Saturday, October 15, 2005

Thinking Economy aka Innovative Economy I

Thinking Economy aka Innovative Economy I

The concept of Thinking Economy or the Innovative Economy could be viewed from many perspectives. From the micro-economic level, it is basically about the product value chain.

Within a short span of 6 decades of rapid technological advancement, there is basically a redefinition of economic terms such as ?commodities? and ?value add? process. Products are becoming more sophisticated with high technology content. There are also traditional ?basic items? being redefined in many ways as well as new invention or products creation that are ?non-traditional? in nature. For example, the creation of walkman to Audio laser CD, Audio mini CD player to mini MP3 player occurs within a short span of 30 years or less. These products do have high technology content with respect to the era of their creation but such technology content has become a ?basic commodity? instead of high value add creation over time.

High technology content does not necessarily mean high innovative content. There is a misconception of technology equates innovation and vice versa. Technology should be view as merely a tool, not the end product. Innovation is the process of creation of products by utilizing creative imagination (the Thinking process) couple with whatever technology available or created specifically to suit this creation. In simple terms, Technology is just like a tool like the brush to an artist. When the artist needs ?special brush? to complete his masterpiece, he will ask other people to make that special brush for him. Many times, people misconstrue that the making of the technology is Innovation, which is not. The Innovation comes from the artist, not the one who is tasked to make the special brush.

The process of creating the necessary ?special brush? is Research and Development (R&D) in technology. The one who created the need (demand) or necessity of the technology is the one who is innovative. There are also instances whereby through R&D, a new technology or technical process is created and waiting for others to utilizing it to create more products based on this R&D creation.

The creation or trying to learn the technology and produce products is what we know as ?Knowledge based economy?. It is just like the master artist thought out a good perspective and artwork but instead of him painting them out, he provide the special brush to others to help him paint and reproduce his ideas out on paper. Obviously, it is the master artist that has most value add. Using another example, it is just like famous fashion designer that asks the factories to use special clothe, machine and technique to reproduce his masterpiece. He is not the creator of the machine but he tells his technology scientist that he needs certain machine to do certain things and the scientist just creates such machine. He is the ?idea creator?, not the ?technological creator? (his scientist is). The factor is just the producer based on the ?knowledge transfer?.

In Singapore?s context, we have been relying on being the ?factory? for the ?creators? to earn out living for a long time. PAP government?s bragging of ?Knowledge Economy? is really outdated in this new era. Fast growing developing countries like China and India could absorb and learn the necessary knowledge of production quite easily. We should have moved on to the highest level of creation, that is the creator instead of remaining as the ?producer?.

The sudden emphasis on R&D spending is actually an unfortunate misunderstanding of the whole picture. Value is not originally created by technology R&D alone. It is the ?CREATOR? like the artist or the fashion designer that is the motivation of innovation. I am not saying R&D is not important but it is not supposed to be taken as the ?final solution? to our economic restructuring.

We could view this from a very simple perspective. Many innovative companies of ?creation? seldom set up factories to produce the final products. Most of the time when the product idea created is so complex that the company alone could not depend on its own technology level to solve all the technical problems involved. Thus, this company will require other companies that could provide the necessary technology or R&D (technology providers) to assist in its product development. After a few prototypes have been created, the final products will be sent to factory which may not necessary be under its charge to produce. The original idea creator is the one that put up its brand name and sells its products or ideas to the market. It could even patent the ideas and then ?license? it to other companies to reproduce the products.

Technology has become a ?commodity? in the process, in the sense that technology providers are many but the idea creator is only one.

It is very important to understand the difference between an Innovative/Thinking economy and Knowledge economy from the micro-economic perspective. Learning of knowledge to provide technological solutions is no longer a niche area which only some could master. In this internet era, information flow is tremendously easy and acquiring knowledge from such environment is no longer a big problem. Idea creation is totally a different game altogether.

A knowledge-based economy will definitely face tremendous competition from other countries, including those rapidly developing third world countries, basically because information and knowledge is easily available and attainable. It has become a commodity unlike in the past where few privileged ones have access to these information and knowledge. This is the root of our problem at the moment. We have positioned ourselves at a level which has little entry barrier and really free flow market. Thus, displacement of jobs in our economy by other cheap substitutes from these developing countries would be a norm. The structural problem will be more eminent when the developing countries move up the ladder of technology.

The environment needed to cultivate a knowledge-based economy is very different from the Thinking/Innovative economy. I will touch on this aspect in my next post.

