Mr Teo Ser Luck at the Awards Presentation Dinner of the 6th Lee Kuan Yew Global Business Plan Competition, 25 Aug 2011

SPEECH BY MR TEO SER LUCK, MINISTER OF STATE FOR TRADE AND INDUSTRY, AT THE AWARDS PRESENTATION DINNER OF THE 6TH LEE KUAN YEW GLOBAL BUSINESS PLAN COMPETITION ON THURSDAY, 25 AUGUST 2011, 7:30 PM AT THE CARLTON HOTEL

Professor Arnoud De Meyer, President of the Singapore Management University

Distinguished guests,

Ladies and gentlemen,

Good evening.

It is my pleasure to join you this evening for the 2011 Lee Kuan Yew Global Business Plan Competition Awards Presentation Dinner.I would also like to extend a warm welcome to our overseas guests and wish them a very pleasant and memorable stay in Singapore.

Innovation – The New Imperative

In today’s dynamic and increasingly competitive business environment, innovation is a key driver of success because it helps businesses establish and maintain a competitive advantage.When firms and even countries create new products, services or processes to cater to changing markets and consumer demands, or generateviable solutions to real-life problems, they create intellectual capital that unlock new opportunities and fuel sustainable and profitable growth over the long term.

Turning the Concept of Innovation on its Head

As the world becomes increasingly competitive, it is no longer enough to rely on a low cost position and the traditional model of developing new products and services to survive.While technology from the developed countries has traditionally been the driver of innovation, there is now an increasing trend where ideas are conceived in developing markets before finding their way back to the developed countries.This is known as reverse or trickle-up innovation.

Innovation is about coming up with novel ideas and practical solutions to everyday problems, and the concept of reverse or trickle-up innovation illustrates that innovation is neither restricted to technological inventions nor the exclusive preserve of developed countries.

Another example is Procter & Gamble, which wanted to break into the Mexican market with its Vicks cough syrup.P&G did its research and found that the Latin Americans have a holistic view of health in general, with a long tradition of using natural remedies for their ailments.P&G worked this understanding of the local cultural preferences into its product development process and produced a version of Vick’s cough syrup that was naturally sweetened with honey. This helped P&G to make inroads into the market in Latin America.P&G then capitalised on its success in Latin America by positioning the same product as a premium offering in the European and United States markets, which turned out to be profitable.Reverse or trickle-up innovation has helped P&G to enlarge its global market share simply by taking into consideration local conditions and needs, and customising their products to cater to different markets.

These two examples show that MNCs in the developed nations are keen to tap on the consumer markets in emerging economies.Our companies can help foreign MNCs innovate and develop products that will appeal to the emerging markets in Asia and around the world.

Asia can lead in innovation

In The Atlantic Century report published by the Information Technology and Innovation Foundation (ITIF), 16 indicators were used to examine the innovation-based competitiveness of 40 nations covering the United States and five Asian countries, including Singapore, China, India, Japan and South Korea.Interestingly, the ITIF found that although these countries were classified as emerging economies, they made faster progress than the United States towards an innovation-driven economy over the last decade.China made the most progress, followed by Singapore in second place, Japan (10th), India (14th) and South Korea (17th).This shows that even though Asian countries are currently not in the league of the top-performing economies in the world, they have the potential to lead in innovation and to achieve innovation-driven economic growth in time to come.

The Impact of Social Networks on Innovation

New communication technologies and social network channels like Facebook, blogs, Twitter and YouTube have changed the way that products and services are designed, and the way that new products and services are being marketed.

As new media and social networks do not distinguish between the developed and developing nations, anyone in any part of the world is now able to harness his or her best creative talents to come up with innovative products and services using new media and social network technologies.For example, an alumnus of the Lee Kuan Yew Global Business Competition, Leonard Lin, who graduated from SMU with an Information Systems Management degree, emerged 2nd runner-up together with his team in the 2005/2006 competition.His team, TYLER Projects, has since grown into a profitable social network game developer and consultant with an annual revenue of more than S$1 million, and one of its creations, Battle Stations, bears the distinction of being Singapore’s first Facebook multiplayer game with 3.5 million registered users all over the world.

Likewise, there are many opportunities for Singapore and the other Asian countries to leverage on new social media to create new innovative products and services. After all, Asia has the highest number of Internet users at 44 per cent of the total number of Internet users in the world, followed by Europe at 22.7 per cent and North America at 13 per cent, according to Internet World Stats.Breaking down the numbers by countries, the Asian countries which lead in terms of Internet penetration rate, defined as more than 50 per cent of the population using the Internet, are South Korea, Japan, Singapore, Hong Kong and Taiwan in that order.

So, Singapore has every potential to make use of new social media to innovate, create and develop new products and services that will capture the world’s imagination, create a lifestyle trend or change the way that people live and work.

Singapore can also learn from the concept of reverse or trickle-up innovation by continually looking out for new ways to improve the value proposition of existing products or services, and seeking new and practical means of addressing present-day problems.Only then would it be able to attract foreign investments or cultivate a competitive advantage that would enable it to generate innovation-driven economic growth in the long term.

Conclusion

The Lee Kuan Yew Global Business Plan Competition is a step towards encouraging greater creativity and promoting an innovative mindset among our youth.The six teams which made it to the finals today deserve our commendation and I would like to congratulate every member of the teams on your innovative ideas and enterprising spirit.Keep up the good work and may you persevere with your innovations as we hope to see you succeed in the regional, or even global business arena one day.

Thank you.