Enterprise champions vital for Gulf innovation hubs to work

Typically founded round a university or research centre, these innovation centres are on the rise across the GCC as states seek to diversify their economies.

Atic, known for its research initiatives, can make a huge impact to the region's efforts to become a hub of innovation. Delores Johnson / The National

Across the GCC, governments are working towards establishing innovation hubs as a means of diversifying their national economies.

These hubs, typically founded around a university or research centre, are beginning to offer the region's inventors and entrepreneurs a platform to develop ideas into commercially viable products and services. However, innovation hubs shouldn't be stand-alone facilities. In fact, Booz & Company's analysis of innovation hubs worldwide, published in the Global Innovation Index 2013, reveals that the best such hubs need large enterprises to succeed.

Large enterprises are important to innovation hubs because they provide the capabilities that hubs need to achieve their goals of serving as commercialisation catalysts. In particular, enterprises can share their resources, knowledge, experienced technical talent, and connections and networks with regional innovation hubs.

As a result, enterprises have an opportunity to serve as "hub champions" that play a major role in efforts to accelerate innovation as well as create a reliable innovation sequence that involves research and development (R&D), commercialisation and the production and distribution of new goods and services.

Worldwide examples of such hub champions include Hewlett-Packard, Lockheed and Xerox, which have supported a leading innovation hub, Silicon Valley in the United States. In South Korea, hub champions have included Samsung, LG and SK Energy. In the GCC, where governments tend to launch innovation hubs, as opposed to independent groups in other parts of the world, hub champions might include state-owned enterprises, family-owned conglomerates, and multinational corporations.

Such enterprises in the UAE can include the Advanced Technology Investment Company, a state-owned enterprise that frequently provides resources and know-how to research initiatives, and could make an even greater impact to the region's efforts as the champion of an innovation hub.

Large companies offer support in three key areas that together encompass the entire innovation value chain. First, they build hub capabilities through their financial resources and innovation networks, which a hub may not have access to otherwise.

In particular, they can provide capital and services and bring in customers, other companies and universities. They also have the ability to attract the talent needed to generate new businesses and ideas, and to support and encourage the development of a strong intellectual property system.

Second, they can bolster a hub's R&D activities, which lead to discoveries that later become products. Enterprises can cooperate with universities and other research centres to create and share knowledge.

They can also use their corporate networks to draw scientific knowledge into the hub to stimulate innovation. Further, they can leverage their expertise to steer the hub's R&D towards local and international market needs, thereby contributing to the hub's economic growth.

For example, Saudi Aramco, a state-owned oil company, plays an important role in attracting key local and international energy players to set up R&D facilities in Dhahran Techno-Valley in Saudi Arabia.

These firms carry out research to develop, test and deploy innovation solutions related to the energy priorities of the kingdom, many of which are driven by national champions such as Saudi Aramco.

The third contribution of large enterprises is their commercialisation prowess, which offers hubs the ability to become more than just academic research centres. In essence, companies provide hubs with the means to transform R&D into new products and services. For instance, champions can upgrade the capabilities of their domestic suppliers so that they can introduce new ideas to the market.

Companies can also promote innovation internally by having their own staff use innovation hubs to develop new ideas. Further, they can help their customers to understand the opportunities to commercialise innovation at home and abroad.

GCC governments have a major role to play in helping innovation hubs to thrive. Importantly, they should establish national and hub-specific policies that ensure the formation of robust innovation hubs, which will in turn generate interest among enterprises and encourage them to serve as hub champions.

It is critical for governments to establish a national knowledge economy development plan as well as framework for identifying and supporting promising innovation projects. Hub-specific policies have to be aligned with the national policies, and they should aim to ensure the viability and development of hubs.

In particular, these policies should identify technological focuses that support their national economic strategy as well as the appropriate enterprise champions that already have the commercial capabilities to support innovation efforts.

Innovation hubs do not grow overnight. Instead, they are long-term projects that succeed through public-private collaborations that lead to knowledge sharing, idea generation, and ultimately the commercialisation of new products and services.

Therefore, in their quest to develop successful innovation hubs, governments must either create and grow or identify and enlist, strong enterprise champions. By ensuring that these champions are involved, the odds of creating successful innovation hubs in the GCC rise significantly.

Without them the odds of failure are almost certain.

Rasheed Eltayeb is a principal of Booz & Company. The article was co-authored by Tamer Obied, senior associate, and Hatem Samman, lead economist, at Booz & Co