The Singapore Government has identified innovation and productivity as the twin drivers for transforming our economy and this is the right direction.

However, in today’s competitive world, productivity tools alone are not enough, as most of these tools have been known and used by our competitors for many years. Innovation alone is also not adequate. There are many innovative initiatives in the marketplace and are mostly not making money.

Beyond innovating, important steps include implementing, commercialising and monetising those innovations productively. Thus, in short, people need to improve efficiency effectively or to improve productivity innovatively, and innovation productively.

Productivity alone

There is little point in becoming more productive for an obsolete product or in an agency that is going to be taken away because the principals think that they can do better themselves.

Most small and medium-sized enterprises (SMEs) in Singapore play a middleman’s role: traders, distributors, agencies, sub-contractors and sub-manufacturers, and these roles are being marginalised.

Thus, becoming more productive in a losing business model does not help. At best, it helps prolong the business in the short term. I am not suggesting that Singapore’s SMEs become manufacturers or totally change their business models immediately but they need innovation to re-formulate their business models.

Innovation alone

Almost every organisation can tap into a deep well of innovation. From the classic suggestion box to modern intranet databases, a company can easily ask employees to recommend improvements. Beyond these incremental changes, a R&D department has the mandate to develop new products or methodologies.

These innovative initiatives are not enough. Innovation is defined as a good idea that gets implemented successfully and profitably. SMEs need to use innovation to re-position, resuscitate or reinforce their business model so it will be a profitable one and able to handle the new realities in the marketplace.

Improving productivity innovatively

Sometimes success flows to those who use someone else’s productive and innovative invention in creative ways. This is something that Singapore companies may want to emulate — adapting and leveraging an existing business model innovatively.

Several examples of such companies are:

* Talent shows have long been a staple of television. Thee“Idol” reality TV singing competition created by Simon Fuller, which includes American Idol, added the innovation of audience voting in near-real time, using supporting technologies such as pay-per-call telephone numbers and texting to increase the viewers’ identification with “their” contestants.

* Radio and television have presented news shows since their earliest days. Ted Turner invented the 24-hour news channel, the hugely successful CNN.

Improving innovation productively

There are many R&D and innovative projects that are losing money because the products are either not commercially viable, too early for their time or simply not marketed at all.

* The “dot.com” bust in early 2000 showed that creative individuals and innovative companies may attract capital investment but fail to deliver a profit. However, Google, ebay, Amazon, Facebook are able to exploit the same Internet technology and make their business a success.

* GM (General Motors), like most car-makers, introduces innovative products and features. It has been criticised for the time it takes for a product to go from conception to market. Smaller car-makers have been able to deliver much more quickly — and thereby take market share away from GM.

Productivity and innovation

Looking back at these successes, it is easy to see that these innovations required significant productivity improvements. Imagine a 1950s talent show that called for audience voting. A large call centre would have to be dedicated to taking phone calls and tabulating the results on paper. The show would take at least a week to announce the results of a mail-in ballot.

Could CNN exist in a world with only 12 broadcast channels? The technological innovation of “more channels” led to experimentation and opportunity. CNN hit the sweet spot with its 24-hour feature.

Success and profitability require both innovation and productivity. What new product or service can local companies develop? How can they deliver it? Will it be easy to find a market? Can they scale up to meet rising demand?

In conclusion, what Singapore needs most is not increased productivity or innovation alone, but improving productivity innovatively and innovation productively.