Goh Meng Seng


Chris Klein said...
This comment has been removed by a blog administrator.
LuckySingaporean said...

my blog:

Point number 1 : Turn on your comments validation so you don't get spammed by Chris Klein.

Now for the rest of the points.
The PAP has thrust us to the forefront of technology by getting foreign talents to help us. More than 50% of the engineering graduates from NUS & NTU are now foreigners.

See we Singaporeans are trained from young to be unquestioning, obedient and indifferent. This training will help to produce the best factory workers and civil servants but not CREATORS of INNOVATIVE design and technlogy.

So for the good of Singaporeans and to help us patch up our weakness, the PAP has open the floodgates to foreigners. These R&D engineers and designers will help us innovate and creative. The govt can now continue to produce more unquestioning, obedient and indifferent citizens who will be easily ruled by the PAP.

I also have a tip for you. Your articles are darn boring. These days Singaporeans are bombarded everyday by quick ads and MTV type entertainment, they won't last 2 minutes listening to you. You have to make your pitch "finger licking good". Keep the concepts simple, entertaining and appealing.

Can you also tell that to James Gomez? His books are damn this day and age.

Did you watch the movie FlightPlan? Now the No.1 movie in Singapore - why do people pay money to watch this stuff? The plot is full of loopholes, and illogical sequences.....yet people pay money to be entertained. To get an audience attention for 2hrs, you gotta give enough punch, action and thrill.

Longwinded arguments are definitely a "no-no". ...people will be lost. In the US, they run 2.5 minutes advertisement during the presidential elections that go straight to the point - finishing with a knock out line like "Vote Bush for a Strong America!".

Singaporeans don't have the capacity to remember more than 1 or 2 things.

Goh Meng Seng said...

Dear luckysingaporean,

Thank you for your feedback! ;)

These articles will just remain as "articles"! ;) Speeches for election rallies will be very different, I guarantee.

I know it is very difficult to put such dry topic into one "entertaining" piece but I will try my best for the next one.

I do understand where you are coming from but James Gomez is basically an academic, thus he will write as an academic. I will tell him about your comment anyway.

I think speeches or articles are crafted to different audience. For a forum, the participants are expected to be a different lot. Articles that articulate a certain idea, especially a relatively new idea to its intended audience will be more lengthy, technical and academic in nature. This is what happened to James' deliberation on the New Poor in last election.

For election rallies, speeches will have to be more "entertaining" but not losing its gist of the messages that we want to put across. Else the middle ground audience would think that we only talk big without substance.

One of the important role of my personal blog here is to present a more detailed perspective of my beliefs and thoughts which would not be possible to be delivered in an election rallies. This is just an additional avenue for those who want to understand more depth in my arguments.

Hope I didn't bore you with my replies! ;)

Goh Meng Seng

LuckySingaporean said...

Your reply has failed to address the point I brought up, that the PAP has solved everything by bringing FTs to help us innovate and create. Your reply failed to address the main point that I raised about how the PAP already solved the problem you brought.

Singaporeans cannot be creative or innovative. It is simply not desirable. It is best for them to be obedient and law abiding.

Another point I want to raise is that you have obviously not been reading your Straits Times thoroughly. I see many of your views oppose that presented from the Straits Times. This is an unhealty situation. It will confuse the people of Singapore - is this the purpose of this blog??

Goh Meng Seng said...

Dear luckysingaporean,

I respect every other people's views, even in my blog. Thus, you have the right to your own opinion and there is no need for me to "rebut" every view or opinion expressed here.

I believe you are just speaking in jest. ;)

Bringing in FTs, in my opinion, could only delay the bigger problem later, it cannot really "solve" the problem. The problem would forever be inherent. Imagine that if FTs could just come here because there is something attractive here, they could also leave us for greener pasture if there exists any. Of course one could argue that there will be other FT that will come, but the problem is, what those FT left, leave with all the expertise and experience learnt from Singapore. All other FTs would have to start from the lower learning curve.

It basically means that we will always get second or third rated FTs basically due to our size and the opportunities we could provide. Period. And could that really solve our problems of lack of creativity and innovation? I really doubt so.

I do not think Singaporeans are that gullible and unable to judge for themselves. ;) They won't be confused lah.

BTW, didn't know this blog is named "Singapore Alternatives"? It is not named that way for nothing! This is a blog that provide alternatives views as against the "official" views propagaded by PAP government.

Goh Meng Seng

at82 said...

hmmmm... coming to economy... I read somewhere that WP is coming up with an new manifesto. So how is it going along? Is it nearing completion?

