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Using creativity to foil copycats

Embrace experimentation, says business school professor at the launch of a new forum.

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The first edition of the the Cutting Edge forum moderated by Mr Khanna (left) and featuring Prof Yu, was attended by nearly 200 participants.

IP protection is overrated. And to avoid being replaced by machines, we should block out two to three hours each day for deep, creative work. These were some of the insights discussed by Howard Yu, professor of management and innovation at the IMD business school in Switzerland, in the first of a four-part public interactive forum titled Cutting Edge.

Launched on Oct 5 by The Straits Times and The Business Times, with the support of GuocoLand, the series features prominent thought leaders from around the world. The talks will be conducted every three months, and be moderated by ST associate editor Vikram Khanna. Besides the discussions that Mr Khanna will have with the speakers, the audience will also get a chance to pose questions during Q&A sessions.

According to Prof Yu, one prevalent complaint among executives is that products are constantly being commoditised. However, product innovation getting copied overnight is not a recent phenomenon, but one that predates all the way back to 250 years ago, he notes. "The moment you write things down, things can get borrowed, copied and (stolen)," he says.

This is why latecomers can command an advantage over pioneering firms and even topple industry incumbents, Prof Yu adds. Citing the example of Yamaha overtaking Steinway in the grand piano business, Prof Yu notes that every time industry know-how moves from craftsmanship to more rule-based decision-making, opportunities for mass production and automation are opened up.

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He adds that latecomers can also have the competitive advantage because intellectual property (IP) will eventually expire. "If you're looking at the drug industry, every time a patent drug has gone off patent, revenue crumbles. At some point IP protection will expire, and so the singular obsession around IP protection I think, is a misguided industry policy."

That said, he notes that pioneers can still maintain their edge if they choose to reinvent themselves. "Competition is almost like climbing up a mountain. If the underlying knowledge discipline stagnates, sooner or later, the latecomer will reach a similar height. But if the underlying knowledge discipline continues to shift from one to the next", then it's almost like a constant mudslide, where everyone is pushed down, Prof Yu says. "Now in that scenario, it turns out that the most experienced one will stand a better chance to stay on top."

Separately, Prof Yu observes that we're navigating in a "virtually new world", where "data is the new oil". In the past, the largest listed companies by market cap were asset heavy companies. "If you own an oil field, if you have a mineral ore, if you have big factory, then you're king," Prof Yu says. "Today if you have data, if you have consumer interface, if you have algorithm, that matters a lot."

And two factors that can explain this shift in dynamics include ubiquitous connectivity and the rise of computing power, he says. "In the world of AI (artificial intelligence) and connectivity, it's no longer just machine replacing muscle prowess, but also machine replacing human intelligence."

"What I would argue going forward is that you will see a lot of pioneering companies armed with historical know-how partnering startups. . . so that there is cross-boundary disruption."

Separately, a question posed by Mr Khanna during the event was how workers could respond in the light of new frontiers including AI and blockchain technology. Prof Yu responded that conversations which build empathy, trust and solidarity will still require humans. He adds that research by academics has shown that highly successful people make it a habit to block out at least two to three hours each day for their most creative work, and that this will make employees less likely to be replaced by robots.

Another issue raised by Mr Khanna was why "big companies should act small" as suggested by Prof Yu in his book, Leap: How to thrive in a world where everything can be copied. This revolves around the idea of conglomerates setting aside part of their budget for market experimentation, according to Prof Yu. "If you launch a product, if you fail, so what? You learn a great deal. The idea is that we need to learn from the market, particularly when we enter adjacencies because we don't know what we don't know."

He cited the positive example of Swiss Post, which has autonomous delivery robots and even drones delivering medical supplies. This was made possible under their 'early label' programme where they informed the public that they are testing out certain prototypes and may discontinue services if functionalities are not perfect. In the words of Prof Yu: "If a Swiss postal office is embracing experimentation, there's really no excuse for us not to do so."

Why then do we not see industry incumbents leaping across different knowledge disciplines more often? Prof Yu posits that this boils down to the nature of the managerial decision. "For a company to successfully leap, it cannot be guided purely by financial payback and analysis on an excel spreadsheet, it has to develop a shared agenda. Organisations must set up the right climate and structure so that (they) can embrace a lot of experimentation."

That said, he notes that innovation may sometimes be about enabling an ecosystem to flourish, rather than merely developing ingenious features. "The reason that WeChat can be so powerful is fundamentally because they link a lot of service providers on one side and customers on the other."

"I remember I was in Shanghai walking around People's Park, there were homeless people asking for money, but they weren't asking for change. They held up the QR codes and asked for donations on mobile payment," Prof Yu quips.

Separately, Cheng Hsing Yao, group managing director of GuocoLand Singapore said the firm is partnering ST and BT because it recognises that innovation in the real estate industry is critical. "Competition is getting more intense and we have to find ways to have competitive advantage. This is a forum where we could bring people together, but I also see it as an opportunity for my team to be involved, and be thinking about these issues so we can apply it in our own work."

Close to 200 participants attended the forum, which was conducted in a packed auditorium at The URA Centre. A meet-and-greet session was also held after the Q&A, with a long queue spotted during the book signing by Prof Yu.

Michael Ma, founder of the IndoChine group said: "Case studies always work for me . . . being involved in the business community, it's always good to network again, and it's a good session for that as well."