6. i s s u e 1 6 2 0 1 1
G L O B A L i s s u e s i n P e R s P e C T i V e
18 easy does iT 32 charging ahead 56 Power surge
Saudi Arabia’s status as a global business destination Electric transport, a rapidly accelerating sector of the Nuclear energy is undergoing a resurgence around
continues to climb, as reflected in the 2011 World Bank Ease automotive industry, can combine excitement with efficiency the world, as booming populations and development create
of Doing Business index. and economy. unprecedented power demands.
22 comPeTiTive advanTage 36 Budding genius 60 The redux of luxe
The 2011 Global Competitiveness Forum, with the Excellence might come easily to child prodigies but The improved outlook for the global luxury market is
theme of innovation as a competitive advantage, gathers how do parents ensure their precocious children become set to continue, but not without facing up to some significant
international leaders in business, politics and intellectual fields. well-adjusted adults? challenges.
28 humane naTure 41 innovaTion and ingenuiTy 64 eco TriP
THINK talks exclusively to best-selling author, Young Saudi inventor has a bright future ahead of him, Eco-friendly tourism is expanding from niche into the
entrepreneur and dedicated activist, Paul Hawken, about the with numerous patents and software creations at just 23 years mainstream, with more businesses and governments seeing
success of his business, social and environmental ventures. of age. the green light.
06
7. “innovaTion is The
sPecific Tool of
enTrePreneurs, The
means By which They
exPloiT change as an
oPPorTuniTy for a
differenT Business or a
differenT service”
PeTer DruCker, SoCIAL eCoLogIST
68 some like iT hauTe
The world may still be reeling from suggestions of
regulars OpiniOn
a double-dip recession, but high fashion marches on 13 sPecTrum 42 whaT do you Think?
regardless. The latest news and creativity from around the globe Students discuss the merits of e-learning
75 Profile 47 Thinking forward
76 caughT on camera Natalia Allen, design entrepreneur, bridges the divide between In our post-crisis business environment, companies are adjusting
We unveil the best images and speak to some of design and activism their strategies to become more agile, responsive and accountable
the winners from the THINK and SAGIA photography
83 fuTure Thinking 48 scTa PresidenT sPeaks To Think
competition. An ambitious plan for mass-scale solar power HH Prince Sultan bin Salman, president, Saudi Commission
85 Books for Tourism and Antiquities, on Saudi's cultural responsibilities
The best reading material reviewed for you
52 Think roundTaBle
86 visionary Leaders from the world of arts and culture discuss the global
Nick Pope, ufologist, on what space has to teach humankind appeal and economic value of national heritage treasures
07
8. COVER PHOTOGRAPHY
Spring-Arrival by Mohsen
Mohammed al-Danjani
SAGIA eDITorIAL ADvISor Fahd M Hamidaddin
eDITorIAL LIAISoN Aseel A Al-Zamil
mOTIVATE PUBLIShING eDITor-IN-CHIef Obaid Humaid Al Tayer
grouP eDITor + MANAgINg PArTNer Ian Fairservice
grouP SeNIor eDITor Gina Johnson
grouP eDITor Catherine Belbin catherine@motivate.ae
CHIef Sub eDITor Iain Smith iain@motivate.ae
eDITorIAL ASSISTANT Belinda Igaya belinda@motivate.ae
geNerAL MANAger grouP SALeS Anthony Milne anthony@motivate.ae
geNerAL MANAger – ProDuCTIoN + CIrCuLATIoN S Sasidharan sasidharan@motivate.ae
ProDuCTIoN MANAger C. Sudhakar sudhakar@motivate.ae
DePuTy ADverTISeMeNT MANAger Omar Al Eit omar@motivate.ae
DeSIgN Design Studio
INTerNATIoNAL CorreSPoNDeNTS Ashlee Beard, Laura Collacott, Glenn Freeman, Steve Hill, Elsa Mclaren, Joanne Molina, Lisa Vincenti
SAuDI ArABIAn GEnErAL InVESTMEnT AuTHOrITy (SAGIA) C
SAGIA HEADquArTErS Imam Saud Bin Abdulaziz road (university road), PO Box 5927, riyadh 11432, Kingdom of Saudi Arabia,
T +966 1 203 5555 F +966 1 263 2894 E Info@sagia.gov.sa M
SAGIA InTErnATIOnAL OFFICES Y
MIDDLe eAST & AfrICA Hatem A Al-Ahmad; e mena@sagia.gov.sa CM
euroPe Mai Al-Torki; e europe@sagia.gov.sa
MY
frANCe Lucile Pons van der Slikke; e france@sagia.gov.sa
ITALy Mai Al-Torki; e italy@sagia.gov.sa CY
gerMANy Dahlia T rahaimy; e germany@sagia.gov.sa CMY
uNITeD kINgDoM Sara bouzo; e uk@sagia.gov.sa
K
THe AMerICAS Ahmed Islam; e americas@sagia.gov.sa
WASHINgToN DC Ahmed Islam; e americas@sagia.gov.sa
eAST ASIA Noriko Sozuki; e japan@sagia.gov.sa
WeST ASIA Meshari S. Al-khaled; e singapore@sagia.gov.sa
MOTIVATE PuBLISHInG
HeAD offICe Po box 2331, Dubai, united Arab emirates
T +971 4 282 4060 f +971 4 282 4436 e motivate@motivate.ae
Abu DHAbI e motivate-adh@motivate.ae
LoNDoN e: motivateuk@motivate.ae
InTErnATIOnAL MEDIA rEPrESEnTATIVES
AuSTrALIA okeeffe Media; e okeeffekev@bigpond.com.au
CHINA/HoNg koNg emphasis Media Limited; e advertising@emphasis.net
CyPruS epistle Communications & Media; e nasreenk@epistlemedia.com
frANCe/SWITZerLAND Intermedia europe Ltd; e administration@intermedia.europe.com
gerMANy IMv International Media Service gmbH; e j.hoffmann@vhb.de
INDIA Media Star; e ravi@mediastar.co.in
ITALy IMM Italia; e lucia.colucci@fastwebnet.it
JAPAN Skynet Media Inc.; e skynetmedia@y2.dion.ne.jp
Turkey Media Ltd; e mediamarketingtr@medialtd.com.tr
uNITeD kINgDoM Spafax Inflight Media; e nhopkins@spafax.com
uNITeD STATeS redwood Custom Communications Inc.; e brigitte.baron@redwoodcc.com
PrINTINg Emirates Printing Press, Dubai
Motivate Publishing LLC, on behalf of Saudi Arabian general Investment Authority, publishes THinK quarterly. SAgIA and Motivate Publishing do not accept liability for errors or omissions contained in this publication for whatever reason, however
caused. The opinions and views contained in this publication are not necessarily those of SAgIA or of the publishers. SAgIA and the publishers take no responsibility for the goods and services advertised. All materials are protected by copyright.
