Can Singapore be Asia's Silicon Valley?

Barring Hong Kong in Asia and Tel Aviv in the Middle East, and potentially Bangalore in India, no other Asian city seems to be jockeying for this position. Tokyo, Tai Pei and Seoul can boast of some big ICT corporations but when it comes to innovation, Singapore seems to be doing something right. That's why the world is looking at the city state with a certain awe and promise, even though the Fortune magazine named only Hong Kong in Asia as one of the top four world's tech capitals after Silicon Valley and New York.

Surprisingly, Hong Kong did not even figure in the Global Startup Ecosystem Index compiled by Startup Genome and Telefonica. It ranked Singapore 17 among the top 20 innovation ecosystem of the world. Silicon Valley was number one followed by Tel Aviv. Sydney was at number 12 and Melbourne at number 18. Bangalore in India was at number 19, one rank above Santiago.

Two weeks ago, I was in Silicon Valley, and a friend from Arizona, who has been involved with some modest startups, made an interesting remark. He told me that he increasingly saw Singapore as the Silicon Valley of Asia. Another friend from Los Angeles told me how the United States government was slashing research funds to universities whereas the Singapore government was pouring tons of money into the innovation engine of its research institutions.

He referred to a Time magazine article that made that point (East Asia leads the world in business funding, Times Higher Education, 12 August 2013). According to the article by Jack Grove, the World Academic Summit Innovation Index shows companies are investing the equivalent of US$97,900 in each scholar in South Korea to carry out work in innovation and research on their behalf. Singapore is in second place, bringing in an average of US$84,500 per academic, whereas the US lies in 14th position, with industry contributing nearly four times less to its academic researchers (US$25,800 per person) than in South Korea.

Phil Baty, editor of the THE World University Rankings, sees Asia investing more than the US in research as "a shocking wake-up call for the West'".

However, when I attended the Google Big Tent event in Singapore on 29 October, I had the feeling that while the world believes in Singapore's potential to be an innovation city, it is the Singaporeans themselves who are sceptical of the Singapore promise.

At the event, questions came up from locals casting doubts at the country's future potential for innovation. Was something wrong in the Singaporean education system that neutered the innovativeness of Singaporeans? A journalist even asked if there was any accountability for the millions of dollars that the government poured in startups year after year, without much to show for it. She seemed to ask if such blind investment could yield any worthy fruits?

During the discussions at the Google event, Singapore was compared time and again with the Silicon Valley. Why innovations happen there and not here (at least not at a similar pace and not at a scale that is global in terms of the effect of the innovation)?

While the panelists carried on the discussion on innovation, my thoughts went to a book by Salman Rushdie. In 2012, Rushdie published Step Across This Line, a collection of essays. To paraphrase a review of the book published in The Guardian, Rushdie's line falls on the side of free speech, intellectual liberty, frontier-crossing, national and individual tolerance and multiplicity, a refusal to be co-opted (what he calls "unbelonging"), and, above all, scepticism. Isn't this what defines America or at least defined that great land of opportunity until recently? And by default, the Silicon Valley too?

If I can use a metaphor, I see the Silicon Valley as the new Wild Wild West. As a country, the United States pushed its boundaries by daring men who were hungry for success and were looking for riches (remember the Gold Rush?). To extend the metaphor to Silicon Valley, success in the field of IT through innovation is what defines the rush for innovation in the Valley.

Most of the innovators who came to the Valley and built world changing companies often came from outside California and even outside America: Jeff Bezos started Amazon.com in Seattle, Facebook's founder Mark Zuckerberg started his networking site in his Harvard dorm, and the founder of Tibco, Vivek Ranadive, came from Bombay as a student and made his way to the Silicon Valley after studying at MIT and Harvard.

And they were hungry for success and wanted to change the status quo of things. And the available ecosystem in the valley, with universities and venture capital firms lined up to offer them the necessary resources, helped them scale up globally and achieve success. More success stories attracted more hungry fellows. Most failed, but many succeeded, and their stories attracted others, thus forming the perpetuating circle of innovation.

