Do you know why free trade brings you better local services and economic protectionism brings you mediocre to poor services? The answer can be found in the presence of competition. But what does competition do that makes those foreign brands of good quality stand out? Let's talk about innovation and how having competition brings it out of the competing companies.
Here's how the Iowa State University (also the source of the image above) would define innovation before we continue with our topic:
This cyclical process begins with defining a new concept, then discovering if the concept provides business value. The valued concept is then developed into a ready solution, and finally the innovative solution is delivered to customers.
The four Ds of innovation explained in simple terms
They would have to really have to Define, Discover, Develop and DELIVER. The whole process according to the brochure from CIRAS (this is where I got my discussion below) shows it's not an easy process. But no pain means no gain right? That's exactly the whole thing with winning the competition. If you're going to compete then shouldn't you get serious and not slack off?
First, it's important to define. Defining would involve (1) creating and capturing of ideas, (2) developing value proposition, (3) evaluate opportunity, and (4) strategic fitting which involves selecting and refining ideas. There's going to be a lot of ideas but only a few will really stand out. It's a filtering process which may require a lot of research in the actual field. It's like how some research work is done in order to find out with what's hot and what's not. Symptoms of breakdown include (1) lack of clarity of real customer needs/ problems (2) lack of ideas (3) innovation vs. innovation, and (4) low management or employee support. Potential solutions to get things defined involve (1) idea stimulation training, (2) concept refinement training, (3) customer and market research and (4) technology research in this phase.
Second, there is the discovery phase. You already have you research data and all is well and good, right? No, the battle has just begun. This phase would involve (1) pilot concept to prove value, (2) estimate financial returns, (3) evaluate competitive options, and (4) commit resources. It's time to do some evaluation of research data. Financial analysts, statisticians and operation managers would get involved. This may also include the risk-returns cycle. It would be stupid to think only of returns without considering the risk. Symptoms of breakdown include (1) high percentage of new products/services fail to meet expectations, (2) overloaded product development/underresourced projects (3) "flavor of the month", and (4) unclear "why" we are considering the concept. Potential solutions involve (1) formal decision framework, (2) more customer-market research, (3) more technology research, (4) financial analysis and (5) competitive analysis.
Third, there is the development phase. Ideas are only ideas until they are carried out. This requires (1) developing a plan, (2) designing a solution, (3) verifying and validating processes, and (4) creating sales and marketing plan. This would be important to understand that innovation can fail without good development. Symptoms of breakdown include (1) delayed releases, (2) high costs, (3) long development cycles, (4) solutions don’t satisfy market needs, and (5) poor team morale/ motivation.Potential solutions involve (1) project and management planning, (2) development systems, (3) prototyping, (4) designs, (5) simulations and (6) failure mode analysis. It's important to see the flaws of the development. While nothing is indeed perfect but we want to reduce error as much as possible, don't we?
Fourth, there is the delivery phase. What good is an idea if the implementation is a big time failure? Learning from failures should be done as soon as possible. Good marketing and good product come together. This requires (1) refined sales literature, (2) team communication, and (3) integrating into the most current practices. Symptoms of breakdown include (1) many engineering changes after commercialization, (2) high manufacturing costs, (3) quality problems, (4) solutions don't satisfy market needs, and (5) team confusion. Potential solutions involve (1) improvements to definitions, discovery and development, (2), integrated product teams, (3) post-mortem analysis, and (4) collecting customer feedback to improve one's product line.
Huawei and Samsung as illustrations of how foreign competitors caused these two major companies to keep innovating new products to keep themselves afloat
Two good examples concerning constant innovation would be how Huawei (China) and Samsung (South Korea) are constantly innovating. Do you think these two phones would be of worldwide quality if they didn't face foreign investors as competitors? You can think about the economic policies of both China and South Korea. With the presence of the Japanese electronic revolution you can think of how DVDs and rice cookers are no longer limited to just Japan. So how did both Huawei and Samsung become so innovative? Was it because their countries are protectionists or was it because of free trade?
China today has become very competitive thanks to the economic reforms brought by Deng Xiaoping. Deng understood how Maoism is an obsolete model with how it brought China to poverty. South Korea made itself better than North Korea after the split during August 17, 1948 (the same year that the Philippines became independent from American control). South Korea was able to rise into an Asian economic power through free trade in contrast to North Korea's protectionist policies. When both countries allowed foreign investors (in spite of one is a dictatorship and the other is a democracy) they both provided badly needed employment and revenues for the national treasury.
Do you think Huawei and Samsung would bother innovating their products and services if they were the only mobile phone companies in their respective countries? They wouldn't think of innovating what they have to continuously offer to local customers because there's no competition. When there's competition people are forced to be on their toes. Innovation is absolutely necessary to keep your product alive. Without pursuing innovation then I wouldn't have the privilege of writing this piece, having a PC and enjoying the benefits of the digital age. Both companies faces with competition such as Japanese electronic companies would put them into the challenge to innovate or face extinction.