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9.
10.
11. eDiT
q1 2011
THinK glOcal
Increasingly, nations not traditionally associated with innovation are adapting and implementing new
technologies, especially information technologies, social media and telecommunications, in becoming
creatively and globally competitive.
A case in point is the Global Competitiveness Forum 2011, hosted by SAGIA in Riyadh, where the
organisers have used the latest technology to pioneer one of the first e-forums of its kind, leveraging
tablet computing and sophisticated networking.
In the new de-centralised global community, countries not historically associated with innovation
and thought leadership are beginning to take the lead. In Asia, this is happening in a range of
sectors including manufacturing. This is also exemplified in the Middle East, where governments
are slowly but surely diversifying national revenue sources outside of petrochemical industries.
Further examples of this are the new breed of inventors emerging within the Kingdom and
also its foray into automotive manufacturing.
Similarly, Saudi Arabia's dynamic ministers are adopting social media such as Facebook
and other relevant digital media platforms, to access new channels and create dialogue in
search of effective solutions for the new globalised Kingdom.
In this issue of THINK, our editorial focuses on the increasingly prevalent phenomenon
of glocalisation. The term has gained broad acceptance from the international business
community in recent years, having been adapted from Japanese business practices. Indeed,
the word is derived from the Japanese word dochakuka, which literally means global
localisation.
Our international correspondents address numerous issues of increasing global concern,
from a broad spectrum of topics within the worlds of business, science, technology and culture.
This diversity of thoughts, discussions and opinion reflects the increasing convergence of these
themes and the ever-broadening implications of events around the world on the lives of global
citizens.
Whether locally, globally or in a glocal combination of the two, this first issue of THINK for 2011
encourages you to think glocal.
Catherine Belbin, Group Editor THINK@motivate.ae
LINA SALeH MALAIkA
011
12.
13. the right
place at the
right time
wriTTen By sTeve hill
An unusual entrant at the top of the
countries to visit in 2011 list, some royal
wedding-inspired short breaks in London
and a boost to organic farming in Saudi
Arabia are all on the agenda
013
14. PHoTo by MArIo TeSTINo/CLAreNCe HouSe PreSS offICe vIA geTTy IMAgeS/gALLo IMAgeS.
specTrum
royal
connections
The british royal wedding in April
between Prince William and kate
Middleton is expected to spark a large
increase in tourist numbers to London.
And short-break specialists Superbreak
leading The way
has reacted by launching a series of
geTTy IMAgeS
tailor-made wedding packages that
include a stay at a range of three to five-
star hotels in the centre of the capital as
well as a trip on the London eye and a indra Nooyi, the chief executive of PepsiCo the Indian Institute of Management and was and chief executive of Gulf One Investment
two-for-one dining card. since 2006, has been named number one in the employed by Johnson & Johnson in Mumbai Bank, was ranked 24.
Financial Times’ list of the top 50 women in before moving to the United States to study Legendary US TV talk show host Oprah
world business for a second successive year. at Yale. Winfrey was designated as the newspaper’s
lighting Up Born in Chennai, she completed her MBA at Saudi national Nahed Taher, the co-founder woman of the decade.
The world’s biggest LeD media facade
has been installed at the king’s road
Tower in Jeddah by french company
Citiled. The Place To Be
The 10,000 square metres screen alBania is the country to visit in 2011,
covers 21 floors on the north and south according to travel company Lonely Planet,
sides of the building as well as 16 levels which is extolling the virtues of a destination
on the west facade, and features more customarily regarded to be off the beaten path.
than five million LeDs which can display The Mediterranean country boasts heritage
up to 16.7 million different colours. sites, beautiful beaches, fine food and a warm
More than six months were needed welcome, according to Lonely Planet’s latest
to produce the innovative system, which book, Best in Travel 2011.
is almost transparent, guaranteeing Brazil, which is set to host the 2014 World
daylight for the building’s occupants, and Cup and the 2016 summer Olympic Games,
installation and testing took six months. is listed in second place with Cape Verde, off
The dynamic “skin” can display a wide the coast of Africa, third, Panama fourth and
range of content and messages including Bulgaria fifth.
graphic, artistic, cartoons, videos, news, The top 10 also includes Vanuatu (sixth),
photos and events. Tanzania (eighth) and Syria (ninth).
