The CFE ambition: Getting S’pore’s economy into higher gear

 

My initial reaction to the recently released report from the Committee for the Future Economy (CFE) was that it had chosen to reinforce previously defined strategies and objectives.

 

It talks about defending global free trade, investing in innovation and entrepreneurship, embracing the digital economy, taking advantage of Singapore's image as a global and well-run city and investing in the reskilling of the workforce. There was no silver bullet that could transform our economy.

 

While it did not sound that exciting, it seemed logical, given the changes in the international environment in which we operate, and also given the maturity of our economy.

 

But after more careful analysis, I have to say that this report is about very ambitious objectives.

 

The CFE may be using the same words like innovation, entrepreneurship, upskilling - but the meaning is very different. One of the single most important words in the report is "deep", as in deeper skills, deeper transformation, deep capabilities.

 

Deepening of what we have started in the past is perhaps the most difficult to accomplish, because it is all about implementation. Developing a new sector or a new portfolio of activities as Singapore did in the past, when it was catching up with other economies, is relatively straightforward. Think of the integrated resorts, Formula 1 races, becoming a hub for visual arts or medical tourism - in each of these cases there were successful role models. And you could bring in foreign companies that were able to develop such initiatives.

 

But the world and Singapore have changed. I was a member of a similar committee in 2001 and I have to say that the current committee faced a bigger challenge.

 

We had our own problems in the early 2000s. We had just come out of the Asian financial crisis. And we were in the midst of the bursting of the tech bubble. But it was also a world with consensus about what needed to be done - such as less government, more free trade, multilateralism, or stimulating technopreneurship. The concept of "millennials" did not exist. Other jobs like app developers or those in the shared economy were unknown.

 

Today, the environment is different. Many jobs that required strong skills in industry have been automated. Machine learning is taking over clerical jobs. This is a far more uncertain world. Developing strategies for it is a tough challenge.

 

Singapore's economy has matured and we now have very strong sectors such as logistics and transport, wealth management and finance, advanced manufacturing, infocomms technology and tourism. We are world leaders in many of these, and there is a real partnership between industry and the research laboratories at our universities and the Agency for Science, Technology and Research.

 

Innovation is not a dream, but a reality for many companies. Entrepreneurship has developed and incubators are full of ambitious start-ups.

 

Therefore I am not surprised that this report is about strengthening and deepening what we already have. As a small country we also should remain focused. We cannot be a jack of all trades. Our future is not about doing many new things, but to be much more innovative in what we already do well. We need to go into higher gear.

 

The report is full of interesting ideas, but I favour five very crucial and extremely ambitious proposals.

 

Firstly, I am impressed by the idea of forming global innovation alliances. It sounds like a simple idea to partner other universities and companies all over the world.

 

In practice, this will require hard work. But think of it in this way: We all admire, if not aspire, to be a new Silicon Valley. But what the CFE proposes can be a global virtual Silicon Valley. This idea was also fleshed out in the recent Budget.

 

Singapore Management University's Institute for Innovation and Entrepreneurship is building links with other institutions in the United States, Belgium, Denmark, Indonesia, China, Vietnam and India to bring budding entrepreneurs together. We keep it very lean and have informal structures because our resources are limited.

 

But the ambition is to ensure that our student entrepreneurs have the global networks to develop, finance and commercialise innovations. We are open to working with companies to give this approach more muscle. Perhaps in a few years we will write case studies about Singapore at the heart of a virtual Silicon Valley that covers the world.

 

Secondly, I agree with the CFE - and the Budget statement this week - that one of our challenges is to scale up the myriad of entrepreneurial ventures. I would hope to see tens of $100 million companies, rather than one "unicorn" of a billion dollars. Why? Because a very large company will very quickly leave our shores. Smaller successful companies will create more top-quality jobs in Singapore. To achieve this, we need to adapt the infrastructure to enable growth.

 

Third, Singapore is a very successful city. Many countries and cities would like to learn from it. Remaining at the forefront of modern urban development requires us to keep investing in the vibrancy and smooth organisation of the city. That will not be easy, because there is a risk that tensions about cultural, lifestyle, transport or housing choices will rise.

 

Being as diverse and vibrant as a London, Tokyo or New York and at the same time remaining very liveable and affordable has its own challenges. But when Singapore succeeds in this, I am convinced that foreign delegations will queue up at Changi Airport to learn. With a bit of luck and wisdom, this can easily be turned into a profitable business. But this third ambition requires careful implementation.

 

Fourthly, I am a strong supporter of the Industry Transformation Maps (ITMs). Am I convinced that they will be equally effective across the 23 sectors that have been selected? I doubt it.

 

But I support the ambition to bring together all partners - multinational corporations, small and medium-sized enterprises, universities and polytechnics, trade associations, the Government and other relevant partners - and create a consensus to collaborate and deliver growth and productivity for each of these sectors.

 

It can be done. It happened in Europe after World War II and it led to the Golden Sixties and the recovery of Germany. It happened in California in the 1950s and it led to Silicon Valley. Singapore can pull this off, and if only half of these ITMs succeed, it would be impressive.

 

Fifthly, I wholeheartedly support the commitment to free trade and international connectivity. Research consistently shows that free trade and globalisation have led to more wealth for the world. Yes, there are problems with how that wealth is distributed and consequences for the gap between the rich and the poor. Yes, there are geographical changes in where and how that wealth is created. But let's work on these issues of distribution, rather than attack globalisation.

 

But underlying all these are two big questions: Do we have the people to achieve these ambitions and do we have the right methods for implementation?

 

The first question is addressed by the report: No, we don't have them, but with sufficient investment in education and skills training we can get there.

 

I like the idea of deep skills. When I see Danish or Finnish design, northern Italian fashion, German machinery, Swiss hospitality or watches, Japanese cars or French wine, I am often reminded that having a deep understanding of an industry or a deep skill set gives you a great competitive advantage.

 

None of these examples are the cheapest in the world, and all of them have strong competition. But they do add value to their country because of their deep skills. What is Singapore's deep skill set?

 

The second question about implementation is left open in the report.

 

Yes, we trust that Singaporeans are good at implementation. But in the past, it used quite straightforward project planning, implementation and monitoring methods. That was fine when the uncertainty quotient was not so high.

 

Recently I did some research on project management under high uncertainty, and my co-authors and I showed that implementing such projects requires a totally different mindset and approach.

 

One needs to invest in quick experimentation and consolidation of learning; launch many different small projects at the same time; and be able to cut losses quickly. There is also a need to be nimble and flexible and not be hung up on predetermined plans, and to challenge the hierarchy.

 

In this respect, the approach outlined by Finance Minister Heng Swee Keat in his Budget speech was reassuring: "We will take a learning and adaptive approach, try new methods, continue with them when they work well, cut losses when they do not, and draw on feedback and experience to adjust and refine our plans. That is the Singapore way."

 

I hope we will have that nimbleness and flexibility in implementing the ambitions formulated by the CFE.

 

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