The key thing for me to understand was to see if the same was happening in Singapore and if more of this could happen here. And I was glad to see that the technology leaders in Singapore not only understood this point but they even believed in it.

Innovation is core to Singapore's economy: IDA Chairman

In her opening address, IDA Chairman Yong Ying-I made several points that showed how Singapore fostered a culture of innovation.

Innovation is core to Singapore's competitive success, she said. "At Singapore's stage of development, we can no longer compete just by being more efficient or implement better than our competitors. We can only compete if we innovate."

"Singapore government agencies have been working to energise and support an enabling environment for innovation to take place," she said.

"We are now seeing a vibrant technology start-up ecosystem take off. Patents granted for instance, has risen around 30 percent in the last two years, from 2010 to 2012. We have also seen several Singapore start-ups attaining international success; such as Viki, an on-demand video streaming website with user-generated subtitles; and YFind, which focuses on indoor positioning and real time analytics." She also mentioned another Singapore start-up, Third Wave Power, which developed a portable multi-function solar charger known as mPowerpad.

According to Ying-I, IDA sees the data explosion as a big opportunity for Singapore. "Now Singapore already has the infrastructure in place, the connectivity in our hands, a sophisticated customer base with high expectations, to be a Smart Nation," she said.

The IDA Chairman pointed out several ways in which the leading government agency is fostering innovation in Singapore. This includes how the Singapore Government is encouraging open data and the proactive sharing of government data sets, to spur innovation; developing a "tinkering environment" by setting up IDA Labs; providing over a $1 billion funds (for five years funding period) to support schemes offered by a variety of government agencies in the name of innovation; and building the enabling environment for data innovation by strengthening both hard infrastructure and soft infrastructure. (Read the full report here)

However, many innovators in Singapore pursue "me-too" ideas in highly competitive spaces, she said. "I urge our budding innovators to have the resilience and courage to seek differential competitive advantage," she said. She urged the local innovators to consider pursuing areas that leverage Singapore's competitive strengths, much like how YFind focused on indoor positioning for mobile phones using wi-fi and Digify focused on security.

The other point she made was that innovators should take advantage of Singapore's small size. "I believe Singapore's strength lies in our interconnected ecosystem, and the ability to come together to create innovative and useful solutions for the future," she said. "There are many disadvantages to being small, but being able to bring the ecosystem into one Big Tent is our strength and advantage. There is no other nation in the world better placed than Singapore to unify policy, technology and industry towards being a Smart Nation. I hope we can all work together - the industry, researchers, our universities and polys, government and our citizens must come together and collaborate. Let's write the next chapter of the Singapore story together."

The secret sauce

So what is the secret sauce that lubricates the innovation engines of a country?

According to Kent Liu, CFO of Viki, Singapore has many strengths that make its innovation ecosystem strong. Great infrastructure, a growing community of start-ups, government support to start-ups in terms of grants and low tax rates-these are some of the strengths of the country.

However, there are some areas that suck. For example, raising Series A funding is difficult, he said. It means that investors here are willing to invest only in those startups that have already gained some traction. Talent crunch is another sore point. It is hard to find engineers and designers here, Liu said. 'Salaries versus stock options' is also an area of concern. He said that unlike in the Silicon Valley, employees here don't prize the stock options as their counterparts in the West do. This attitude puts a financial squeeze on the startups which are most often cash-strapped.

Bernice Ang, social entrepreneur and founder of Syinc, a social platform connecting the youth in Singapore for social change, tackled innovation from a social angle. "Innovation is about meeting needs," she said. "It is about community participation."

She has a point. Facebook, Twitter, LinkedIn work as platforms because they answered a need and they are about community participation.