014
15. Organic
agreement
organic farming in Saudi Arabia has
been boosted by an agreement between
gTZ Saudi Arabia and the Morarka
foundation, of India.
A delegation of senior officials from the
Saudi Agricultural Ministry and farmers
recently visited certified organic farms
at bhuj, where the foundation has been
working since the 2002 earthquake, and
farm lands in rajasthan.
Technical assistance is to be offered
to Saudi farmers regarding the planning
of organic agriculture, development
of technology and training, as well
as management expertise, record
maintenance and certification.
Worldwide, 30.4 million hectares of
land is now used for organic production,
generating global trade of uS$38.6 billion.
geTTy IMAgeS/gALLo
qaTar kicks major goal
qaTar recenTly won the right to host football event is watched by an estimated 700 who said that Qatar’s win was a victory for the
the FIFA World Cup 2022, winning the bid ahead million people worldwide, and is expected to entire Arab world.
of the United States, Japan, Korea and Australia. benefit the country and the entire region. In a statement issued after Fifa’s announcement,
Qatar led in the ballot on each of the four Qatar has promised to spend US$50 billion Sheikha Moza said: “The importance and usefulness
rounds, obtaining 14 votes against eight to the on infrastructure upgrades and US$4 billion to of this event cannot be overstated…it represents
US in the final round. build nine stadiums and renovate three others. a historic opportunity to show the Middle East’s
For Qatar, the GCC and the Middle East, this A leading proponent of Qatar’s successful bid openness to the West and to help further promote Berth control
represents enormous opportunities. The global was HH Sheikha Moza bint Nasser Al Missned, dialogue among civilisations and cultures.” Saudi Arabia is expected to see a 50
per cent increase in the number of marina
berths by 2012, according to a recent
study by leading industry consultancy
ToP gear Mike Derrett Marine.
The nation’s rapidly growing leisure
The recent Riyadh Motor Show attracted fleet and an upsurge in overseas boating
more than 96,000 visitors over its five-day run tourists are helping spark this growth,
while deals worth around US$60 million were making the marine sector an important
signed by international car accessories and investment opportunity for domestic and
services companies. foreign markets.
The event, at the Riyadh International Saudi Arabia, which recently
Convention and Exhibition Centre, also played host to the second edition of its
generated around 2,000 applications to international boat show, currently boasts
participating financing companies for car 10,000 vessels measuring five metres or
reservations, on top of deals concluded at the more in length, and trails only kuwait in
stands of automotive dealers. terms of boat population in the gCC.
The Kingdom is the largest auto market in More than 130 international
CourTeSy of LexuS
the Middle East region and the fifth largest in companies and brands were represented
the world for auto parts, accessories, service at the show, staged at the Al furusya
and garage equipment. Marina & yacht Club in Jeddah.
015
16. specTrum
Financial
Solutions
Participants from 35 countries took part
in a two-day global investment forum at
the king faisal Conference Hall at the
riyadh Inter-Continental Hotel.
Saudi Investor Window 2010
showcased how Islamic finance could
become a solution to the world financial
crisis. London-based uCI International
co-organised the event with the Saudi-
based Islamic International foundation for
economics & finance (IIfef) and Motamara.
“Increasingly, Western and Asian
governments and business leaders are
turning to Islamic finance to provide
financing for major international projects
in response to the global credit freeze,”
said Tahar benourrad, uCI’s chairman.
Debate heats Up
A series of recent climate change-related
disasters around the world highlight
mena growTh PredicTion
the need for stronger action to reduce
greenhouse gases, according to
international lobby group 350.org.
The series of natural disasters include
some of the worst wildfires ever recorded growTh in The MENA region is forecast to outpace the global Property prices in Egypt grew 10 per cent in 2010, according to
in the Middle east, flood-related crises average in 2011, signalling the property sector is ripe for investment. Global Property Guide, with similar growth forecasts for 2011.
in South America and the recent cold The International Monetary Fund is predicting gross domestic Property prices in some parts of Saudi Arabia surged as much as 40
weather experienced in the uk and product will expand 5.1 per cent in the MENA region in 2011, higher per cent in the second half of 2010, according to Banque Saudi Fransi,
europe, some of the iciest conditions than the forecast global average of just 4.2 per cent. and will likely continue to appreciate in the New Year.
experienced in 100 years. “All of these The MENA region is expected to be second only to Asia in terms of “There is still a lot of cash on the sidelines, but there are opportunity
disasters are taking place with just annual growth, with economies of the region expanding at more than costs to keeping liquid cash. Investors will now be weighing up their
390 parts per million of Co2 in the double the pace of advanced nations, including Europe and the United options about where to invest next year, and property is shaping up to
atmosphere,” said bill Mckibben, author States. be one of the best performing sectors,” said Ziad El Chaar, managing
and founder of 350.org. “Physics and Property sectors in Saudi Arabia, Lebanon and Egypt are all expected director of DAMAC Properties.
chemistry have laid their cards on the to report double-digit growth in 2011. Lebanon’s Director General of The region is also getting a boost from Qatar’s successful 2022 World
table: above 350 [parts per million of the Economy Ministry, Fuad Fleifel, predicts property prices in Beirut Cup bid, with Shuaa Capital predicting Qatar may spend close to US$90
Co2 to oxygen], the world doesn’t work.” will rise another 15 per cent in 2011. billion on housing and infrastructure in the lead up to the tournament.
charity Begins
at home with the anonymous Saudi investor.
