Bidiversity

Asia is positioned to generate a torrent of new products and services that could make it the global leader in innovation. China and India are fast adopting modern technologies and making great economic strides. South Korea, Taiwan, and Singapore have already leaped forward. Yet all of these countries were among the world’s poorest only a few decades ago. With this momentum, Asia could become the center for innovation in the 21st century.

But that outcome is hardly certain. Asia has much to overcome: the region has adopted innovations primarily from abroad; about 45 percent of its four billion people live on less than $2 a day; the average Asian income is only 40 percent of the world average; other than Japan, successful Asian economies are newly industrialized; and many Asian governments are weakly democratic or nondemocratic.

Yet adversity can foster innovation, and innovations can convert adversity into advantage. Indeed, Asia has been doing just that. The region has generated innovations-defined here as new ways of doing things that have actually been put into practice, not patents or good ideas that haven’t-in at least five ways. Each could generate innovations at an even faster pace in the not too distant future.

First, innovations often emerge from existing technologies. Electricity, for instance, was not harnessed originally to facilitate computing or wireless communication, but it led to these transformative innovations. Likewise, Filipinos and Indians are innovating in ways to transfer money through mobile phones, which were originally invented in Western countries for other purposes. Thus, when technologies-no matter where or why they were invented-are applied to diverse contexts, they provide a foundation for previously undreamed-of permutations and combinations.

Second, 1.8 billion people in Asia live on less than $2 a day. Although India is considered an IT powerhouse, more than one billion Indians lack Internet access. However, the self-interest of Asia’s considerable commercial entities will compel them to engage vast low-income populations in serious commerce. That will require new products, approaches, and forms of employment and participation. Microcredit and innovative distribution schemes for solar panels, cell phones, and drip irrigation systems in rural communities are examples of ways to engage the traditionally unengaged.

Third, Asia’s companies know that by addressing low purchasing power, they can reach vast markets. The lure of these markets is pushing them to search for ways of achieving dramatic savings in energy and materials. Tata’s affordable, fuel-efficient Nano automobile, for example, caters to low-income markets, but its impact may extend well beyond them. Admittedly, the environmental effects of the Nano remain to be seen because it will probably translate into more cars on the road and the product itself has yet to mature. However, the thinking behind the Nano and the practical experience that will result from its use could lead to innovations for global markets that increasingly must reckon with climate change.

Fourth, while Asia’s late industrialization implies a weakness in fundamental research, it also means that the region is less locked into old infrastructure and legacy technologies and more willing to adopt new ones. For instance, 95 percent of South Korean households have broadband Internet access, while only 60 percent of US households do.

Fifth, though vast amounts of human energy and ingenuity remain dormant beneath Asia’s weakly democratic or nondemocratic regimes, this is changing rapidly. Recent events in Iran-whatever their eventual outcome-demonstrate the potential for the Internet, mobile phones, and Twitter to bolster democratic pressures. As democratic forces gather steam and people become more empowered, new entrepreneurial activities and innovations will follow.

These forces of innovation are self-reinforcing, their effects cumulative, and their impact exponential. Together, they can make Asia this century’s global center for innovation.

Source: Iqbal Z. Quadir, Part of the Debate section of McKinsey Digital

To read the adversary’s view, click here. Many of the points raised in view of the US’ potential loss of leadership in innovation are relevant to the UK and Europe.