Developing to Enhance Dalians Software Sector

Winning in the Knowledge-Innovation-Creative EconomyMichael EnrightPlenary Session 4 Facing the Challenges of a Creative Economy

November 2015 Copyright Michael J. Enright2Winning in the Knowledge-Innovation-Creative EconomyProfessor Michael EnrightUniversity of Hong Kong and Enright, Scott & Associates Limited

TCI Conference, 2015

This presentation is incomplete without the spoken commentary.November 2015 Copyright Michael J. EnrightProfessor Michael EnrightBased in Asia for 19 yearsOriginally a scientist with background in biotechnology, electronics, advanced materials, and softwareFormer Professor at Harvard Business School, presently on the faculty of University of Hong KongLeader of competitiveness and economic development projects in 23 countriesAdvisor to governments in >20 countries on science and technology policiesAdvisor to many leading cities around the worldESA economic development projects for nations, regions, and cities and international strategy projects for leading companies3November 2015 Copyright Michael J. EnrightThe Competitiveness ImperativeCompetitiveness is more important than ever The aftermath of the GFC and ongoing economic turmoilInternational markets stagnant or worse means more people fighting in difficult marketsWhy the knowledge-innovation-creative economy?What is the alternative?Potential to leverage modern technology and business systemsTake advantage of the Flat World

4November 2015 Copyright Michael J. EnrightThe Knowledge-Innovation-Creative EconomyGenerates value through developing and leveraging IP and intangible assetsIncludesScience and technology-based businessInnovative service sectorsCreative and cultural industriesAdvanced technology in low-tech and mid-tech industriesImproved processesNew business modelsNew marketing, distribution, management systemsKnowledge, innovation, and creativity can be leveraged in any industry 5November 2015 Copyright Michael J. EnrightThe KIC Economy Requires the Traditional InputsHard and soft infrastructureInnovative peopleSupportive policiesSuitable financeAttractive working and living spacesAmenities to attract mobile professionalsA supportive environmentEtc.6November 2015 Copyright Michael J. EnrightInnovative People Well-educated and trainedAble to think out of the boxMix of people with different backgrounds and disciplinesThe ability to understand new technologies and advanced business practiceAble to understand or anticipate market needsAble to leverage productive capacity7November 2015 Copyright Michael J. EnrightSupportive PoliciesInvestments in education and trainingInvestment in science and technologyInvestment in modern infrastructureIncubators for start-upsIP protectionLight-handed regulationAttraction of investment from innovative companies (domestic and foreign)

8November 2015 Copyright Michael J. EnrightSuitable Finance Public support for university and institute researchLarge companies willing to invest in R&DAngel and venture capital for start-ups (need the ability to exit via sale or IPO)Access to bank loansAbility to obtain stock market listingsAccess to both domestic and foreign capital9November 2015 Copyright Michael J. EnrightAttractive Working and Living Spaces Work spacesScience and tech parks / Dense, high-performance CBDs /High-interaction, creative spaces Living spacesVaried offerings / Close to work / AffordableAttractive amenitiesRetail, entertainment, leisure / Education / Cultural / Public services / Social spaces

10November 2015 Copyright Michael J. EnrightA Supportive Environment Public acknowledgement of the value of knowledge, innovation, creativityEducation and support for entrepreneurs Entrepreneur and investor clubs to provide advice and shared experienceAn environment in which it is OK to leave large companies to start new venturesAn environment in which it is OK to fail and entrepreneurs get a second chance11November 2015 Copyright Michael J. EnrightThe traditional inputs are necessary, but not sufficient to win in the KIC economy.

Winning in the KIC economy also requires the 11 Cs.

12November 2015 Copyright Michael J. EnrightCompetitiveness The world economy is a tough place. Enhancing competitiveness through improving productivity is vital to success. Short term: identifying and removing immediate obstacles to progress and attracting / developing businesses that use existing resources and capabilities. Medium-term: enhancing local resources and capabilities and attracting new ones. Long-run: shifting higher up the knowledge-innovation-creative economy ladder.

13November 2015 Copyright Michael J. EnrightComprehensiveness Competitiveness is NOT additive. A location does not get a few points for this and a few for that. Competitiveness is threshold. Significant shortcomings in any key attribute can kill local industries and economies. This means that enhancing competitiveness is a comprehensive undertaking. There is no single, magic-bullet that can be used to foster competitiveness.