Saudi Arabia features the greatest landmark In April, a French court ruled that Saudi-
number of charitable societies and
foundations in the gCC, according to hoTel sold backed JJW Hotels & Resorts would have to
pay US$130 million to Starwood Capital to
a report published by the International settle a dispute involving the aborted sale of
Centre for research and Studies. a ProminenT Saudi investor, part of Le Crillon to JJW.
“gulf Charity Work: A first Information the Kingdom’s royal family, has successfully The price paid by the buyer, described as an
report” reveals that 86 per cent of such purchased the Hôtel de Crillon in Paris. “eminent” member of the Saudi royal family,
bodies are based in the kingdom with The luxury hotel, built in the Champs has not been disclosed. However, Reuters
the remaining in kuwait, bahrain, Qatar, Elysees area in 1758 after being commissioned quotes a source close to the sale in estimating
the uAe and oman. by King Louis XV, has long been the subject of the sum at over US$328 million.
Just over 25 per cent of charitable legal wrangling over the sale. Groupe Concorde, the prestige hotel unit of
action is aimed at the poor, with almost Groupe du Louvre, a unit of Starwood Groupe du Louvre, will continue to operate the
18 per cent concentrated on orphans Capital, which acquired the hotel in 2005, hotel on behalf of the new owner over a six- to
and 16.4 per cent on the disabled. confirmed it has now agreed on sale terms 12-month period.
016
18. invesTmenTs
easy does iT
SAuDI ArAbIA CAN be rIgHTLy ProuD of ITS MANy ACHIeveMeNTS IN THe PAST yeAr, buT
01
eMAAr ProPerTIeS
IT refuSeS To reST oN ITS LAureLS AND IS IMPLeMeNTINg eveN More reforMS AIMeD AT
SIMPLIfyINg DoINg buSINeSS IN THe kINgDoM.
wriTTen By joanne molina
lasT November, the Saudi Arabian General Investment
Authority (SAGIA) was pleased to announce that the country has
Chevron Phillips Chemical (United States), Alcatel-Lucent (France) and
BUPA Investments (Britain). SAGIA and GE signed an MOU to pilot
dramatically improved its ranking in the World Bank Report Ease of innovative and sustainable technologies in Saudi Economic Cities in June cost of starting
Doing Business Index 2011. From the 183 countries surveyed for the 2010. a business in us$
report, Saudi Arabia made significant progress by moving up to 11th “Cisco recognises the visionary leadership and ambitious reform
9000
place from the 67th place in the global ranking it occupied in 2005. programme that has brought about an improved business environment
It was able to sustain and improve its position as a global investment in Saudi Arabia as well the great potential this environment offers for 8000
destination ahead of 172 countries this year, while some of its neighbouring, businesses and citizens alike. As one of our key focus countries, our 7000
like the UAE, Bahrain and Qatar moved down the rankings. strategy is to work with both the government as well as private sector
This accomplishment is just one among many for the Kingdom this organisations to support continued development and growth.” says Dr 6000
year. In addition to being honored by the World Bank as the fifth fastest Badr Al Badr, managing director of Smart + Connected Communities, 5000
reformer over the past five years, its major reforms make the country a Asia and Africa, Cisco Systems International.
4000
much more attractive investment destination. The Kingdom moved up Saudi Arabia’s improvement in the World Bank’s Ease of Doing
to 11th place from 13th in the World Bank Report due to reforms to Business 2011 Index ranking was driven by major reforms, including the 3000
enforce commercial contracts and investor protection. Finally, the 2010 elimination of the minimum capital requirement for starting a business, 2000
UNCTAD report ranked Saudi Arabia as the eighth largest recipient of streamlining the processes for starting a business and creating the
FDI, attracting over US$36 billion. This meant major global corporations foundations of a competitive internal credit market. 1000
commencing significant operations – GE, Alcatel, BUPA and CISCO. “We are extremely pleased to improve our ranking and continue to 0
Top corporate investors in Saudi Arabia over the past five years were be recognised as one of the easiest countries to do business with on a 2006 2010
018
19. 01 King Abdullah Economic City
(KAEC).
02 Proposed residential villas in the
new age KAEC, Saudi Arabia.
03 The proposed harbourside
financial district of KAEC.
04 Artist’s impression of the massive
biosphere of King Abdullah
International Gardens (KAIG).
02 03
04
global basis. Saudi Arabia has been very successful at attracting a steadily When asked why Saudi Arabia’s recent success would be good for the
growing flow of foreign investment since 2005, which contributed to the world, Al-Dabbagh explained: “At one point during his speech at the
country’s rapid and sustainable economic growth,” says His Excellency 2009 Global Competitiveness Forum, Michael Phelps said: ‘There are no
Amr bin Abdullah al-Dabbagh, the Governor of SAGIA. limits to my life.’ I thought this was a very profound statement at the time,
“Saudi Arabia is already ranked as the easiest place to do business and still do, and still think about it quite often. Most people I imagine
in the entire MENA region and now we are keen to compete in the took the obvious view – given who he was and what he had just achieved
reduced time to start a international arena. We are pleased that Saudi Arabia’s efforts to reform – that we can accomplish almost anything we dream of and set out to. But
business to 5 days have been recognised by the World Bank and the country moved up in that’s not how I understood it. I understood it to mean that my life does
40.0 the rankings yet again this year. not begin and end with my own physical boundaries, but that I have an
35.0
“According to the World Bank, about 85 per cent of economies made impact on the world beyond myself.”
