SINGAPORE (Aug 6): Singapore may be consistently ranked as among the most prepared countries for a digital future, but the reality is not quite so, according to Alex Lin, the former head of ecosystem development at government agency SGInnovate. In fact, the challenge is getting businesses here to digitalise, in order to adapt to the demands of the future economy and workforce.

According to the latest INSEAD Global Innovation Index, Singapore ranks fifth in terms of innovation, ahead of the US and Finland. But that is not enough, says Lin, who is now a business consultant helping companies in the region expand. According to the same index, the city state ranks 63rd in the world for innovation efficiency.

“It’s quite [embarrassing]. Although we [are among] the top five in innovation, our ability to innovate is not very good. We are able to do very well because we dump a lot of money in input, but [there’s] not a lot of output,” says Lin. “Can we afford to focus only on exploitable innovation, which means reducing innovation input, which will see our rankings drop?”

In Lin’s assessment, businesses, including small and medium-sized enterprises (SME), have embraced the digitising of functions. This has been spurred on by government help and initiatives such as the productivity and innovation credit scheme, and the Infocomm and Media Development Authority of Singapore’s SME Go Digital Programme. The key challenge, Lin says, is getting businesses to digitalise.

Lin defines digitisation as automating or removing paper from processes, such as making data entry automated or using e-signatures for invoices. Digitalisation, he says, requires a company to overhaul its core business from a traditional one to a digital one. For example, instead of relying on traditional methods to gain customers, the business could put itself on an app and have customers come to them.

“Digitising is a simple productivity improvement, [and] only a cost saving for business,” Lin says. “[But] digitalisation is a huge transformation... It is what you put as a core of your business, which becomes your revenue generator. Fundamentally, you are still serving the customer, but the method is different and the scale is unlimited. Everything is on my core digital system and I can start [overtaking] other people’s business, [by] signing up everyone via the app, and even deploy overseas [easily].”

With digitalisation, businesses would also redesign jobs away from the mere functional and monotonous, which are the ones most likely to be replaced by automation anyway. “We need to create jobs that young people will enjoy doing,” Lin notes.

This in turn would help business owners find successors, which is currently a challenge, he says. “I’ve met so many SME bosses who have a succession problem, [even though] their business is a steady one with a reputation. Owners are willing to give up 40% of the [company’s] shares for someone to take over. When you start transforming all these businesses into a digital business, you can engage the second generation.”

Ultimately, for any city to continue to grow, it needs a thriving local enterprise scene that provides engaging and sustainable work for a young labour force. “The competition is there. The question is whether Singapore can continue to be relevant,” says Lin.

While the government has been very proactive in driving change, it is incumbent on business owners to see to their own success. The government will, and should, only step in if the market is not working on its own.

People must be willing to experiment and take on some risk; even the cautious Singapore government has done so. Lin points to previous programmes — the Tech Incubation Scheme and the Interactive Digital Media Jumpstart and Mentor -
(i.JAM) programme — as government efforts to experiment. The -i.JAM programme gave out grants of up to $60,000 to start-ups, with milestone payouts for the grants, and took the approach of “letting a thousand flowers bloom”, according to Lin. “We can be very wrong, but at least we tried.”

This article first appeared in issue of The Edge Singapore (Issue 842, week of Aug 6)