The latest EU scoreboard on competitiveness is unfortunately very discouraging as far as innovation is concerned. Despite all the lip service paid to innovation, Malta languishes at the sixth position from bottom.
Innovation drives every aspect of economic and social life. In the arts, whole new art forms are emerging based on interactive, multimedia. Along with the perennial Academy Awards there now exists the Academy of Interactive Arts and Sciences. Innovation must drive education curricula. In the old economy, a curriculum was good for years. In the new digital economy, the education system must constantly change content, instruction tools, and approaches to be relevant.
One fundamental problem with Malta is that in the public sector and in some private organisations risk taking is punished. The main foundation stone of innovation is risk taking. Malta needs to start creating a climate in which risk taking is not punished, creativity can flourish, and human imagination can soar.
In the innovation economy, human imagination is the main driver. The critical challenge for any organisation in the digital economy is to create a climate in which innovation is prized, rewarded and encouraged. Every country needs innovative workplaces and organisations that foster creativity. What are required are educational systems that teach and motivate students to learn and be creative, rather than to recall information. Governments and regulatory authorities must help to liberate the spirit for invention and creation rather than acting as a bureaucratic brake on change and breakthrough.
“Obsolete your own products” – this theme has been made clear to all product planners, strategists, engineers, developers working in Silicon Valley, Cupertino California, since the early eighties and has been constantly reinforced over the years in all aspects of their work. If a company has developed a great product, its goal is to develop a better one that will make the first one obsolete. If it does not, some other company will.
Innovation also includes a commitment to a continual renewal of products, systems, processes, marketing and people. Ironically, in the pre-industrial economy, innovation was very important. Each gun or shoe was different – crafted by the innovator. The number of produced units for each product was very small, often only one. If the gun or shoe needed fixing, the crafts person would innovate a solution. In the industrial economy, the number of units per product type increased for mass production of standard goods. In the new economy, there is a shift from mass production to mass customisation of goods and services – just like going from Henry Ford for whom every car was black to Henry Fonda to whom every film was different.
Even products as seemingly stable and low-tech as beer requires innovation. Ninety per cent of Miller's Beer revenue of USA comes from beers that did not exist three years ago.
It was only a few decades ago that the steel industry in USA was in deep trouble, uncompetitive with low-cost, high productivity Japanese steel mills. The US industry innovated by creating mini-mills. They reinvented the process of making steel with new production processes based on new technologies. This enabled smaller plants to produce higher-quality steel at lower cost. The result was that the US steel industry became productive again, competitive, and produced the highest quality steel.
No past is a guarantee of the future and this has been amply shown by the hundreds of admired companies around the world who failed to innovate and eventually lost market share and went into bankruptcy. This also applies to public corporations and governments themselves.
The new digital economy is all about competing for the future: the ability to transform businesses and organisations into new entities that yesterday could not be imagined and that the day after tomorrow must be obsolete. Malta must tackle the issue of a fundamental ingredient of the digital economy, innovation, by finding ways of changing attitudes associated with risk taking.