Lecture 1 Case From Prof Hang

8/8/2019 Lecture 1 Case From Prof Hang

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Innovation and R&D in Singapore-The past 20 years & current strategic options

Stephen ZHANG

With the kind help from Professor C.C. Hang

Deputy Vice-Chancellor (Research & Business Ventures), NUS

Co-Director, Singapore-MIT Alliance

Deputy Chairman, Agency for Science, Technology and Research

Content

Review of R&D and Innovation Development (up to 2009)

Future Innovation Strategy Options


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Background

60s and before a trading port (think of Panama)

70s - Labour-intensive Industries

80s - Skills-intensive and Capital-intensive Industries

90s - High value-added industries with a focus on

design, R&D, etc

00s transformation to a Knowledge-Based Economy

(KBE) centered on technology and innovation

GDP per Capita of Selected Nationsbetween 1989-2008


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90th: Anticipated Changes ofCompetitive Paradigm

Little need to invest in R&D in the past until the 80s.

However, it was anticipated

that continued economic progress would propel Singapore into high-end knowledge-

based competition with developed countries.

extensive innovation and research would then be necessary.

The key to the transformation would depend on the availability and quality of the people

there.

It is the innovative researchers who would create a competitive advantage for the companies

(Porter 1990). They will also significantly enhance the human intellectual capital of the nation

(Thurow, 1999).

Innovative researchers will help find new problems, solutions and directions.

Why are Multi-National Companies(MNCs) interested?

MNC increasingly set up global R&D Centers outside of

their home bases

Home-base augmenting : to tap knowledge from

competitors and universities around the globe.

A trend in recent years: cut down corporate research and

source upstream research from universities & elsewhere

Open Innovation

Home-base-exploiting : to adapt standard products to local

and regional demands.


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Why is it good to SMEs (Small andMedium Enterprises) Innovators are also more likely to make start-ups and join SMEs.

This results in more capable and more dynamic local enterprises.

The innovative solutions they develop in startups and SMEs also

make it easier for MNCs to locate their home-base-exploiting R&D

sites in Singapore.

Very helpful for SMEs in Singapore to grow and serve the Asia-

pacific regions.

Boosting Innovative Talents inSingapore

A ready and abundant supply of researchers will

attract more high-value-added companies abroad.

Innovators will also help local enterprises to move

up the technology value-chain and become more

internationally competitive.

How to encourage, attract, and help people to

become innovators?


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As a part of national strategy, universities and institutes are prepared to "lose"researchers regularly to industry for them to contribute directly to industry.And in order to maintain a critical mass of experts, university /institutes willcontinue to replenish their talent pool by aggressively recruiting both locally and

worldwide

Getting innovators from oversea creates another competitive advantage

in cultural diversity well appreciated in creative team formation to

further increase innovation.

Universities and Institutes have a critical role in nurturing and

attracting innovators.

provide required training for a technically skilled persons.

undertake research investments that serve as the foundation for

industrial clusters.

serve as a knowledge broker (a knowledge hub) through which spillovers

are achieved.

Role of Universities and Institutes


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National University of Singapore and Nanyang Technological University

Jan 1991, A*STAR (Agency for Science, Technology and Research),

known as the National Science & Technology Board (NSTB) at that

time.

In 2005, Research, Innovation and Enterprise Council chaired by the

Prime Minister.

The direct national R&D expenditure substantially increased

0.85% of GDP in 1990 2.36% in 2005 3.00% by 2010.

Role of Universities and Institutes


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Researchers Per Million


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Philips Innovation Campus

The largest product development centre of Philips outside its headquarters in the

Netherlands.

Over 1200 design and development engineers.

US$280 M investments have been committed since 2000.

Responsible for 300 new inventions which resulted in 2,400 patents filed by Philips

worldwide in the past 8 years.

Since 2005, more than 1000 new products are developed in this campus every year.

Products developed at the Innovation Center generated US$6 billion in annual sales

for Philips globally.

Source:http://www.philips.com.sg/philips4philipssg/about/company/local/philipsinnovationcampus/article-

14738.page


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Strategies for SME: Encourage and Enable Spillovers

1. Demonstration effects. SME may adopt technologies introduced by

universities/institutes or multinational firms through imitation or reverse

engineering.

2. Labor turnover. Innovator may transfer important information to SME by

switching employers or may contribute to technology diffusion by starting their

own firms.

3. Vertical linkages. SME may get technology transfers from institutes or other

companies who are potential suppliers of buyers.

Technologies are "within reach" of existing human capital and technology of the

recipient companies will generate spillovers of greater value (Xu 2000, Borensztein

et al 1998, Keller , 1996, and Haddad and Harrison 1993)


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Preliminary results

On Get-up Not onGet-up

Projected revenuegrowth

15% 6%

Projectedemployment growth

18% 7%

% of Sales comingfrom innovativeproducts

16%-20% 11-15%

Future Innovation Strategy Options

To date, the broad strategies of the Singapore Government in R&D have

been in

Human capital creation (local + foreign talent) Mission-oriented RIs of A*STAR to support MNCs and SMEs

Selective Funding of R&D that are in the current & emerging areas of economic

relevance

Pro-industry policies

Infrastructure development

The type of R&D performed by MNCs sustaining/ expanding current

market.


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Sustaining technology/innovation is not enough; Universities,

Institutes, and entrepreneurs also create radical innovations.

High-end Radical innovation usually requires substantial financial and

manpower resources and extremely long time commitment (5 to 10

years).

More and more companies have reduced their corporate R&D andshifted towards Open Innovation.

Opportunities for universities

To invest heavily into selected focused areas to establish

multidisciplinary research centers in universities.

Radical Innovation

On-going progress

Spore-MIT Alliance for Research & Technology (SMART), 4 focused research groups

BioSystems and Micromechanics (BioSyM)

Center for Environmental Sensing and Modeling (CENSAM)

Future Urban Mobility (FM)

Infectious Diseases (ID)

US$6 Million Venture capital raised for biotech spinoff, supported by 3 top US venture capital

firms

US$1 Million in Grants was awarded to Student Entrepreneurs and Scientists through

SMARTs Innovation Centre

Spore ETH Centre for Global Environmental Sustainability

Spore-Israel Research Institute

Singapore Delft Water Alliance


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Disruptive Innovation

Disruptive innovation (with initially inferior performance in the

mainstream market) identified to be the new growth engine (Prof

Christensen from Harvard).

Favored by new entrants

Increasingly pursued by innovative incumbents

New strategy of developing new products targeting developing markets

Purposeful creation of disruptive technologies is an emerging

research topic in innovation management (studied in NUS)

How this goal may be achieved and what roles universities and

public research institutes could play is not clear yet

Practices of Disruptive Innovation

HP Labs in Bangalore targeting the nextBillion customers; focusing on reducing

complexity of interaction, affordability, etc. GE proposes Reverse Innovation

GE is now selling an ultra-portableelectrocardiograph machine based on a modeldeveloped for India and China in the U.S. Marketat an 80% markdown for similar products.


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Singapores Business Strategy of Innovation

Lack of water in SG 100% urbanized No major river\reservoir

Detect aweakness

R&D in water Start-ups

Buildcapability

$150M Desalination Plant 10% of water supplyTurn it intoa strength

Tianjin, China, $110M Tlemcen, Algeria, $468M Magtaa, Algeria, worlds biggest

Exploit thestrength Hyflux

/Olivia

Lecture 1 Case From Prof Hang

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