She took a swipe at the Singaporean mindset of opting for cushy jobs instead of pursuing the gritty and uncertain path of innovation. "Why innovate when you have cushy jobs?" she quipped. She herself is a living example of bucking the trend in Singapore. She could have a cushy career in Australia where she studied but she returned to Singapore to connect the youth in her country for effecting social change.

How society sees failure-that also became a moot point.

In the US, people invest in failed entrepreneurs. Will failed entrepreneurs be given a second chance in Singapore, she asked.

It is OK to fail; but we must celebrate the successful exits

Steve Leonard, Executive Deputy Chairman of IDA, agreed with the idea of tolerating failure. Entrepreneurs need to have the confidence that it is OK to fail, he said. He gave the example of Finland which has a national day to celebrate failure.

Julian Persaud, Managing Director, South East Asia, Google Inc, also felt that there was a need to 'redefine failure'. He gave the example of Google and how the company welcomed new ideas every Friday (Thank God It Is Friday or TGIF event) from all employees globally irrespective of their rank and did not penalise engineers whose ideas did not result in final products.

Leonard emphasised celebrating achievements and the successful exits (when start-ups get off the ground and get an IPO or achieve a status of viability). "We need to excite the kids," he said. "The secret sauce is to celebrate the exits and create more excitement."

Engineered serendipity

Professor Bruno Lanvin, Executive Director, European Competitiveness Initiative, INSEAD, brought out the concept of 'engineered serendipity'. He said that innovations don't happen in labs but in the cafes. He cited the example of Bell Labs where many of the last century's technical innovations happened. Founded by the inventor of the telephone Alexander Graham Bell, researchers working at Bell Labs are credited with the development of radio astronomy, the transistor, the laser, the charge-coupled device (CCD), the UNIX operating system, and the C, S and the C++ programming languages. Seven Nobel Prizes have been awarded for work completed at Bell Laboratories. But that was in the past. Now, most of the innovations are happening at the cafes in the Silicon Valley.

Change the mindset and encourage diversity-that was Professor Lanvin's mantra. This immediately reminded me of the Silicon Valley and the Wild Wild West thesis (a daring and adventurous mindset, people from various backgrounds coming together to achieve success).

"Innovation can come from anywhere," said Susan Pointer, Senior Director of Public Policy & Government Relations for Asia Pacific, Middle-East, Sub-Saharan Africa and Russia, Google Inc.

According to Pointer, innovations happen when there is a cluster impact, allowing smart people to connect.

She said that in every country she visits, the governments want to foster a culture of innovation. But the mistake they make is that policymakers have an urge to codify and regulate the ecosystem that stifles creativity.

She referred to the soft culture of the Silicon Valley where people found it safe to exchange ideas sitting in a café without any fears. "For innovation to flourish, we need to have a culture of exchange, and not guard ideas with jealousy," she said.

For those entrepreneurs who struggle to raise funds for their projects, Pointer asked them to persevere. "Perseverance beats resistance," she said.

By the time the Big Tent event ended, I had the feeling that Singapore already had an atmosphere of hope and achievement. The government is doing its best to encourage innovation (through abundant funds, low taxes and ready availability of expertise) and there are some successful role models ('exits' as Leonard calls them) too to excite the new entrepreneurs.

A day earlier, I had met Professor Clayton M. Christensen who was in Singapore to attend a meeting on innovation. Christensen is the Kim B. Clark Professor of Business Administration at Harvard Business School, and is widely regarded as one of the world's foremost experts on innovation and growth. Christensen is the bestselling author of a number of books including his seminal work, The Innovator's Dilemma (1997), among others. He is a member of the Research, Innovation and Enterprise Council in Singapore (chaired by Prime Minister Lee Hsien Loong) which sets the national agenda for innovation. I thought-when a country's Prime Minister himself is steering innovation, how can that country not be at the forefront of innovation?

The ball is now in the court of Singaporeans who have to decide whether they want lucrative jobs (say, in the country's burgeoning banking and financial sector) or they want to be global innovators, shaping the contours of the future.