Even with all the faults with our current govt. they had a plan, at least a semblance of a plan.

However we have not heard much from opposition. While SDP has a plan, it is populist at best, plain economically suicidal at worst.

I hope that WP can unveil its plan soon and hopefully impress us singaporeans to vote for u all.

BTW is there any plans for WP to run in hong kah? Cos my sense is that the minister there is the weakness link in PAP line up. I would love to see him go to say the truth.

Goh Meng Seng said...

Dear at82,

I would only agree that back in the late 1960s and 1970s, PAP govt did have a full plan with the help of Dr. Goh K.S.

Economic plan cannot be looked upon solely on its own. To have a comprehensive economic plan, one must understand the importance of integrated, holistic approach in managing all aspects of governance.

For example, if you are talking about innovative economy, it is not merely giving tax rebates and incentives for people to be creative or innovative. It involves education policy, social welfare or security policy, cultural policy, laws, political system and environment, labour law, social system, mindset and environment...etc. All aspects of the four pillars of a nation, namely economic, cultural, social and political aspects.

To put up a few policy points on economy and say we have an economic plan is utterly amateurish. PAP has lost the art of managing economy in the holistic way. It merely "manage" problems without providing a clear direction with comprehensive respective plans for the various areas which "looks unrelated" but in fact with great relevance.

I am going to write about the need for a holistic approach to create a "National culture" to enhance clear economic directions in my next few postings. However, these would not be included in WP manifesto as perse as it is a complex "experimental" views from my side.

Goh Meng Seng

BEAST said...

Glad to know there are more thinking Singaporeans than I thought.

The Beast

code22x said...

I have been based overseas for several years now and do not follow speeches by PAP only overall government policies (which is also by PAP anyway). I am pro-Singapore and not exclusive support to any particular political parties. I would like to share my views regarding this topic.
While Knowledge economy is different than Innovative economy, I believe they are not exclusive and should occur together for an economy to be successful. This is because they require very different characters or type people who would have very different needs.
Innovative economy is very attractive concept because it is supposed to bring about change and new ideas that would benefit all. There is need for freedom, flexibility and space for exploration, testing ideas with high tolerance for failure. Except for the few geniuses, most people would require a structural way of thinking together with very open, thinking process oriented education background in order to succeed. Generally (sometimes different, of course), people who will succeed here are fearless (high failure rate), dreamers (yet practical), explorer, eccentric, like changes (sometimes just for the fun of it), persistent and do not like rules, regulation and discipline. They require different way to motivate & compensate as they have wider vision for their achievement appreciation (which is not necessary (exclusively) monetary). A specific environment will be needed to support, fund and protect them (and their ideas). In the US, they have Silicon Valley.
After the innovative economy conceive and proof the idea is profitable, the Knowledge economy takes over to replicate at the cheapest, fastest and best way (cheap, fast & good). They will employ the most suitable technology, at the lowest cost, most efficient approach or business process. Therefore high technical competency with different systematic thinking approach is needed (to innovate within this environment), low tolerance for failure (much testing & benchmarking to proof viability before use), discipline and efficient.
For Singapore, both types of economies are needed because of the nature of Singaporeans who are mainly very discipline, high technical competency and efficient as compared to its neighbors. And need the new innovations to keep up forward before other nations catch up. There are many ways including modifying the education system, attract innovative foreigners or companies to (educate) pass on this innovation thinking to us, and government policies to do so.

Anonymous said...


Anonymous said...

I do hope opposition have some feasible solutions for those problems they bring up

What we want is not just an opposition that ONLY voice the problems but also to come up with feasible solutions.

My impression for oppositions was quite bad in the past but probably you guys really did the hard work and that mentality somehow changed.

So keep up the good work!

Goh Meng Seng said...

Dear Code22x,

You are not wrong to say that Knowledge Economy and Innovative Economy is NOT mutually exclusive.

In fact, if you read my article carefully, you will realize that they need to exist together. Or I would rather say that Knowledge Economy is just a SUBSET of Innovative Economy.

The Innovation spurs the evolution of the knowledge creation.

Goh Meng Seng

OHenry said...

There was a time when communities would seek counsel from the elders. More experience usually translated into lessons learned. Having picked up a pearl of wisdom here and there over the years, I am now able to share a thought or two. The main lesson is to never stop learning. Seeking other points of view and new ideas like visiting your blog are steps in the right direction. Finding what is ultimately important leads one to appreciate actuality, efficiency and mindfulness. Helping others to see some of the forest through the trees is its own reward. happy thought