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Dubai firms must focus on innovation

DUBAI — Two top management innovators yesterday urged Dubai companies to stay away from break neck market competition by coming up with original ideas for new products and services that would bring in more profits, even as the UAE has been found to have recognised the importance of innovation to achieving financial success.

Renee Mauborgne, co-author of Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, and Kip Knight, vice-president of marketing for eBay in North America, said an uncontested market space can be created by developing new ideas with the goal of having enormous paybacks. Also yesterday, IIR (Institute for International Research) Middle East said 77 per cent of over 200 business leaders surveyed in the UAE, Saudi Arabia, Oman, Qatar, Kuwait, Bahrain, Egypt, Syria, Jordan and Lebanon were aware that innovation is the key factor in driving the growth of regional businesses. These companies implemented innovative solutions and programmes in the last two years. "Increasingly businesses in the Middle East are recognising the critical role innovation plays in achieving financial success and gaining the competitive advantage," said IIR, the world's largest human capital company and organiser of the three-day Management Innovation Forum that kicked off at the Dubai International Convention Centre yesterday.

According to IIR, 53 per cent of the respondents said their business firms set aside a budget to work on innovative ideas while 58 per cent of companies surveyed encouraged a culture of generating new ideas among employees through informal sessions. "More than half of all CEOs surveyed viewed innovation as very important within their overall corporate structure," it said. It added that 75 per cent of all government leaders surveyed agreed about the importance of innovation while almost 44 per cent of large companies-with more than 5,000 employees-had assigned a team to handle innovation. "Overall the results showed positive acknowledgement that innovation in any company regardless of the size is important," IIR said. Mauborgne, who co-authored Blue Ocean with W Chan Kim, told the management forum that the 'blue ocean strategy' involves the creation of uncontested market space, making the competition irrelevant, and creating and capturing new demand. This is opposed to the 'red ocean strategy', which directs companies to compete in the existing market space that is often congested and trying to beat the competition by spending so much on research and product promotion.

She said blue ocean would result to 61 per cent profit impact as against red ocean's 39 per cent, even if the revenue impact would be 38 per cent compared to 62 per cent, respectively. With regard to business launch, blue-ocean would result to 14 per cent spending as compared to 86 per cent for red-ocean. Mauborgne cited the US-based company Apple, which catapulted to the top 500 companies in the Fortune magazine's list three years after its great innovation iPod, and Sony's Walkman that changed the way people listened to music as good examples of innovative products. "You should build a brand that creates your company," she said. "The power of brand is very important."

She said the path to blue ocean strategy is through analysing the industry, focusing on benchmarking, identifying the niche market, understanding the product or service being offered, getting the pulse of the sector concerned, and bringing the new product to the market fast. She added that this means having a narrow but good perspective of coming from "competing within to creating across". Knight, whose topic was Business Innovation: The Ultimate Killer App, said the most exciting business innovations happened on the Internet.