x Abu Dhabi, UAEFriday 19 January 2018

GCC states have all it takes for creative success - some day

To get a real look at innovative potential in the GCC, ignore patents and inspect the region's inputs and outputs.

Insead's Global Innovation Index 2011 paints a far rosier picture of the region. Ravindranath K / The National
Insead's Global Innovation Index 2011 paints a far rosier picture of the region. Ravindranath K / The National

I'll be honest. This column started off as another of those hard luck stories about the Gulf lagging years behind the West and Asia in innovation and business savvy. It ended up as a beacon of hope and optimism. We'll get to why in a minute, but first some background.

Larry Page's first big move as Google boss this month was to buy Motorola's mobile phone business for about US$12 billion (Dh44.07bn). As we now know, he wasn't after Motorola's factories, he was after its patents - some 17,000 of them.

To put that in context, the GCC patent office has received about 19,000 patent applications since opening its doors in 1998, and granted 1,131. So one unit of one company has significantly more patents than six countries have mustered in more than a decade.

The picture is equally bleak if we look at individual countries. The most recent numbers from the World Intellectual Property Organisation and the World Bank (for 2007) compare the number of patent filings per million population. Saudi Arabia, the only Gulf state on the list, had five. South Korea, the world leader, had 2,656.

We care about this because patents are a byword for innovation and creativity, which most people agree are the building blocks of growth, prosperity and jobs. James Watt's steam engine changed the course of human history from the late 18th century, spurring unprecedented economic growth in the United Kingdom and beyond. But not without a fierce patent war of his own in the British courts from 1775, which ultimately left Watt (and arguably mankind) much the richer.

So far, so bad for the Gulf.

But here the plot has some encouraging twists. A report by Insead business school, Global Innovation Index 2011, paints a far rosier picture of the region. The Gulf states rank pretty well, with the UAE placed 34th out of 125 countries, and Qatar higher still.

Why the sudden improvement? The key is Insead's distinction between two types of innovation: inputs and outputs. When it comes to outputs, such as knowledge creation and publishing scientific articles, the Gulf states are at or near the bottom.

But when it comes to inputs, they do much better. Take the Emirates. It's in the top 30 globally in a raft of vital areas: university education, particularly in science; access to IT; industry clusters; strategic alliances and joint ventures. Not to mention the stuff we all take for granted, such as a rich economy, great physical infrastructure, political stability and effective government.

Here's the point: innovation is a slow burner. You have to put in place the inputs, go away for a decade or three, and only then enjoy the outputs.

Bachir Abouchakra, a patent lawyer with DLA Piper, says he's genuinely confident that policies being put in place today will deliver - not tomorrow, but in the years ahead.

"Governments in all the GCC states have realised absolutely the value of intellectual property assets, and they know that the future is all about developing a knowledge-based economy that's heavily dependent on patents," says Mr Abouchakra. "There is an emerging trend and it's just a matter of time."

He points to three hotbeds of innovation as standard bearers for the region: Masdar City in Abu Dhabi; Saudi Arabia's King Abdulaziz City for Science and Technology; and the Qatar Foundation.

Finally, it's worth thinking about another distinction in the Insead report, concerning the type of innovation that serves up those elusive benefits of growth and jobs. Traditionally, researchers spoke of innovation purely in terms of high-end technology. Thinking over the past couple of centuries was all about ivory tower innovation, with new gadgets developed in university labs and turned into products by big company research and development teams.

This so-called mode-one innovation is still important, but today mode-two innovation is equally valued. This takes place not in the lab but on the factory floor, by the water fountain or in the boardroom. It's about coming up with better ways of running companies, brainstorming new products by thinking about the customer, or just taking an old idea and tweaking it.

I can't help thinking about some of the great Gulf companies that have become world-beaters this way, most obviously Emirates Airline.

Earlier this year, after Emirates announced another set of record profits, I sat down with Tim Clark, the president, and asked him about the constant criticism he gets from rival executives at some struggling European airlines. His response: "We are a new competitive force, we have redesigned how long-haul network carriers go about their business, we are great opportunists, we have a knack of being able to identify the market segments as they change, and going after them. Why can't they do the same thing?"

Not so much a hard luck story as a distinctly happy ending.

Richard Dean hosts Tonight on Dubai Eye 103.8 FM and is author of Sink or Swim? How to stay afloat in tough economic times: Business lessons from the UAE