HAVING a good business model is more crucial than innovation for companies or even whole economies, the group president of a prominent Internet company has said.
Nick Nash, chief of Singapore-based consumer internet platform provider Garena, said: "We think, in many ways, that one's business model is more important than innovation because it leads to more sustainable outcomes."
Speaking as as panellist at The Business Times Leaders' Forum 2016 on Tuesday, he sang a different tune - and loudly, at that - from the other panel participants at the forum, who called for innovation and value creation to underpin Singapore's next phase of economic transition.
In his keynote speech, Minister for Industry S Iswaran, for instance, said it is "imperative for Singapore to build an innovation-led economy", as it would help the small country overcome domestic and external challenges.
Later, during the various discussions that took place during the forum, speakers also mulled over how institutions, investors, employers and employees could work together to foster innovation.
To be sure, Mr Nash did not put down innovation; in fact, he said it was "fantastic" that these were taking place, and that investments were being channelled towards making them a reality.
But he said that during his days working in private equity years ago, he had seen several business ideas burst forth, burn brightly and attract attention, but were now nowhere on the scene.
"In 2010, there were 25 Groupon clones that were funded. All of them have gone bankrupt, except for Groupon itself," he said.
"The point here is that business model matters. Innovation in the isolation of a true business model is very, very disruptive."
In his view, a good business model can strengthen a company's cash flow, but also makes for better customer and suppliers' engagement.
Taken at an economy-wide level, Singapore would do well to think through how the innovation that it is pursuing can create positive spinoffs for the economy.
He noted that most of the value-creation in the digital economy is founded by multi-sided platforms, as seen in the Internet companies that dabble in several different segments.
Using China's Alibaba and Tencent as examples, Mr Nash said the Internet giants have been a huge boost to the local economies of their respective birth places - Hangzhou for Alibaba, and Shenzhen for Tencent.
Hangzhou is now home to several start-ups and attracts many venture-capital firms.
"The single biggest priority for Singapore is to be the home for many of these multi-sided platforms," he said.
This is a strategy that several public agencies here have already committed to pursuing.
Chairman of the Agency for Science, Technology and Research (A*Star) Lim Chuan Poh said at the forum that the agency ensures that there is a good mix of major companies here so that the economy can remain vibrant.
"The presence of large anchor companies in any industry is important. We should be quite agnostic as to whether they are multi-national corporations or large local enterprises. They can build deep, meaningful collaborations within the industry," he said.