London Business School: innovation is key to the economic progress of a nation

Dubai, UAE, 25 November 2015 – The UAE government’s initiatives to stimulate innovation are a wise and welcome undertaking that will lead to long-term growth and diversification in line with the country’s economic vision, say London Business School experts.

According to Freek Vermeulen, Associate Professor of Strategy and Entrepreneurship, the UAE’s ability to look ahead and maintain continuous innovation in all the key business sectors, plays a key role in delivering the economic and social goals set out in the UAE Vision 2021.

“Innovation is what fuels economies in the long-term,” commented Dr Vermeulen. “Countries and companies that run out of innovation eventually run out of steam. It is important therefore – for countries as well as companies – to invest in innovation before they are in trouble, and to always keep up a minimal level of renewal also in prosperous times. The focus should never only be on what is working today.”

The real challenge, according to Dr Vermeulen, lies in maintaining innovation, which is often not straight forward. Successful companies often have trouble adapting to this approach, as they fall into what is called the “success trap” – a state where they continue doing the things that made them successful in the past, but lead to no further progress.

For companies in the UAE that wish to follow up on the government’s rallying call for innovation, Dr Vermeulen sets out five key principles of innovation. These are:

Create an innovative environment – top management will not come up with the innovations themselves. Instead, it is their task to create an environment where employees are involved in the pursuit of new ideas
Strive for the new – innovation is about identifying and eliminating antiquated practices and developing new ways of running key processes.
Question the status quo – whenever someone says: “I don’t know why we do it this way; this is how we have always done it”, you know you have encountered a prime candidate for innovation. Someone who recognises the need to change status quo is an asset. 
Cooperation – innovation is often about teamwork and it is on the boundaries between different fields and industries where new combinations can emerge. Innovation cannot take place in closed, secretive Research and Development centres. New partners with different, yet complementary skills should be sought.
Think within the box – despite popular belief, innovation requires you to think within the same, clearly defined box, with a clear strategic focus in the field you wish to operate and innovate.
The convergence of over two hundred nationalities in the UAE is one of the factors that makes the country conducive to innovation, says Julian Birkinshaw, Professor of Strategy and Entrepreneurship at London Business School, and, Academic Director of Deloitte Institute of Innovation and Entrepreneurship. Citing the success story of Silicon Valley as an example, Professor Birkinshaw says that the real story of its success is the story of people, the story of immigration.

“Many of the founders of successful companies in Silicon Valley are Indian, Chinese, Korean or any other nationality. It is, like Dubai or London, a melting pot of nationalities.

“There are two important principles of innovation for a country. First, diversity, that is enabling people from all over the world to come together and create new combinations in ways that they have never done before. The other principle is the putting in place of a guiding structure such as governments supporting certain Research and Development projects, thereby providing a sense of direction.

“In places such as Dubai and indeed Singapore and London, innovation has been enabled by a number of factors coming together. While on the one hand it has to do with government policy in terms of rules, regulations and tax breaks, it is also to do with encouraging competition by encouraging investment. This ultimately means you are encouraging innovation,” Professor Birkinshaw says.