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Mindset change towards risk is key to building innovative economy
A GREATER appetite for risk and tolerance for failure is needed from all corners from society as Singapore looks to restructure its economy into a more innovation-driven one.
This change in mindset will ultimately determine the strength of Singapore's future economy, said business leaders and public officials at The Business Times Leaders' Forum 2016 on Tuesday.
The 16 speakers and moderators at the forum, held in conjunction with the 40th anniversary of The Business Times, shared their views across different panels on how Singapore can chart the next phase of its economic transition.
They agreed that innovation has a central role to play in Singapore's new economy, be it the creative value that it brings to the economy, or in overcoming the challenges that the country faces, but they stressed the need to change mindsets to help Singapore become the innovative, creative economy that it wants to be.
Keynote speaker Minister for Industry S Iswaran, for example, said that Singapore already has good systems, infrastructure and a skilled labour force to prime its economy for restructuring, but it was still missing a key element in sparking off the "spontaneous combustion" which fosters entrepreneurship.
"Mindset is going to be very critical going forward, and it's not something the government can just dictate; it has to be something that pervades all levels of our society," he said during a question-and-answer session.
Already, business leaders are embracing innovation, even as they flag new ways of thinking and doing things as crucial to Singapore's innovation-led economy. An on-site poll of the more than 300 attendees at the forum found that nine in 10 of them agreed that disruption was good for the economy. They also said society needed to change the way it thought and did things so that innovation can happen.
The Business Times-Standard Chartered Leaders' Survey, conducted earlier, found mindset change at the societal level to be the most important factor facilitating this economic restructuring; 35.7 per cent of 112 respondents cited this as the most important factor.
Another 30.4 per cent named companies changing their mindsets as the most crucial factor.
As co-founder and chief executive of startup accelerator JFDI Hugh Mason, a participant in the second panel, said: "Stop thinking in old-world paradigms. No business is an island."
These views were floated against a backdrop of Singapore facing increasing challenges domestically and abroad.
Domestically, it has to grapple with demographic challenges; externally, structural issues such as rising labour costs in emerging economies and the reconfiguration of global value chains have affected its trade-reliant economy.
Added to the mix are cyclical challenges, with the global economic outlook remaining uncertain. Growth is slower and more volatile all around the world.
Mr Iswaran thus warned of challenges ahead that will lead to industrial activity, business models and jobs being "reshaped, redefined or even completely displaced".
This makes risk-taking a pertinent issue that the Singapore economy must address. In the latest version of its Global Innovation Index, business school Insead said that risk aversion can result in market failure where innovation is curbed.
Therefore, clear legal frameworks need to be set up for entrepreneurs and innovators so that risks can be made more attractive, wrote Insead.
Mr Iswaran on Tuesday noted that the government has made efforts to change regulations so that they support a more innovative ecosystem.
But, he pointed out, innovation and enterprise cannot always succeed, so it is society that has to reshape its views on risk and failure, so that businesses and workers are more willing to try new things.
Already, the effects of the lack of appetite for risk and challenges is making itself felt in big banks and Internet companies based here.
As digital technology continues to weaken geographical borders, businesses and workers here face increasing competition from other companies and talents from further abroad, said the panellists. They thus need to be more culturally aware of their clients' needs, as Singapore continues to cement its status as a global node for business.
But Judy Hsu, chief executive of StanChart Singapore, noted that some of the bank's younger Singaporean employees seem less willing to work in far-flung places. Speaking on the first panel on Singapore's future ecosystem, she said technical skills were a given with these employees, but "the rest is really about the hunger, the softer skills that are ultimately going to make the bank successful".
Lack of appetite for overseas exposure is also making its effect felt on Internet companies based here.
Garena group president Nick Nash said the company has been able to grow respectably because it has been focused on growth opportunities in the region, but that it now faced an "unbelievably challenging dilemma" - that of his employees not understanding neighbouring economies and societies adequately.
"There is a two orders of magnitude of difference between incomes in Bukit Timah and incomes in Timor-Leste. The average student who grew up in Singapore often has a difficult time building a business in a much lower-income environment."
Standard Chartered Bank was the presenting sponsor of the forum.