In the World Economic Forum Global Competitiveness Report (2004-2005) recently released, Malaysia ranked 31 out of 104 countries surveyed, falling 2 places from the previous year. The study, amongst others, examined the existence of a nation’s patent pool for the purpose of the growth competitive index. This competitiveness in turn translates into greater FDI, a better quality of life and the ability for companies to establish commanding presences in other markets.

In short, innovation is at the heart of national competitiveness. But let’s not be quick to forget the partnering ‘I’ in this statement: Intellectual Property.

I’ve had some time in between travels to catch up on some reading over the past few weeks. And whether it was sheer coincidence or not, Business Week’s special edition last month focused on the Innovation Economy - highlighting technologies and new ideas that are changing the world. It’s no wonder the world seems to be abuzz with this shift – and I recall that it wasn’t too long ago - just under 20 years as a matter of fact, when the industrial economy shifted to the internet economy, which very quickly evolved to the information economy – and now, the innovation economy.

No doubt, these waves of change seduce national economies in shorter intervals. And with certainty, Malaysia must be prepared not only to witness this (r)evolution, but embrace it in a single lifetime.

In this month’s piece, I want to share some insights gained from reading this extremely well-written supplement, for the benefit of those who can no longer find it on our bookstores – chiming in my observations as well. Particularly as we ready ourselves for the 9th Malaysia Plan to be announced next year.

The numbers game?
My previous articles (Sept & Oct) already put forward the notion of Malaysia’s readiness to trade in the new digital economy and our need to drive return on innovation – through the development and commercialization of intellectual property (talent).

So it was exciting for me to see the writers expounded certain (similar) elements which were key indices to innovation – national R&D spend (vs GDP), human talents, the in-and-out flow of intellectual property, quantum of science graduates from institutions of higher learning. And on their global radar, five Asian countries stood out – not surprisingly – India, China, Japan, South Korea and Taiwan. I believe Singapore didn’t make the list for matter of sheer number (of people).

But here’s my observation. The population for both Malaysia and Taiwan is in the range of 23 million. And the geo-political characteristics of both nations have been largely similar. So how come our neighbour was able to well advance into the innovation economy, positioning herself well in the trade? How were they able to produce internationally recognized brands for electronics goods and computer chips? And churn out 49,000 science and engineering graduates annually? Taiwan jumped from filing 62 US patents in 2002 to 5300 the following year! A whopping 2.3% of GDP spent on R&D.

Can Malaysia funnel the same in the next planning cycle? As the saying goes, you sow what you reap – and the bigger the risk, the larger the gain. So if we’re not parking our monies towards creating unique IP for ourselves – in the form of human capital or product research, we’re setting ourselves up for a loss.

Huawei – China’s gem of an IT company, has 46 percent of its workforce in R&D. It filed 1590 patents last year, up 33 percent from 2002. And its key partners include Microsoft, 3Com, Siemens and Qualcomm.

Innovation can be cultivated. It can be accelerated.

“The fallacy about innovation was that it was all about spending on R&D or information technology. Instead it has to do with execution and getting products out faster and better. The answers are out there – for the quickest and smartest to find them,” Dianna Farrel, Director of McKinsey Global Institute.

Winner takes it all
Hypercompetition is another term that caught my attention this week. It's a global phenomenon characterized by extremely intense and rapid competitive struggles in which firms and national economies must move quickly to build new advantages and simultaneously erode the advantages of their rivals. And perhaps this is what the innovation economy subscribes to.

It seems coincidental and yet timely, that the industry seems abuzz with the government’s consideration to partially own and commercialize intellectual property from companies receiving its grants. While countries like South Korea and Singapore have benefited such programs, technology companies in other developed nations in Europe and the Americas have ascended on their own accord.

As a company that thrives on the commercialization of intellectual property, Microsoft spends more than 34% of our annual revenues on R&D – amongst the highest in the software industry.

Yet, the speed at which the rest of the world is advancing into the innovation age leaves me to agree in part with the government’s consideration. The idea is noble, remarkably plausible, and we need to ensure that the plans are well-thought out and executed, not merely left as an ambition.

Because, we continue to advance into the future at 60 seconds a minute, 60 minutes an hour. Whether it’s doing something old in a new way, or creating a niche product or a ubiquitous service in an underserved market, the challenge is before us to rapidly innovate, shrewdly manage, and quickly commercialize the gems of intellectual property.

Shopping for IP
Some people call it talent scouting. On a global scale, that is. Interestingly, countries in Asia are already produce many more engineers each year compared to the US. If we don’t increase support for basic research and if we don’t develop our own talent while continuing to mine talent from around the world, we are heading for dire straits. We’ve got to start looking attractive as the season will quickly pass.

But all is not lost. The in-and-out flow of talent and IP allows R&D to be, like any other service, ‘outsourced’. If Malaysia is able to attract first-class talent to the MSC and become a hub for brainiacs by first addressing the fundamentals, then there is still a fighting chance that the voices of innovation will become more audible

Last Updated: Tuesday, December 14, 2004