Posted in AmCham
Plato once said that necessity is the mother of invention. So when the Bibliotheca Alexandrina wanted to digitize ancient manuscripts and found that standard object character recognition technology wasn’t up to the job, an Egypt-based innovation center developed a solution based on artificial intelligence.
In the wake of a landmark global economic downturn, businesses that want to stay in business must adapt and innovate. As Steve Jobs, CEO of Apple, has said: “Innovation distinguishes between a leader and a follower.”
When examining some of the most cutting-edge companies in Egypt, it is clear that innovation, while rarely easy, is possible. It can require a flexible structure and a skilled and engaged workforce, a corporate culture that encourages thinking outside the box and supportive government regulations.
Starting within
Google is known for a corporate environment that fosters creativity and innovation; the company was recognized by CNNMoney/Fortune magazine as the “Best place to work” in 2007 and 2008.
Google’s “70:20:10 model” requires employees to spend 70 percent of their time on routine job tasks, 20 percent on innovative ideas and 10 percent on professional development. Top management determines strategy and vision, but it is largely left to employees to decide the best ways to achieve them. Wael Ghonim is Google’s head of product marketing for the MENA region. “We are a technology company, and hence our assets are the intellectual abilities of our employees. We empower them and allow them... to innovate,” he says. Gmail, Google’s e-mail, and Google News had their beginnings in the 20 percent of time allocated for employees to come up with and develop ideas that could benefit the company.
Because Google employees are empowered users, the solutions they create can address their own needs as well as the company’s. Google’s dynamic advertising platform, for example, filters user preferences based on sites visited and was designed not to annoyingly pop up in the middle of the screen.
Innovation depends on attracting and retaining the right talent, and corporate culture can be an effective tool in reaching that goal. Professional chefs cater to Google employees around the world, for example, and Ghonim’s use of words such as “Googler” (who they are) and “Googly” (what they do) is an indication of the company’s powerful corporate culture.
What does Google look for when hiring? “Communication skills, humility and high levels of curiosity are highly ranked,” Ghonim says. “But the number one priority is the ability to do things differently and to have done something different with your life. In the US, we have employed those with Olympic medals; one of our employees climbed Mount Everest before joining us.”
However, innovators needn’t climb mountains or be world-class athletes. “The most important non-technical characteristic needed to make a person innovative is reading. And I mean reading anything outside the scope of your career,” says Tarek Elabbady, who heads the Cairo Microsoft Innovation Center in Maadi. “Sitting in front of the TV or listening to your professor will dictate a certain way of thinking. I need independent thinkers to fulfill the mission and vision of the center.”
Finding entry-level employees usually is not a problem, since recent graduates undergo rigorous filtering procedures before they are hired. Attracting experienced middle managers can be difficult, Elabbady says, since “qualified candidates are mostly working outside Egypt and don’t want to come back.” Comparably experienced candidates in Egypt often don’t have the necessary technical skills or are not interested in leaving their employers, he adds.
The right idea
Innovation originates from ideas. The traditional research and development model consists of a separate department with a substantial budget that attracts some of the company’s most talented and creative employees. While this model has long proved its worth, it has become an expensive solution that tends to discourage creativity and innovative ideas elsewhere in a company.
As part of its R&D strategy, Microsoft created eight innovation centers around the world, including the one in Maadi. Elabbady emphasizes that while his center is owned by Microsoft, it is independent from the company’s commercial operations. “The centers reach out to talent anywhere in the world without the need to relocate them to the US,” he says. The Maadi center uses the Indian model to try to attract talented people by creating a work environment that mirrors work environments abroad.
The Innovation Center provides concept-inspired innovation solutions, where patents generated are the property of Microsoft. A case in point is the digitization project at the Bibliotheca Alexandrina. “The conventional object character recognition method yielded 50 percent correct output due to the complexity of different Arabic writing styles,” Elabbady says. “Our engineers produced an image processing solution that uses artificial intelligence and neural networks.” The solution was then registered to Microsoft for future use.
The great advantage of such a model is that ideas are still generated in-house, but tailored toward the specific needs of innovation center clients, unencumbered by pre-existing Microsoft solutions. The center’s solutions can be integrated into specialized applications or used in Microsoft’s consumer products.
