By Invitation

Wanted: Twenty $135m companies

Rather than shoot for 'unicorns' - firms with a turnover of US$1 billion - Singapore can aim to groom more successful medium-sized companies. Singapore's innovation ecosystem requires a more regional, not just local or global, mindset.


When the Government initiated consultations on the Future of our Economy early this year, Singapore Management University's faculty had a lively internal debate on what such a future could hold. These discussions were summarised in a paper submitted to the Committee on the Future Economy. A copy is on our website (

Our faculty come from very diverse disciplines and so there is a wealth of variety in their ideas. But common themes emerge. The words "innovation" and "disruption" come back again and again. And the emphasis of the recommendations is on the creation of an ecosystem in which innovation can blossom.

A second theme is the economic opportunities offered by connectivity, based on information and communication technologies (digital connectivity). A third theme is that Singapore can be a leader in the tropics in the development of a closed-loop economy.

Markets are shifting to this part of the world, and thus sources of innovation will also come. Some large Korean and Chinese companies such as Samsung, Alibaba, Tencent and Huawei are leading this evolution, but also more regional medium-sized companies, such as locally-listed Hyflux and City Developments Ltd (CDL) and Manila Water in the Philippines, are developing innovative products and business models that can conquer the world.

Multinational companies are also distributing their R&D worldwide and a lot of it is shifting to Asia.

But do we get a competitive share of all these activities in Singapore?


After all, we have great universities and research laboratories. We have one of the best IP (intellectual property) legislation in the region, if not in the world, thus protecting the innovator. And Singapore is located at the heart of South-east Asia, a region with more than 600 million consumers.

But I am convinced that we have not realised our full potential as innovators. We can do a lot better if we can improve our ecosystem and innovation infrastructure, and if we commit fully to the markets around us.

Innovation does not happen in a vacuum. The economically successful commercialisation of creative ideas and research results requires an intricate network of service organisations. It requires a dynamic group of, usually, small and medium-sized engineering service companies, designers, prototype builders, financiers, analytics and marketing companies and business model developers.

That is what I call the innovation ecosystem. Large MNCs usually have such an ecosystem in-house, or can call on long-term partners elsewhere in the world.

That is where the MNCs can help: Rather than working with their traditional suppliers overseas, we may encourage them to develop local partnerships as the seeds for a local innovation ecosystem. This has happened elsewhere. Silicon Valley developed partially around the demand created by HP, Fairchild and its successors, and Intel. And in Shenzhen you will find a very extensive network of small and medium-sized companies that can collectively design and produce almost any electronic device or gadget.

Successful innovators also require markets. We are lucky to have South-east Asia around us, but local entrepreneurs tend to look very far over the horizon and aim at markets in China or the United States, two notoriously difficult markets to enter.

Markets in Vietnam, the Philippines, Thailand or Indonesia may also be difficult, but they are close, and thus easier to monitor and manage.

We also have many friends in these countries, young people who have studied and worked here, and feel comfortable working with Singapore companies. But do our young Singaporeans feel comfortable with them?

I sometimes doubt it. Our young people need to be encouraged to get to know these markets and to develop the intercultural skills and languages to operate there.

The second theme that I picked up from my colleagues consists of all the opportunities offered by digital connectivity. This is linked to the DNA of Singapore. We exist because we connect with people and countries. The port and the airport are both key hub infrastructure around which Singapore has built an extensive business of connecting people, of being a high-performing node in an international network.

Can we do the same in the international digital network? Can Singapore be the high-performing node in a network of storing and sharing data, protecting data and cyber security, analytics, simulations and large-scale computing for finance or marketing?

That will require an investment in technology. All of our universities are engaged in research on analytics and cyber security. But we also require a heavy investment in international discussions on regulation and legislation on data handling. As one of my colleagues argued: "It will require (Singapore) playing a role in the data 'sovereignty' debate, much as the European Union and the United States have been working on the new 'Privacy Shield' provisions beyond the 2000s' approach of 'Safe Harbour' for cross-border data-sharing."

The third theme is the opportunity for Singapore to be a leader in the closed-loop economy - reducing waste and carbon emissions. There are other cities that strive to be a leader in this, such as Copenhagen and Amsterdam. But none of them is on the Equator. Singapore is in a unique position to develop its own approach to a closed-loop economy, to be a "living lab" for a circular economy, one that is relevant to many cities in Latin America, India or Africa.

Developing an ecosystem for innovation, reaping the benefits of digital connectivity and being a leader in a low-carbon circular economy can be excellent goals. But what does it require to get there?

The discussion among SMU faculty focused a lot on education, that we have to invest more in "learning how to learn". What we teach our students today, beyond the foundations, may be obsolete in five or 10 years. Therefore it is important to provide sufficient opportunities for students to learn from what they do in the job and conceptualise from their experiences. Experience-based learning will become much more important.

We also believe that the world's challenges will require interdisciplinary solutions. One can get those by bringing experts from different fields together. But you will also need people who can bridge the differences in jargon, methodology, etc.

Economists, cyber engineers and lawyers will have to work together to create a hub for digital connectivity, yet they may not speak the same language and have very different ways of analysing similar problems. Somebody will need to coordinate the creation process. We will need to create more opportunities in our educational system to develop interdisciplinary knowledge and thinking.

Thirdly, we need an evolving entrepreneurial culture in Singapore. At SMU, we can count more than 350 entrepreneurs among our alumni. Now that we have that stock of entrepreneurs, we need to ensure that they can grow their business. There needs to be a shift from start-up to scale-up.

Let's not dream too much about "unicorns", or those companies that grow quickly into a turnover of more than a billion US dollars. They will be very rare. We have a better chance of building up 20 companies or more with a turnover of US$100 million (S$135 million). More employment will also be created locally by 20 medium-sized companies than one unicorn which probably will need to go global.

Readers are welcome to go to our website and comment on the ideas. We hope that some of them can stimulate your own thinking.

  • The writer is president of Singapore Management University.

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A version of this article appeared in the print edition of The Straits Times on July 16, 2016, with the headline Wanted: Twenty $135m companies. Subscribe