Friday 21 October 2016

Political paralysis is no excuse for inaction: Role of Business and Philanthropists

Hong Kong is facing an unprecedented political gridlock. Yet amidst all the economic, social and environmental challenges, the city is ill afford to stay put. It is high time for businesses, philanthropists and foundations to provide the impetus for change.

The economic and social well being of a community is closely intertwined with business performance and profitability. More and more businesses now understand that CSR as a marketing concept is no longer adequate. To attain sustainable growth, business has to first and foremost address the needs of a society and give due regard to the interests of multiple stakeholders. ‘Doing good’ is not a responsibility and an after thought, but a pre-requisite to ‘doing well’. Such belief has led more and more business leaders taking a more proactive role in addressing economic and social challenges. 

Unilever and GE are clear examples of how business turn social and environmental problems into new business opportunities through innovative offerings and practices. 

The Itasca Project in America’s Minneapolis–Saint Paul region demonstrates how business can work together for the collective good. Established in 2003, it is an employer-led alliance seeking to revive the economic competitiveness and the community well being of the region.  Working closely with government, educators and NGOs, business leaders lead task forces on key strategic issues such as generating quality job-growth and forging stronger collaboration between business and universities.

Mark Zuckerberg led a new approach to philanthropy by creating a limited liability company for for-profit investing in new technologies and public policy advocacy to solve the world’s biggest challenges.

Traditional philanthropists and foundations can also become drivers of change by investing in startups that can make a difference. Earlier this year, the Rockefeller Foundation and Unreasonable Institute in the US launched the ‘Future Cities Accelerator’ to encourage revolutionary solutions to complex urban problems.

Hong Kong has a vibrant business community, the largest number of HNIs in Asia and a strong tradition as a free wheeling community. The current political stalemate should not be an excuse for doing nothing. The above international best practices have shown that:

  • Business can take the leadership in driving economic and social prosperity. The dividing line between for-profit business and NGOs (or social enterprises) are blurring. 
  • Philanthropists and foundations should innovate their charity giving approach by supporting for-profit  startups in creating innovative and sustainable social changes. More funding also needs to go into public policy research.

How relevant is R&D spending to innovation development?

Hong Kong’s ability to reinvent itself as an innovation-led economy is in the spotlight again, in the wake of the latest release of the World Economic Forum’s Global Competitiveness Index. There are calls from various quarters that Hong Kong has to increase its spending in research, scientific and technology development (commonly referred to as R&D). 

It should be clearly understood that technology is but one element of innovation. Hong Kong should ride on its unique DNA as a service economy and a trading hub in its pursuit of innovation. Li & Fung, Lan Kwai Fong, HKBN and startups like Go Go Van and Handy are good examples of service, process, customer experience, management and business model innovation. 
Some believe that reindustrialization can help spearhead innovation. The reality is that service inputs make up an increasing proportion of manufacturing activities.  Instead of bringing in more production lines, Hong Kong should continue to offer manufacturing services – albeit with a stronger dose of innovation. This also means that STEM education is important, probably not because we need more engineers but more designers, lawyers, accountants, marketers and business development specialists who can understand and commercialise technology.
If technology is not the only innovation driver, heavier investment in R&D should not be a pre-requisite to innovation development. Creating value in the 21st century is not about ownership but the sharing of knowledge. Countries are trading patents, copyrights and other intellectual property. With the exception of the US, Japan, the UK, Germany, and France, all other OECD countries obtain over 90 percent of their productivity growth from ideas that originated abroad. The key to innovation is therefore not so much the amount of R&D spending but the ability to scout for, integrate and commercialise new ideas and inventions. In order to do this, Hong Kong should further enhance its understanding of the global markets and broaden its international network. This is also the most that Hong Kong can contribute to China’s high tech development.
Hong Kong is an ideal test bed for new products and services. 
To catalyse innovation development, we should create demand for innovation to thrive. The government, businesses, universities and foundations should start to create challenge funds, innovation prizes and demonstration projects and seek innovative solutions from around the world. Hong Kong should aspire to become the role model for innovative and sustainable solutions for densely populated cities.