Would both companies bother to innovate if both companies' home countries were still stuck in the dork ages of economic protectionism? They wouldn't bother because competition is little to none. If you have no competition then why bother to innovate? Why bother tasking risk? Instead, all the competition made them take the risk to try something new. Both companies may have never even know what it takes to be competitive if they didn't face the Japanese electronic companies. The Japanese electronic companies serving as their worthy competitors wouldn't even exist would have Japan remained forever in the Tokugawa era's protectionist mentality. It was when Imperial Japan died and Modern Japan was established that a lot of stuff we enjoy today from Japan was born. Watching Japanese Anime and Tokusatsu? You can thank economic liberalization for the rise of Japan's influence in many areas of the world today.
Business fairs and exhibits allow companies show off what innovative products they have to offer to customers as their end products. Huawei and Samsung end up showing both their local and international customers what they have to offer. You can think of how these showcases would eventually give them a whole lot of ideas. If there was no competition then there would be no innovation. When there's no innovation then what choices would you eventually have? None. You may still be stuck with communicating using smoke signals, writing on tablets of stone or using messenger pigeons this 2017.
If more competition from foreign investors were set in the Philippines then there would be more innovation from local Filipino businesses
Why do so many Filipino businesses suck and only a few do better? It's because of the law's 60/40 policy have restricted certain sectors. A good example is the problem of slow Internet in the Philippines. It reminds me of the event where Jack Ma was given a doctorate award at the De La Salle University. He's the founder of Ali Baba. He mentioned the problem of slow Internet in the Philippines that should have been addressed much earlier. Internet is slow because of the duopoly where you only have Globe and PLDT while there are already 7,107 islands. If you want better Internet services then you should consider competition. Globe and PLDT are only competing against each other which gives them less reasons to innovate.
So why is Jollibee getting so innovative in their choices? I could really think of going to the Jollibee branches to get my favorite burger. But would Jollibee keep making better burgers if it were the only snack joint in the Philippines? No, it has to worry about how to keep up with competitors like McDonalds, Kentucy Fried Chicken and Army Navy to name a few. The product mix's advantage plays with both pricing and quality. A Jollibee Yum Burger can be considered a more affordable and lighter substitute to the expensive and heavier burgers from Army Navy. They keep making new items, testing them and removing those that won't work out. If they didn't have to worry about the competition, if Jollibee were the only place where Filipinos can get a burger - then maybe it'd still run with the inefficiency of the Krusty Krab from Spongebob.
The defeatist mentality that foreign investors will put local Filipino businesses and leave Filipinos impoverished is only partly true. Foreign investors appear as opportunities and threats. If you don't innovate then you can only expect to perish overtime. Instead, it's time to be innovative with how businesses run themselves in the race. They could think of getting new customers and new service providers. They can use whatever new knowledge they can to develop new methods to carry things out. If they don't take advantage of what innovation has to offer then they have accumulated a lot of opportunity costs.
How do you weed out incompetence? It's by exposing them to competition because that's where incompetent businesses either innovate or perish. It's stupid to keep shouting Pinoy Pride when Filipinos win competitions abroad if you're a defeatist about foreign investors. The reason is those Filipinos who won their titles abroad were exposed to foreign competition. They are considered foreigners in those countries. Not to mention, they didn't win the prizes immediately. They had to keep working and making sacrifices before they brought home the trophy. If more Filipino businesses were exposed to competition then only those who bother to be innovative would survive.
Innovation is risky but not innovating at all is even riskier
Every step of innovation will always involves risk. You want to try something new? There is a risk in doing so yet you must do it anyway. Do you think that successful companies didn't face risks before they arrived to where they are now? Change will involve risk one way or another. One of these risks may mean spending more money on the short run. More money will be spent in both research and development. This would also mean staying up late, working overtime and skipping family trips at times just to get the job done. There's also the risk of failure which is why risk management is required to minimize it. You can always minimize risk but you can't avoid risk altogether. It's all about having manageable risk and not risk avoidance.
The problem of trying to avoid risk by not innovating at all is even riskier. A number of problems yesterday could have caused the end of civilization if it wasn't for risk taking. If scientists didn't take the risk then think of what could have happened. If immunization wasn't invented then think of how many deadly diseases would have ended humanity a long time ago. If new stuff weren't tried out then how would we know if something new works or not. It would be comparable to not facing the growing problem. By not facing the problem then it ends up destroying everyone because nobody bothered to face it. It's like not doing anything to find ways to minimize disasters has caused the casualties to increase. A good evacuation procedure requires some risk but not having it will cause more casualties.
You can consider it like a two-edged sword. It can be used for good or for evil so it must be used wisely. If you don't have a sword then how can you defend yourself from danger? You can't throw away swords because they were misused by criminals. It's all about making the wise choices instead of throwing away hammers because they were used in a crime scene. The problem wasn't the hammers but the misuse of them. Innovation can't be overthrown because it was misused. Instead, it's all about punishing those who misuse it.
Think about that!
