Policymakers in the GCC understand the need to offset their economies' dependence on finite and economically volatile hydrocarbons.
They are tackling this issue through a slew of initiatives to promote new sectors and industries. These laudable efforts are being supported with a strong push to promote innovation and diversify GCC countries' economic base. However, policymakers can do more to complement these efforts.
Innovation is the key to building a resilient economy because it encourages enterprise, which in turn contributes to economic growth. The best approach is to establish a vibrant innovation ecosystem, composed of connected stakeholders who share ideas and work towards the same goal.
In developed countries, strong innovation cultures foster an environment that takes ideas from creative spark to commercial launch.
Such an entrepreneurial environment helps to stimulate economic growth and preserve national competitiveness.
GCC countries should, therefore, institute a national model that establishes coherent links among all parts of their innovation systems to introduce novelty and create economic value.
The GCC also has internal and external reasons to favour innovation. First, the population will remain predominately young. This provides an opportunity to harness the energy of youth and to channel it towards enterprise and innovation.
Second, global economic integration tends to benefit countries with rich innovation cultures and friendly business environments. For the GCC, this means attracting foreign investors and corporations with much-needed business and technology expertise.
The GCC has already taken important steps to promote innovation. GCC states are cultivating human capital, promoting research and development (R&D) and developing traditional and nascent sectors. Initiatives include the Centre of Excellence for Applied Research and Training (Cert) in the UAE and the King Abdullah bin Abdulaziz Science Park in Saudi Arabia, with others completed or under construction.
Yet, as this year's Global Innovation Index report by Insead and the World Intellectual Property Organisation indicates, more is needed. The report, in which Booz & Company took part, argues the GCC's substantial input has not yet resulted in sufficient creative and business output.
The problem is a lack of coherent linkagebetween stakeholders of the innovation systems. These missing links prevent the formation of a streamlined innovation ecosystem that can turn great ideas into commercial ventures.
Governments have to align cross-cutting, corresponding policies for a holistic partnership between different parts of the innovation system to emerge.
GCC countries, critically, need an innovation policy framework with three main components: innovation strategies; innovation drivers; and an innovation environment.
First, innovation strategies should be set within economic sectors. This means they work to drive creativity in specific business areas. Second, innovation drivers means a set of policies that span all sectors and relate to financial, physical and human capital as well as R&D needs.
Third, governments need policies that make this socioeconomic environment conducive to new ideas. Governments can achieve this through regulations, operational support and orchestration.
Innovation policies are a crucial step as they help to create a balance of human, physical and financial resources and to energise the framework. However, policies to develop innovation drivers are necessary but not sufficient.
Policies must also align with laws and regulations to provide the conditions for inventive ideas to flourish.
Next, there must be links between innovation stakeholders. In this regard, GCC countries have improved the level of collaboration between industry and academia, resulting in more research. However, the main stakeholders in the GCC's innovation landscape - such as government agencies, business and academia - remain insufficiently connected.
Coordination of activities among various stakeholders can improve significantly at the operational and institutional levels. Innovation-promotion entities can achieve this by facilitating stakeholder interactions and driving overarching policies.
These entities create and develop strong links throughout the ecosystem by identifying policies that can improve the overall environment - promoting these policies to their stakeholders, working to gain stakeholders' buy-in as owners of those policies and building networks among key leaders.
An innovation ecosystem should also link innovation operations. This can be achieved through promotion entities, which play a major role in orchestrating the innovation system at the operational level.
Linking innovation operations means businesses gain access to the financial, physical and human capital they need to succeed. Good ideas will no longer stay on the drawing board. Linking operations also ensures sectors coordinate with adjacent ones and remain aligned with the overall national policy.
Establishing a vibrant innovation ecosystem is a complex and long-term task. By nurturing strong links among policies, stakeholders and operations, GCC countries can take advantage of the one natural resource that will not run out - the ambition and creativity of their own people.
Chadi N Moujaes is a partner, and Rasheed Eltayeb and Hadi Raad are principals with Booz & Company. Hatem Samman is the lead economist and director of Booz & Company's Ideation Centre
