the harsh reality of pursuing innovations: emerging market perspectives

2nd National Conference on Management and Higher Education2nd National Conference on Management and Higher EducationTrends & Strategies for Management & Administration

The Harsh Reality of Pursuing Innovations: Emerging Market PerspectivesEmerging Market Perspectives

Quan Hoang Vuong, Ph.D.Centre Emile Bernheim, Université Libre de Bruxelles (Belgium)

DHVP Research (Vietnam)E-mail: qvuong@ulb.ac.be

Resource CurseResource Curse

The probability of “poor-performance event” conditional on overemphasis on capital resource AND physical assets in absence of “innovation” factor is extremely high: ~98%

*

resource AND physical assets in absence of innovation factor is extremely high: ~98% following Vuong & Napier (2014)(*). Pursuit of “capital” has much stronger effect on increased riskiness. We call it “transition turmoil”.

(*)Vuong, Q.H., and Napier, N.K. (2014). Resource curse or destructive creation in transition: evidence from Vietnam’s corporate sector. Management Research Review, 37(7), 642-657.

The Growth EngineThe Growth Engine

• Entrepreneurial EffortsDi i li d f– Disciplined process of creating knowledge

I ti C it• Innovation Capacity– Continuous innovation

Entrepreneurship & Innovation:the Best fit Predictorthe Best‐fit Predictor

Orientation

Resource Prospect Total

Failure Rent-seeking 8 29 37g

Innovation 0 10 10

Fraud Rent-seeking 181 19 200g

Innovation 5 4 9

194 62 256194 62 256

Business Approach: Rent-seeking vs. Innovation-makingCorporate Orientation: Tapping out resources vs Seeking prospective marketsCorporate Orientation: Tapping out resources vs. Seeking prospective marketsM&A Acquiring Pursuit: Assets & brands vs. Innovation Capacity & willingness

Some evidenceSome evidence

• The evidence tells about results of a model where– The dummy variable x1 represents “pursuit of physical resources”The dummy variable x1 represents pursuit of physical resources– The probability π represents a conditional probability of “fraud” when

x1=TRUE• Remarks:

P it f “ ” i th i k f b i fi i l f d– Pursuit of “resource” increases the risk of becoming a financial fraud– The probability is staggering: almost 96%– Both “rent-seeking” and “resource” together become significant, and their

“interaction” has a influence on increasing risk level, collectively leading the b bilit t l t 97%probability to almost 97%.

“Innovation” factorInnovation  factor

• Innovation can enter the equation as a factor that hedges against the increasing risk of poor performance and/or frauds.

• Innovation helps reduce the problem of resource misallocation, and mitigate the adverse effect on “resource curse” problem.

• Unfortunately, it has not been widely accepted or adopted due largely to myopic management and short-termism in today’s business world.

• Some major issues:j– Clichés– Half-hearted pursuit and arbitrary implementation– Absence of an appropriate ecosystem– Outside of strategic determination– Measurement issues

3D Conceptual Design for Innovation Process

Aha!Moment, Serendipity and 3D MethodsAha!Moment, Serendipity and 3D Methods

• Aha!Moment– Long‐standing problems that are well researched– Step by step iterations– Solutions arrive at a critical time

• Serendipity as a strategic advantage– Noticing unexpected info including new data and strange patterns– Flash evaluation based on built knowledge base, experience and sense

C ti th d t– Connecting the dots

• 3‐Disciplines approach– Out‐of‐discipline search for ideas/concepts

Best expertise in the discipline– Best expertise in the discipline– Best practices in applying disciplined process in making innovation– Both Aha!Moment and Serendipity approaches are used in 3‐D– Multiple filters processes & concept of “mindsponge”p p p p g

“Je ne cherche pas, je trouve”

Einstein: Information is NOT KnowledgeEinstein: Information is NOT Knowledge

Inclusive Innovation MetricsStrategic AdvisorAcademic Institutions Business Associations

Market Testing:Market Testing: Feb. – May 2014

Ad i S iAdvisory Services: Since June 2014

SurveySurvey

• 40 firms from 11 provinces– 24/40 larger (total assets greater than US$4.7 million); 16/40 smaller– Total annual revenue of approx. US$2 billion– Estimated growth rate (average) ~15%

l i 3 000 k– Employing 35,000 workers

• Sample expected to increase• Increasing awareness and supports from governmental agencies• Improved coordination and implementation• Part of CSR

i2Metrix: Expanding Survey Sample

O t t

19 Firms 25 Firms 40 Firms

8.0

9.0Output

DifferentiationC-Readiness

7.0 Trend-settingImplementation

6.0

InnovatorMindsponge

F-ResourcesMulti-Filtering

Supports

i2Metrix: Large vs. Small Firms

Output

i2M Large Size i2M Small Size

8.0 

9.0 p

DifferentiationC-Readiness

7.0  Trend-settingImplementation

6.0 

InnovatorMindsponge

F-ResourcesMulti-Filtering

Supports

“Mindsponge”: Learn and Unlearn ValuesMindsponge : Learn and Unlearn Values

Multi‐Filtering & Mindsponge: i i f i iDimensions of Innovation Capacity

Histogram of Multi-Filtering Histogram of MindspongeHistogram of Multi-Filtering Histogram of Mindsponge

Firm’s Pursuit of Innovation10

8

9

7

8

Mea

sure

6

i2M

50 5 10 15 20 25 30 35 40

Firm

i2Metrix: On‐going Experimenti2M T i t i i ti2M Team interviewing corporate managers

i2M Team at International Innovation Business Forum

Participants include Vietnam’s Science and Technology Minister,

Swiss Ambassador to Vietnam, l h dinternational researchers, and

corporate executives.

RemarksRemarks

• Innovation capacity is NOT about “slogans,” “PR campaigns” or clichés. i i f i i– Investment in HRM, information process, strategic management,

entrepreneurial orientation, even if the firms undertaking it are well established.• Overexcitement may create pitfalls for not just startups and young SMEs,

but also established firms– due to uncontrollability of the process and high degree of uncertainty of a

typical process of making, adopting and diffusing new innovations.• Methods for better management of the innovation process are a critical

requirement for firms in their “innovating time”equ e e t o s t e ovat g t e– Measurement and benchmarking components that help to identify areas of

weakness and pitfalls, and to avoid “innovation curse” whenever possible.• Market as the determining factor

Innovators’ assumption and illusion about market opportunities are a major– Innovators’ assumption and illusion about market opportunities are a major source of risk

– Innovation has its context and “innovativeness” has to fit a context, given realistic market demand.

Agenda• TIGERS@Mekong

– http://tuoitrenews.vn/business/12647/tigersmekong-strategy-meeting-held-in-hcmc

• Streamlining i2Metrix frameworkg• Expanding survey / focusing on “entrepreneurship + innovation”• Cambodia, Laos, Myanmar, Thailand and Vietnam

Thanks

• Participants at the conference and the organizers• Participatory firms and their managers in the i2Metrix program• Advisers and colleagues:

– Mr. Dang Le Nguyen Vu (Trung Nguyen Coffee Group), – Dr. Nancy K. Napier (Boise State University), – Dr. Dolly Samson (Stamford Intl University), – Mr. Mike Ducker (J.E. Austin Associates), – Mr. Tran Tri Dung and DHVP Research, – Mrs. Vu Kim Hanh and BSA staff.