it easier to do business in the past five years, with Saudi Arabia ranked as “What I do has a reach, perhaps an enormous one, on a vast, remarkable,
30.0
the fifth fastest reformer. This is a testimony to our work over the past five often delicate and certainly complicated tangle of living beings, my children
25.0
years on the creation of a pro-business environment, a knowledge-based included. When we set out to be among the top 10 most competitive
20.0 society and the development of new world-class ‘Economic Cities’.” nations in the world, we weren’t competing against anything but our ability
15.0 The World Bank Ease of Doing Business 2011 Index analysed regulations to become our own personal bests in light of certain well defined standards
10.0 affecting nine areas of the life of a business across 183 countries, including that have and will continually evolve, and that theoretically will bring
5.0 starting a business, dealing with construction permits, registering sustainable national and global prosperity,” he continues.
0.0 property, getting credit, protecting investors, paying taxes, trading across “I think it was in the mid-1980s when Michael Porter said that the
2006 2010 borders, enforcing contracts and closing a business. concept of resource productivity would give us a new way at looking at
019
20. invesTmenTs
eMAAr ProPerTIeS
01
C
the full-system costs as well as the value associated with every product stakeholders involved including His Majesty Custodian of the Two Holy
we are
M
we create. ‘Full system costs’ and ‘value’ – that’s what I’m trying to Mosques King Abdullah, the Ministry of Commerce, the Shoura Council
exTremely
Y
understand. What value our product can bring the world, the costs and chambers of commerce across the country. CM
associated with both delivering and not delivering it, and the impact
constantly improving it will have.”
The results of these reforms are already overwhelmingly positive.
The New Regulations data from the Unified Center for Commercial
Pleased To MY
The numerous impacting reforms undertaken by SAGIA and the Registration shows that during the months of March and April 2010, 429 imProve our CY
National Competitiveness Centre (NCC) were part of a co-ordinated
programme to simplify and reduce the cost of a variety of key business
companies registered. For the period of March 1-April 14, the Center saw
registration of approximately 43 companies per week and the average cost
ranking and CMY
conTinue
K
processes. Although no one reform creates an impact on its own, two was almost US$1,500. For the period after April 17, the Center saw an
reforms have had more transformational impact on doing business in
Saudi Arabia than the rest.
average of 71 companies register per week, with the cost being US$1,000
for every company. The average processing time for all companies was 2.5
To Be
The first is the elimination of the capital requirement for starting a business. days. A sizeable number (nearly 15 per cent) were registered in one day, recognised
in many counTries, a minimum capital requirement for
and over 90 per cent of companies were registered in under three days.
Going forward, there are numerous strategies for more reforms. One of
as one of
starting a business represents a key barrier for aspiring entrepreneurs the main initiatives will be communication as SAGIA needs to continue The easiesT
to start their businesses. In 2006, the minimum capital requirement was
approximately US$125,000, today entrepreneurs and small businesses in
to communicate the impact that reforms have had on Saudi Arabia.
There is still a knowledge gap between the impact and systems that have
counTries To
Saudi Arabia benefit from a zero minimum capital requirement. recently been put into place and the business community. SAGIA and the do Business
This reform along with a dozen others have resulted in a simplification
of the process to acquire a new business license from 39 days to just
NCC will work to inform and communicate key changes.
Additionally, SAGIA and the NCC will be focusing on a key set of
wiTh on a
five and a reduction in the cost to the entrepreneur from US$8,530 to reforms that address the issues that still place the Kingdom outside of the gloBal Basis.
US$1,000. The result is a rapidly increasing number of business formed top 50 in the world, as well as continue to aim for recognition of reforms amr Bin aBdullah al-daBBagh
each year from 3,400 in 2006 to nearly 5,100 in 2009. that have not been fully acknowledged by the World Bank. For example,
The second most important reform was the amendments to the getting credit, closing a business and dealing with construction permits
Executive Regulations for the Commercial Lien Act. In February 2010, are all important indicators that will be highlighted in the future.
the Minister of Commerce and Industry passed that will materially The top priority, however, will be to drive reforms that continue to
improve the process of getting credit for Saudi businesses by providing a decrease the amount of time and procedures necessary to enforce a
centralised registry for lien records, clarifying the priority of certain types contract. This has been a long standing initiative of SAGIA and the NCC,
of creditors and improving procedures for settlements. These reforms as exhibited through the following actions: hiring new judges, developing
form the foundation for a competitive credit market as they reduce the case management systems, establishment of commercial courts and the
risk facing potential lenders and will unlock the flow of capital to small development of the electronic court management system.
and medium-sized businesses. All of these have made enforcing contracts easier, but SAGIA hopes to
However, some reforms were particularly challenging. The elimination continue to build on and develop a more efficient process by continuing
of the capital requirement was a significant accomplishment by the to roll out electronic case management systems, and track enforcement 01 Planned indoor-outdoor
Kingdom, due to the complex nature of the previous law and the countless and judgments times to ensure the process is getting more streamlined. walkways for KAIG.
