I have had the good fortune to move to Singapore, which has served as a springboard to experience different cultures and do work in countries like the Philippines and South Korea.
I have also had the chance to experience the world of venture capital investing through the small fund that our team in Singapore manages on behalf of the local government.
There are three important things I will take away. First, the west is overly discounting Asia’s growth potential. I have argued that the innovation axis is shifting from the west to the east.
Silicon Valley remains the global hot spot of innovation, and America continues to churn out innovative companies like Groupon and Bloom Energy, but eastern companies and entrepreneurs are gaining traction. Chinese companies like BYD are well positioned to lead the electrical vehicle market. Indonesia features a vibrant internet ecosystem, with emerging start-ups providing unique services to the local context.
Singapore is positioning itself as the global exchange, where west meets east and where India and China are both reachable via relatively short direct flights.And India’s nation of entrepreneurs is driving change in market after market.
The period of growth that Asia is enjoying still involves a heavy dose of replication and leveraging raw resources, but Western companies that discount the region’s innovation potential do so at their own peril.
Second, innovation has never been more accessible. In October, two entrepreneurs told us about the business they had built – featuring a fully functional website and lead customers – for less than $10,000. I argued then that the increasing ease of innovation meant entrepreneurs were destined to become commodities.
All things being equal, you would rather have a skilled entrepreneur than an unskilled one. But, just like Autotune and other technologies that allow passable music talents to turn into global powerhouses, lower costs and increased understanding of the process of innovation can allow anyone to be a competent entrepreneur.
Companies in industries with fraying barriers to entry need to think about shifting their focus from fighting upstarts to working with them. Companies in industries with strong barriers to entry should think about taking advantage of the increased understanding of innovation to create businesses that only they can.
Third, we are on the verge of a golden age of innovation.
The 20th century innovator who had the most impact was probably Henry Ford. By showing the power of scale economics, he ushered in an era where behemoths created processes to spread their businesses around the globe.
This quest for efficiencynaturally crowded out more exploratory innovation efforts. Entrepreneurs and venture capitalists filledthe void in some sectors of the world economy.
Academic researchers began to focus more deeply on what historically seemed like the black art of innovation. Big companies began to attempt to manage innovation in a systematic way.
As this knowledge continues to build and propagate there could be a wave of powerful innovation that addresses global challenges like poverty and resource scarcity. In particular, watch for markets that historically were inhospitable to entrepreneurs.
There are some businesses that really could be launched only by large, established companies. As these companies figureout how to realise their full innovation potential, we could see some amazing things.
There is lots of work to be done. There are two areas in particular that I think need greater attention from the innovation community.
One, the human side of innovation must be addressed. Innovation is, of course, an intensely human behaviour. Increasingly, I have heard people at large companies ask how to create human resource systems that support inno-vation.
The first thing I tell them is to make sure they are not following policies that penalise innovation, particularly poli-cies that punish prudent risk-taking.
But that is obviously not enough. We need to figureout how to create more systematic ways to track, measure, and reward people following behaviours consistent with successful innovation.
Two, most big companies are built to scale businesses, not start them. In my experience, the biggest challenge is the first mile – when a company takes that critical first step from a plan that looks great on paper to a revenue and profit-producing business.
Of course they can outsource the creation of new businesses to entrepreneurs, but they then have to pay hefty acquisition premiums for the successful opportunities, and they lose the ability to leverage all their capabilities.
First published in Harvard Business Review: blogs.hbr.org/anthony/2010/12/three_year-end_innovation_take.html