Another alternative is to outsource research and development (R&D). In 2000, Procter & Gamble (P&G) was a successful company with large, established brands and substantial market shares. Nonetheless, the company was faced with increasing competition and flat sales revenues. R&D was done in-house, with considerable personnel and equipment costs.
P&G began to shift its innovation strategy from research and development to “connect and develop.” The concept relies on opening a communication channel with customers, partners, suppliers and academics to generate ideas that might be developed into new products. “P&G’s connect-and-develop strategy already has resulted in more than 1,000 agreements. Types of innovations vary widely, as do the sources and business models,” says Bruce Brown, chief technology officer of Procter & Gamble. “We are interested in all types of high-quality, on-strategy business partners, from individual inventors or entrepreneurs to smaller companies and those listed in the Fortune 500 – even competitors,” Brown says on the company website. The Swiffer Duster, Olay Regenerist, Pringles Stixx and Mr. Clean Eraser all grew out of partnerships.
Google, on the other hand, generates many of its innovative ideas from 20 percent projects, but Ghonim is adamant that crowd-sourcing, or accessing the general population, and user-generated content are paramount to creative product development. “Innovation is the art of collecting the wisdom of the crowd and converting it into a product,” he says. The company treats the first 20,000 clients like employees and they give us feedback on new products. “A lot of them improve the product and even make it a more innovative product.”
Obstacles
While favorable regulations often attract foreign direct investment, and encourage exporting and importing, they don’t necessarily act as a catalyst for innovation. Ahmed Ezzat is managing director of Endeavor Egypt, a non-governmental organization specializing in opening foreign markets to Egyptian entrepreneurs. “Entrepreneurship and the innovative ideas which result from it are not generated by regulations... individuals innovate and regulations change to support this innovation,” he says.
Innovation can be hindered by entrepreneurs’ lack of business know-how and corporate cultures that discourage creativity and new ideas. “The problem is not coming up with a bright idea, the problem is having the right business sense to make it work,” Ezzat says.
Other obstacles include entrepreneurs’ reluctance to collaborate and companies’ hands-off treatment of projects or products that generate significant revenue. Even potentially lucrative ideas often languish from a lack of initiative. Ezzat offers an example that he says highlights the lack of innovation in Egypt: “Egyptians don’t trust online financial transactions; anyone would attest to that. People wait for more than an hour to pay their Internet or mobile phone bills. And yet nobody is addressing the confidence problem with online transactions.”
Another significant hindrance is the difficulty of obtaining financing for small and medium enterprises (SMEs), which are widely seen by the banking sector as risky. An alternative financing route is the Technology Development Fund (TDF), a venture capital pool managed by EFG-Hermes, one of Egypt’s largest investment banks. Its core focus is providing telecom startups with the necessary funding to enter the market. Among the ventures supported by the TDF are: Flat World Engineering Services, a computer-aided design company; Ostaz Online, an education services website; and Timeline Interactive, developers of the first Egyptian-licensed video game. The fund consists of TDF I, with $10 million in capital, and TDF II, with $40 million. The SME stock exchange NileX still has only seven listings more than two years after it was established. While the TDF is a step in the right direction, many experts say, the Egyptian venture capital system still is not as established as those in the United States or European Union.
Technology companies have become catalysts for innovation around the world, but not to the same extent in Egypt. Since 2005, Prime Minister Ahmed Nazif’s cabinet has focused on building the nation’s IT infrastructure and more than 900 IT companies operate in the country. “Most, if not all, the IT sector is driven by commercial needs, which is not a bad thing, but it is not conducive to innovation,” Elabbady says.
Because Egypt’s IT infrastructure grew and improved so quickly, few are aware of its value and capabilities so its utilization rate is low. “We can’t form synergies within the market. We are still scratching the surface of technological innovation,” Elabaddy says. “Call centers highlight the importance of operational and technological innovation. As corporations look to reduce operational costs, we need to innovate to accommodate different scenarios to make call centers cheaper to operate and more effective.”
Legal obstacles
Laws governing intellectual property rights (IPR) provide crucial regulatory support for innovation by ensuring legal protection for ideas. IPR law in Egypt is managed by the Organization for Standardization & Quality, a division of the Ministry of Trade & Industry.