020
22. THinK WOrlD evenT
“
innovaTion is the specific tool of
entrepreneurs, the means by which they exploit change as an opportunity
between alternative forms of energy and capitalism. The world’s leading
scientists and physicists also gather to explore how enquiries about outer
for a different business or a different service. It is capable of being space can offer innovative forms of problem solving. Innovations in
presented as a discipline, capable of being learned, capable of being social media, heavy industries and “greenovation” will also be explored.
practiced. Entrepreneurs need to search purposefully for the sources of In line with the themes of innovation and eco-awareness that underpin
innovation, the changes and their symptoms that indicate opportunities this year’s GCF, the event is a paperless forum. Through the use of iPads
for successful innovation. And they need to know and to apply the and a sophisticated networking solution, delegates and guests will be able
principles of successful innovation.” Peter Drucker, social ecologist to search and send messages, communicate and request meetings with
“Innovation as a Means of Competitiveness” is this year’s theme at the other registered GCF members.
fifth annual Global Competitiveness Forum (GCF), the first e-forum of its In their presentations and panel forums, the esteemed guests explore
kind. The GCF is held in Riyadh, Saudi Arabia, under the patronage of HM the meaning of competitiveness and innovation and discuss how these
King Abdullah Bin Abdulaziz, the Custodian of the Two Holy Mosques. definitions impact the ideas and principles that guide their organisations
Still celebrating two of Saudi Arabia’s most recent great achievements: and businesses, both at the present time and in the future.
comPeTiTive
advanTage
IN THe MoDerN WorLD, THe CoMPANIeS AND orgANISATIoNS THAT INNovATe AND
eMbrACe MoDerN CoNCerNS, SuCH AS eNvIroNMeNTAL AWAreNeSS, AND THeN
Seek THe ANSWerS To THeSe ISSueS Are beST PLACeD To ProSPer.
wriTTen By joanne molina
being recognised as the 11th most competitive investment destination in innovaTion, comPeTiTiveness
the world, according to the World Bank’s Ease of Doing Business Report, and The markeTPlace
and being recognised as the eighth largest recipient of foreign direct “I agree with the approach of the Global Competitiveness Forum. I
investments globally, according to the United Nations Conference for think of competitiveness in terms of pillars – for example, technological,
Trade and Development (UNCTAD), this tremendously successful year company and national competitiveness. Companies are competitive when
for the Kingdom is reflected in the GCF’s 2011 programme. they demonstrate a product or service offering that is scalable, sustainable
Founded in 2006 by the Saudi Arabian General Investment Authority and makes a lasting impact on the way people live. Competitive countries
(SAGIA), the conference originated as a gathering of informational and share in common a community and culture of investment, risk taking
communication technologies (ICT) experts, including Bill Gates, to discuss and innovation,” says Linda Rottenberg, CEO of Endeavor.
how ICT enables competitiveness, the GCF grew through the financial crisis In 1997, Rottenberg co-founded Endeavor with the goal of making
to tackle the world’s most important competitiveness issues. Its mission is emerging market countries more competitive on the global stage by
to foster awareness and enthusiasm around the issue of competitiveness, increasing the competitiveness of its highest-potential businesses. “I’m
and to evaluate the applicability of competitiveness theory and practice as pleased with the results,” she says, “but as I often say, we’re just getting
a tool for generating real solutions to contemporary global challenges. started.”
The 2011 GCF programme continues to be the only event of its kind, She explains how emerging markets are becoming the future of
hosting global business leaders, international political leaders and selected innovation. “In general, the most innovative and potentially path-
intellectuals and journalists to create a dialogue about the positive impact breaking business ideas do not come from large, established companies,
organisational and national competitiveness can have on local, regional nor from microenterprises. They come from dynamic, high-growth
and global economic and social development. SMEs [small and medium enterprises] that Endeavor identifies as ‘High-
Panels with topics that address the link between innovation and Impact Entrepreneurs’.
competitiveness this year include: an Oxford-style debate about the “On a national scale, these entrepreneurs are the ones that can generate
merits and successes of the Kingdom’s 10 x 10 programme; innovations in wealth, create high-value jobs, serve as role models and set into motion a
healthcare and education as well as forums that address the relationship culture of investment and economic growth. Identifying and supporting
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24. ceO inDusTry
His conclusions are based on the rising importance of advancement in
“i’m confidenT communication technology. “Looking back at the last decade, it is difficult
ThaT The gcc/ to ignore the internet revolution and its dramatic impact on reducing
mena region information costs,” Gadhia says. “This has transformed the nature of
is Poised for many sections of the economy, particularly through increases in labour
a similar productivity. However this is still largely a Western world phenomenon.
TrajecTory. “In the next decade, the growth markets of Asia, Africa and Latin
jusT look aT America will also see more of the benefits of a fully connected world. This
makTooB, The should further accelerate their progress and open up new possibilities.
araBic online The coming decade will also see more emphasis placed on sustainability
PorTal BoughT – and not just one-off gains in competitiveness.”
By yahoo! lasT Gadhia elaborates: “Wearing my other hat in the financial services
year. now sector, the productivity gains of information technology have effectively
enTrePreneurs made the world smaller, and also made talent more global and accessible.
from amman Offshoring and outsourcing are two manifestations of this. This trend
To riyadh are should lead to greater efficiency for the financial services industry and
saying: ‘i wanT help improve end-customer service, but it will also lead to the challenge
To Be The nexT of managing a more complex and content rich system. Technology is
makTooB’, and also breaking down the traditional distinctions between producers and
an invesTor consumers, with the latter increasingly participating in the former.”
communiTy is
already Taking Jim Turley, CEO of Ernst & Young, has recently led cutting edge research
rooT.”
