9/13/2010

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 Nations

between 1989-2008

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90th: Anticipated Changes of

Competitive 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 and

Medium 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 in

Singapore
• 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 will
continue to replenish their talent pool by aggressively recruiting both locally and
worldwide

Role of Universities and Institutes

• 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.

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Role of Universities and Institutes

• 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.

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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 on
Get-up
Projected revenue 15% 6%
growth
Projected 18% 7%
employment growth
% of Sales coming 16%-20% 11-15%
from innovative
products

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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Radical Innovation
• 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 and
shifted towards Open Innovation.
• Opportunities for universities
• To invest heavily into selected focused areas to establish
multidisciplinary research centers in universities.

On-going progress
• S’pore-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
SMART’s Innovation Centre

• S’pore –ETH Centre for Global Environmental Sustainability

• S’pore-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 next
Billion customers; focusing on “reducing
complexity of interaction, affordability, etc”.
• GE proposes Reverse Innovation
▫ GE is now selling an ultra-portable
electrocardiograph machine based on a model
developed for India and China in the U.S. Market
at an 80% markdown for similar products.

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Singapore´s Business Strategy of Innovation

Detect a • Lack of water in SG
• 100% urbanized
weakness • No major river\reservoir

Build • R&D in water

capability • Start-ups

Turn it into • $150M Desalination Plant

a strength • 10% of water supply

Exploit the • Tianjin, China, $110M

• Tlemcen, Algeria, $468M
strength • Magtaa, Algeria, world´s biggest Hyflux
/Olivia

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