Hany Barakat, head of the Organization for Standardization & Quality, describes a three-part mission for the agency, including defining and maintaining patent standards. “One of the major issues is what to register in a patent. I can’t register a pen, for example; it has to be something with certain aspects that make it unique because I don’t want to stop the pen production industry.”
Secondly, the organization controls the Industry Monitoring Authority, which watches the market for fraudulent products – no easy task since violators are not registered. “We use a two-tier system that monitors producers and retailers. This monitoring is based on risk assessment of the producer and product. Some products are more likely to be copied than others, or can be hazardous. Producer risk is based on previous offenses,” according to Barakat.
Economic courts, which are overseen by the organization and specialize in corporate disputes, were established in 2007 to expedite legal actions. Nonetheless, the courts’ value remains unproven, says Mokhtar El Birairy, professor of maritime and trade law at Cairo University and a partner at the law firm of Ibrachy and Dermarkar. “The problem is that the judges in the economic courts were transferred from normal courts; they don’t have any special qualifications,” El Birairy says. “I don’t believe that prosecution times will decrease because it still takes a long time to prepare for cases.”
In 2009, the International Intellectual Property Alliance “recommends that Egypt be elevated to the Priority Watch List.” “What should be a shining economic success story of ingenuity and creativity in Egypt’s rich creative industries, instead is a nightmare market for right holders, stunted by piracy, difficult bureaucracy, and almost unparalleled market access hurdles,” says the report’s executive summary.
The road to innovation
Building an innovative workforce starts with education, and Elabbady is optimistic about Egypt’s potential. “As a matter of fact, we are so thirsty for research. You can see it when you talk to college students,” he says. “Professors who really did research at one point in their careers show even more thirst for the chance to do research once again. We are a nation that is ready.” Ghonim has a similar understanding, saying that while the education system does not do enough to encourage or teach entrepreneurship, the vast amount of content and knowledge sharing on the Internet can be easily and widely accessed. “Those who want to learn, can learn,” he says. “We don’t lack street-smart minds.”
Commercializing innovative ideas can be more difficult to achieve; it depends largely on social and macroeconomic factors. The robust economies of China, India and Taiwan had their beginnings in entrepreneurial capitalism, Ezzat explains. “There is a continuous stream of new, innovative ideas that are converted to products and then sold to established brands worldwide.”
From the government’s perspective, innovation goes beyond the mere processing of raw materials. “In clothes, there is very little textile differentiation; the value is in design, and it is what makes you pay more,” Barakat says. “The idea is to promote a design culture among producers.” Since 2005, the Ministry of Trade & Industry has established design centers for fashion, leather products, jewelry, engineering products and garments. “We started with 50 students; now there are over 500,” he says.
For Egypt, an effective model might include minimal government interference. Says Barakat: “We need to lower [business] barriers for the system to grow at its own pace and leave competition to decide the look of the market.”
One thing is certain: the argument for innovation and entrepreneurship has been made emphatically of late. In the past month, Tarek Kamel, minister of communications and information technology, and Ahmed Zewail, US science and technology envoy and Nobel laureate, have spoken about the need for Egypt to create a culture that encourages creativity.
While building such an environment is an inexact science, most agree it will require a fundamental commitment by business and support from government. As the global financial crisis fades, the ability of economies and businesses to innovate is likely to become more important than ever.
from amcham
http://www.amcham.org.eg
المشاركات
Ӏ wіll іmmediаtely grab
your гѕs as I can not to find уour е-mail subscгіptіon
link or neωѕletter seгvice.
Do you hаvе any? Kindly lеt me recognizе
so that I could subscribe. Тhanks.
Also ѵiѕit my webpаge - Meuble salle de bain
Magnificent goods from you, man. I have understand your
stuff previous to and you are just too magnificent.
I actually like what you've acquired here, certainly like what you are saying and the way in which you say it. You make it entertaining and you still take care of to keep it smart. I cant wait to read much more from you. This is really a tremendous web site.
my blog - voyance
Fantastic site уou haνe here but I was curiоus abоut if you
knеw of аny useг discussion forums that соver the sаme topics discussed heгe?
I'd really like to be a part of community where I can get feed-back from other experienced individuals that share the same interest. If you have any suggestions, please let me know. Kudos!
My weblog :: disque dur SSD