Stay Home And Innovate... or Go East?

A Westerner and a Chinese symbolising business growth opportunities in the West and in the East.

With its prediction of four decades of declining GDP for Europe and North America relative to Asia, a recent report by PWC could make depressing reading.

Maybe publishing such demoralising predictions is intended to galvanise board members of large corporations into giving the consultancy a call.

Bad news sells newspapers, but pessimism and fear are distinctly unhelpful when it comes to innovation. 

So let’s remove a little of the emotion...

Asia is Catching Up.

Of course growth will be high in Asia for the coming decades- they have a lot of catching up to do. Just raising market penetration outside of the big cities of many of consumer goods including the household appliances that we take for granted – kettles, fridges, hairdryers will provide significant growth. Then there will be growth in fashion and food and the infrastructure networks to distribute and power all these products and services. It’s not difficult to predict this growth.

By contrast we in the West have high levels of market penetration of all these items and more. And of course the replacement market is a tiny fraction of first time purchasing.

But does this mean there are limited opportunities for western countries to grow? Have we indeed reached the apogee of happiness and satisfactory living, working and business conditions?

Where to start? We only have to look around us to realise that there are problems everywhere – problems that need to be solved. The solutions of which will in many cases come in the form of new products and new services and therefore business opportunities.

If we can create these products and services – many of them knowledge based and potentially high value then they will drive GDP growth.

Innovation Vision.

The reason a report like the PWC one makes such depressing reading is not because there are few business opportunities in the West, but rather that in parts of our government and also in some businesses there is perhaps a lack of vision.

You don’t need quite so much vision exporting established products to Asia. You need many things; cultural understanding, patience and partnering capability but vision is not top of the tree.

If there is a market for a company’s products in Asia then there is an element of the known about the strategy to export them. This includes product knowledge and the accumulated experience of developing and marketing it to date.

But in the West, we need to move forward into  the unknown to grow our economy.  We need to ask and answer some very big questions. What is our future? What technologies are available and how can we exploit them to achieve genuine quality of life improvements for people?

Once we have our innovation vision we need to do the innovation work. For that we need to develop a workforce with excellent innovation skills. In a fast moving world of global trade, innovation has to be an integral approach to business not an ad hoc concern

Companies will need to become accomplished in really understanding their customers at a deep level and what their unmet and hidden needs are. We need people to be creative to identify creative responses to those insights. We need companies that can bring new technologies to market and market new technologies effectively.

We also need to create stronger links between universities and industry. Progress has been made in this area but it needs to accelerate to create more knowledge based innovation.

If western companies can get a share of Asia’s rapid growth; so much the better. However this should not be our only growth strategy.

Knowledge-based, High Tech, Higher Margin.

Mature products eventually become commoditised. Higher order, added value offerings with higher margins only come from new knowledge and innovation.

Yes, it’s probably more risky to innovate new technologically advanced products for our own western markets than to export to Asia.

But if we can produce solutions for some of the really big challenges we face - in energy, healthcare, and education and training then this too can revitalise our economy and drive our living standards forward.

There is so much opportunity here in the West -  PWC’s report is not depressing me at all!

Read more about PWC's recent report.

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