14November 2015 Copyright Michael J. EnrightComplementarity Regions / nations that win in the KIC have complementary resources in several dimensions.They have complementary skills and capabilities.They have different geographic parts that play complementary roles (cities, industrial spaces, living spaces, amenities, social spaces, etc.).Innovative products and services involve bundles of complementary technologies and knowledge. Complementary skills and capabilities allow successful economies to innovate, adjust, and adapt.

15November 2015 Copyright Michael J. EnrightConnectivity Connectivity is absolutely vital developing and combining knowledge bases that drive the innovation and creative processes.This means connectivity within a region, between the region and the rest of the country, and between the region and the rest of the world. This means excellent transportation and ICT infrastructure and people who know how to use it.It also means psychic connectivity, sufficient knowledge and empathy to connect with people in the region, the country, and the rest of the world.

16November 2015 Copyright Michael J. EnrightCommunication Communication is vital to the KIC economy.Information and communication are the lifes blood of the innovation process. Regions can experience huge gains just by increasing communication within the region. It is often the unplanned interaction that drives the innovation process. This only occurs when people interact for some other initial purpose, or when they are in information and communication loops that allow ideas to be combined with other ideas.

17November 2015 Copyright Michael J. EnrightCollaboration Success in the KIC economy requires high levels of collaboration. This can be collaboration between business, government, and universities / research institutes.It can also be collaboration among firms, particularly SMEs to overcome the disadvantages of small scale.It also can be collaboration among different local governments or between local and central governments.

18November 2015 Copyright Michael J. EnrightContext Each region / nation has its own context. Lessons from other places with different local contexts must be applied with care. Each region or nation might need its own problem solving and implementation mechanisms. The whats and whys of the KIC economy tend to be universal, the hows context-specific.Context determines how objectives may be reached and which obstacles must be overcome.19November 2015 Copyright Michael J. EnrightConstituencies Each region / nation has its own constituencies, including the public sector, the private sector, and supporting entities. For your location, which constituencies have to be onboard for positive action to take place? Local business? Local government? Central government? Supporting players? Others?Who has the ability / power to help? Who has the ability / power to hurt?

20November 2015 Copyright Michael J. EnrightCommunities Success in the KIC economy often coincides with a sense of community. Winning regions / nations in the KIC economy tend to have high levels of social capital. People in successful KIC regions tend to think of us and us, rather than us and them. This requires regional and interpersonal identification and a sense of common purpose.

21November 2015 Copyright Michael J. EnrightCosmopolitan outlook Successful regions in the KIC economy tend to have a strong sense of community, but they are NOT isolated from the rest of the world. Success in the KIC economy requires being plugged into national, international, and global flows of knowledge, ideas, capital, and people. This is the only way to understand external markets / competitors, to connect with external customers, and to incorporate ideas from the rest of the world.

22November 2015 Copyright Michael J. EnrightConcentrated effortSuccess in the KIC economy requires regions / nations to be able to identify and address a limited number of key obstacles or objectives at a time.This can be facilitated by regional organizations that bring together the public sector, private sector, and supporting institutions to identify and address pressing issues.Often the best obstacles / objectives to address first are the easiest rather than the most important. Low hanging fruit should be eaten, as the appetizer, not the dessert.

23November 2015 Copyright Michael J. EnrightHow many traditional inputs do we have right?Hard infrastructure?Soft infrastructure?Innovative people?Supportive policies?Suitable finance?Attractive working and living spaces?Amenities to attract mobile professionals?A supportive environment?Etc.?24November 2015 Copyright Michael J. EnrightHow many Cs do we get on our report card?Competitiveness?Comprehensiveness?Complementarity?Connectivity?Communication?Collaboration?Context ?Constituencies?Communities?Cosmopolitan outlook?Concentrated efforts?25November 2015 Copyright Michael J. EnrightConclusions Competitiveness is required if nations and regions are to earn rather than try to borrow their prosperity.The KIC allows nations and regions to move beyond the race to the bottom by generating and leveraging IP and intangible assets.The KIC economy goes way beyond just high-tech industries.Winning in the KIC economy requires the right typical inputs, but that is only half the game. (or less).The 11 Cs are also vital to winning in the KIC economy. This is the part that most economies, particularly in Asia have trouble with.26November 2015 Copyright Michael J. EnrightThank You Michael J. Enrightmichaelenright@enrightscott.com

27November 2015 Copyright Michael J. Enright