Would both companies bother to innovate if both companies' home countries were still stuck in the dork ages of economic protectionism? They wouldn't bother because competition is little to none. If you have no competition then why bother to innovate? Why bother tasking risk? Instead, all the competition made them take the risk to try something new. Both companies may have never even know what it takes to be competitive if they didn't face the Japanese electronic companies. The Japanese electronic companies serving as their worthy competitors wouldn't even exist would have Japan remained forever in the Tokugawa era's protectionist mentality. It was when Imperial Japan died and Modern Japan was established that a lot of stuff we enjoy today from Japan was born. Watching Japanese Anime and Tokusatsu? You can thank economic liberalization for the rise of Japan's influence in many areas of the world today.
Business fairs and exhibits allow companies show off what innovative products they have to offer to customers as their end products. Huawei and Samsung end up showing both their local and international customers what they have to offer. You can think of how these showcases would eventually give them a whole lot of ideas. If there was no competition then there would be no innovation. When there's no innovation then what choices would you eventually have? None. You may still be stuck with communicating using smoke signals, writing on tablets of stone or using messenger pigeons this 2017.
If more competition from foreign investors were set in the Philippines then there would be more innovation from local Filipino businesses
Why do so many Filipino businesses suck and only a few do better? It's because of the law's 60/40 policy have restricted certain sectors. A good example is the problem of slow Internet in the Philippines. It reminds me of the event where Jack Ma was given a doctorate award at the De La Salle University. He's the founder of Ali Baba. He mentioned the problem of slow Internet in the Philippines that should have been addressed much earlier. Internet is slow because of the duopoly where you only have Globe and PLDT while there are already 7,107 islands. If you want better Internet services then you should consider competition. Globe and PLDT are only competing against each other which gives them less reasons to innovate.
So why is Jollibee getting so innovative in their choices? I could really think of going to the Jollibee branches to get my favorite burger. But would Jollibee keep making better burgers if it were the only snack joint in the Philippines? No, it has to worry about how to keep up with competitors like McDonalds, Kentucy Fried Chicken and Army Navy to name a few. The product mix's advantage plays with both pricing and quality. A Jollibee Yum Burger can be considered a more affordable and lighter substitute to the expensive and heavier burgers from Army Navy. They keep making new items, testing them and removing those that won't work out. If they didn't have to worry about the competition, if Jollibee were the only place where Filipinos can get a burger - then maybe it'd still run with the inefficiency of the Krusty Krab from Spongebob.
The defeatist mentality that foreign investors will put local Filipino businesses and leave Filipinos impoverished is only partly true. Foreign investors appear as opportunities and threats. If you don't innovate then you can only expect to perish overtime. Instead, it's time to be innovative with how businesses run themselves in the race. They could think of getting new customers and new service providers. They can use whatever new knowledge they can to develop new methods to carry things out. If they don't take advantage of what innovation has to offer then they have accumulated a lot of opportunity costs.
How do you weed out incompetence? It's by exposing them to competition because that's where incompetent businesses either innovate or perish. It's stupid to keep shouting Pinoy Pride when Filipinos win competitions abroad if you're a defeatist about foreign investors. The reason is those Filipinos who won their titles abroad were exposed to foreign competition. They are considered foreigners in those countries. Not to mention, they didn't win the prizes immediately. They had to keep working and making sacrifices before they brought home the trophy. If more Filipino businesses were exposed to competition then only those who bother to be innovative would survive.
Innovation is risky but not innovating at all is even riskier
Every step of innovation will always involves risk. You want to try something new? There is a risk in doing so yet you must do it anyway. Do you think that successful companies didn't face risks before they arrived to where they are now? Change will involve risk one way or another. One of these risks may mean spending more money on the short run. More money will be spent in both research and development. This would also mean staying up late, working overtime and skipping family trips at times just to get the job done. There's also the risk of failure which is why risk management is required to minimize it. You can always minimize risk but you can't avoid risk altogether. It's all about having manageable risk and not risk avoidance.
The problem of trying to avoid risk by not innovating at all is even riskier. A number of problems yesterday could have caused the end of civilization if it wasn't for risk taking. If scientists didn't take the risk then think of what could have happened. If immunization wasn't invented then think of how many deadly diseases would have ended humanity a long time ago. If new stuff weren't tried out then how would we know if something new works or not. It would be comparable to not facing the growing problem. By not facing the problem then it ends up destroying everyone because nobody bothered to face it. It's like not doing anything to find ways to minimize disasters has caused the casualties to increase. A good evacuation procedure requires some risk but not having it will cause more casualties.
You can consider it like a two-edged sword. It can be used for good or for evil so it must be used wisely. If you don't have a sword then how can you defend yourself from danger? You can't throw away swords because they were misused by criminals. It's all about making the wise choices instead of throwing away hammers because they were used in a crime scene. The problem wasn't the hammers but the misuse of them. Innovation can't be overthrown because it was misused. Instead, it's all about punishing those who misuse it.
Think about that!
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