CourTeSy of eNDeAvor
to better understand competition and market growth. “We found
that competitive companies tended to be significantly ahead in some
linda roTTenBerg,
important areas. They were making the most of potential opportunities
ceo of endeavor
by prioritising markets, broadening their product offering around current
clients and reinforcing brand awareness,” he says.
“Importantly, they were agile – focused on getting to market quicker,
making their supply chains more flexible and staying focused on
these ‘High-Impact Entrepreneurs’ is one of the best ways to foster innovation. And in today’s dynamic, globalised market I think that’s
innovation and contribute to the competitiveness of emerging markets – crucial to growth.
and for that matter all countries – on the world stage.” “They were also cost competitive, sustaining cost reduction efforts and
Rottenberg is optimistic about their future. “I’m confident that the GCC/ optimising capital wherever possible,” he continues. “And, finally, they
MENA region is poised for a similar trajectory. Just look at Maktoob, the were taking the time to build strong relationships with their stakeholders.
Arabic online portal bought by Yahoo! last year. Now entrepreneurs from In my view, being competitive in today’s world is about focusing in on
Amman to Riyadh are saying: ‘I want to be the next Maktoob’, and an these four areas – and doing better in each of them than your peers.”
investor community is already taking root.” Turley also agrees that innovation is a crucial part of global
One of Endeavor’s innovations is its “Search and Selection” process. competitiveness. “In developed markets and mature companies,
“We’ve always believed that transformation comes from being selective; innovation is crucial to competing for growth in a tough and constantly
so rather than supporting every entrepreneur, we’ve set up a system for changing global market. It’s really easy for larger, more established
vetting the highest-growth, most competitive businesses, believing that companies to lose their entrepreneurial spark and become rigid and
they hold the key to making economies as a whole more competitive. hierarchical.
In 13 years, Endeavor has screened more than 22,000 candidates and
selected 555 High-Impact Entrepreneurs,” Rottenberg says. “in develoPed
markeTs
Jitesh Gadhia, a trustee of the National Endowment for Science, and maTure
Technology and the Arts (NESTA), which promotes innovation in comPanies,
Britain, as well as a senior managing director of the Blackstone Group, innovaTion
says: “The technical economic definition of competitiveness probably is crucial To
tends to focus more on comparative measures and relative advantages of comPeTing for
firms, industries and nation, [but] the over-riding test of competitiveness growTh in a
is the capacity to create wealth on a sustainable basis.” Tough and
NESTA’s research shows how innovation plays a key role in global consTanTly
competitiveness. “NESTA’s Innovation Index found that 67 per cent of changing
national productivity increase in the last decade in Britain arose from gloBal
innovation. A similar pattern is likely to apply to other economies. markeT.”
Without the productivity gains innovation brings, countries will not
CourTeSy of erNST & youNg
be able to compete effectively. Innovation is the fuel which powers jim Turley,
competitiveness,” Gadhia says. ceo of ernsT & young
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25. CourTeSy of DISNey
THinK WOrlD evenT
Tom Albanese, CEO of Rio Tinto.
“So it’s important that even large companies promote an internal culture Andy Bird, COO of Disney, has embraced a nuanced understanding
of innovation or ‘intrapreneurship’. The companies that get it right, I of competitiveness to ensure the company’s future success. “For me,
think, have the best of both worlds. They have great resources behind the definition of competitiveness can be interpreted in two ways: in
them as well as a vast internal talent pool to supply entrepreneurial ideas.” competition and the desire to win; and in economic terms, the ability
Ernst & Young also found that market variation has increased. “Today you to sell and supply goods and/or services in a given market. What is
can start global, you don’t really need a single home market, and you can important in both definitions is the need for relevance, quality and
source capital, products and people from an array of places,” Turley says. innovation,” he explains.
“At the same time, competition is fierce, can come from anywhere “In order to stay relevant, a company and its products need to
and even established players can be disrupted. Our research found that constantly look to innovation and in today’s world, consumerism moves
companies across all sectors and markets are expecting the new economy at an increasingly rapid rate. Unless you are constantly looking forward,
to be even more competitive than the old economy over the next two years. you run the risk of being left behind – of becoming less relevant.”
“We’re seeing two or three-speed recoveries within developed or For Disney, this leadership philosophy has been crucial to growth.
emerging economies and in many sectors old purchasing patterns are “Innovation is at the heart of the Walt Disney Company,” Bird says. “Walt
under pressure from demographic or economic shifts. We’ve also found himself was a great innovator, creating the world’s first synchronised
that supply chains are being pressured by volatile markets and shorter sound cartoon with Steamboat Willy in 1928; the first Technicolor
product cycles as innovation is increased. cartoon in 1932; the first feature length animation with Snow White in
“Companies are feeling pressure on margins as appetite for price 1937; and the first theme park with Disneyland in 1955.
increases remains diminished. And stakeholders are demanding more “To This day, “To this day, innovation and creativity are at the heart of what we
transparency and improved governance,” he continues. innovaTion and do. You can see examples of this today in everything from the technology
“One of the most important innovations for Ernst & Young is the creaTiviTy are used by Pixar in Toy Story 3 to the new attractions in any one of our
work that we’ve done over the past decade to become the most globally aT The hearT of theme parks to the various ways consumers can enjoy our films and
integrated organisation in our profession – in our mindset, structure and whaT we do.” television programmes.”
