to start thinking how did the 3 employers I had in Singapore so far take advantage of the above pointers. They are all GLC/A, thus much similarities. IDA had to innovate for the poor for national reasons; SingTel have to make simpler solutions for small time SME; SCS (also NCS) draws upon low-cost pool of workers by hiring direct from India or outsourcing to Cheng Du; start-ups in town has plenty of options on leveraging government handouts; M&A and FDI is escalating (foreign examples like McAfee > TenCube, or local examples like NCS > SCS); and overall a relatively less legacy infra (and a knack for renewal) are conditions that all exist here.

At the same time, the opposite is also true. Start-ups don’t survive long enough to reach M&A stage due to higher cost of living (how long can you stay with you parents); Cash-rich enterprises often “park” money in Singapore but invest into higher growth markets, large companies with capacity to innovate can’t get handouts from government that easily (or get into really complex mess of KPI to fulfill); brand loyalty is still strong in the affluent middle class, not to mention the western-worshiping mentality, and much resources are still spent tackling legacy systems in the government (which pays for 60% of the ICT services generated) and banking sector.

All the big-big-small-small business development efforts has been about anchoring, like literally setting down your anchor after you sail to this island nation, thus using the sea as its missing hinterland. “Buying power” is manifested in imports/exports (trade at the harbor is approx 300% of GDP), “Cheap Labor” is borrowed from the region but told to naturalize, “Government Handouts” are boosted by much co-investment from other countries but are told to register with ACRA, “Active M&As” is mostly cautious, look closely and it may just be Temasek reshuffling its resources and old guards. And (imho) not enough effort has been put in place to have a coordinated way to keep overall cost of living in check.

In short, there’s much to do for the real hothouse innovation effect to take root (that is, if, the hothouse model is the solution). Singapore can always stay with the previous model of hub and spoke innovation (or some of my colleagues call “Connect & Develop” C&D, versus the notion of “Research & Develop” R&D). In fact I’m doing one this week. What I fear most is that such development doesn’t lead to the companies upping the game, moving up the value chain, because of too little has went into figuring out how to leverage the collective strengths of all the agencies and business developers to exploit unique advantages.

It’ not just the fever-pitch heat that channels to a hothouse that keeps the plant growing – hygiene factors from soil quality and watering schedule, to differentiated strategies like careful selection of plants and fertilizers, are all necessary to brave the long winter.

Hothouse Innovation
See the big fat dot grow! And JB getting fatter too! World wealth in 2015 by worldmapper.org
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One thought on “Hothouse Innovation requires more than just heat”

  1. Hi Jiin Joo, thanks for mentioning the article and for providing the critical review. It’s one thing to look at the situation from over here, but it’s great to get some perspective on how things actually are ‘on the ground.’

    Your point about opposing forces gives me a lot to think about:

    “Start-ups don’t survive long enough to reach M&A stage due to higher cost of living; Cash-rich enterprises often “park” money in Singapore but invest into higher growth markets, large companies with capacity to innovate can’t get handouts from government that easily; brand loyalty is still strong in the affluent middle class, not to mention the western-worshiping mentality, and much resources are still spent tackling legacy systems in the government (which pays for 60% of the ICT services generated) and banking sector.”

    With respect to the Connect & Develop model, I think that is the way to go, and in fact we’re actually seeing a lot more of that with our clients in North America and Europe as well. Companies realize that they can’t possibly hire and retain all the best and brightest people needed for innovation, so it makes sense to look for talent and resources beyond your corporate/national boundaries.

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