actions. We’ve got a new mix of cultures and different styles of working,
thinking and communicating than, say, even 10 years ago – because andy Bird, Tom Albanese, CEO of British-Australian mining firm Rio Tinto,
we’re more global and because a high proportion of our workforce are coo of disney suggests: “Competitiveness is the dynamic interaction of competitive
generation Y. rivalry between existing suppliers, the threat of new market entrants,
“Anticipating these shifts, we’ve worked hard over the years to embed bargaining leverage of buyers, power of suppliers and the threat of
an inclusive culture that’s focused around high levels of personal substitute products.” He also maintains that global competitiveness is
engagement and development – a culture that means everyone has the accelerated by innovation and technology because it “enables suppliers to
same opportunities, whatever their background, to build a great career lower production costs and potentially unlock new resources, which will
from day one. That’s something I’m really proud of.” enhance competitiveness”.
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26. ceO inDusTry
techniques. “Innovation plays an important role in creating culturally
“innovaTion Plays and contextually appropriate strategies for scaling up and scaling out
an imPorTanT in any particular country, which ensures sustainable growth and global
role in creaTing competitiveness,” Zhou says. “Building a philanthropic platform, the One
culTurally and Foundation brings together resources from the non-profit, government,
conTexTually business and academia to answer the social challenges.”
aPProPriaTe This approach allows for a lasting and permanent positive impact
sTraTegies for in communities that need it the most. “Last year, the One Foundation
scaling uP and partnered with the China Merchants Bank to issue a debit and a credit
scaling ouT in card that have all the financial functions, but are the first ones in China
any ParTicular to use donation amounts as the credit upgrade standard,” Zhou states.
counTry, “Cardholders can choose to donate a certain amount of money to the One
which ensures Foundation every month, and when they use the card, some contracted
susTainaBle merchants will donate a certain amount of money to the One Foundation
growTh with each purchase.”
and gloBal In June last year, the One Foundation set up the Philanthropy Institute
comPeTiTiveness.” with the Beijing Normal University, the first of its kind to offer higher
education in philanthropy. While it was established by a non-profit
amy zhou, foundation and a university, its board consists of outstanding Chinese
TrusTee and execuTive entrepreneurs, such as the chairman of Alibaba, Jack Ma, and its director
chairman of one is a former head of the Ministry of Civil Affairs. The Institute marks the
foundaTion start of the official philanthropy education in China.
Michael Strong, co-founder of the US-based FLOW, an emerging
movement dedicated to liberating the entrepreneurial spirit for good,
CourTeSy of oNe fouNDATIoN
emphasises that innovation does not only mean advancements in
technology.
“Precisely because the most effective approach to competitiveness
is to identify and serve an under-served niche, it’s a mistake to focus
exclusively on technological innovation while ignoring other forms of
innovation,” he says. “After technological innovation, there is widespread
awareness of the importance of innovation in business strategy and
According to Albanese, this enhanced competitiveness has shifted in marketing strategy, and there remain countless opportunities there with
the last decade. He says that in the past 10 years “competitiveness tended respect to the identification and exploitation of niches.”
to focus more on OECD markets. In the next decade, there will be much Strong explains that what lies ahead for innovation requires the
greater focus on developing markets including China, India, Russia, development and utilistion of creativity and thought. “The next frontier
Brazil and South East Asia”. for innovation is the world of cultures, ideas and branding. The 21st-
At Rio Tinto, innovation is most clearly illustrated by their “Mine of century economy will be the experience economy, in which developed
the Future” programme. “It utilises next generation technologies to allow world consumers will increasingly be seeking rich, valuable experiences,
for smarter mining, resulting in greater efficiency and lower production and an increasing percentage of the world’s population will count as
costs as well as improved employee health, safety and environmental developed,” he says.
performance,” Albanese says. “Thus we are seeing the growth of ‘meaning as the new luxury’, the
growth of the ‘cultural creative’ demographic and conscious capitalism.
gloBal ProsPeriTy: Thinking Beyond The Thus firms seeking to focus on innovation should include but transcend
Business of innovaTion and comPeTiTiveness innovation in technology, strategy and marketing to focus increasingly
The inexorable link between innovation and competitiveness can also be on deep innovations in creating conscious capitalist companies that
understood by looking at ideas from those who lead and develop not-for- incorporate meaning and purpose into their corporate DNA and thereby
profit organisations and NGOs. obtain a sustainable competitive edge as an increasing percentage of the
Amy Zhou, trustee and executive chairman of the China-based world’s consumers demand meaning and purpose in the products and
One Foundation, understands how competitiveness works in dynamic services that they purchase.”
ways. “Recently organisations’ competitive edge has shifted focus from To accelerate its goals, FLOW “has focused on integrating the worlds of
technology and the upper and middle parts of the pyramid to the creation humanitarianism and business in new ways that have allowed us to define
of better human capital through training and education, which tends to and lead the growing conscious capitalism movement and the Peace
open up a blue ocean marketplace at the bottom of the pyramid level,” through Commerce movement while also nurturing numerous specific
she says. “As this happens, minorities’ interests will become increasingly innovations, such as the entrepreneurial creation of legal systems for
important and a new type of venture capitalism with new forms of the sake of poverty alleviation [to promote both peace and prosperity].
philanthropy will be created.” In each case, we have sought to identify niches at the intersection of
The One Foundation is able to achieve its international philanthropic humanitarianism and business, which are not currently being served by
goals using state-of-the art technology and community-building existing organisations.”
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