Creativity, connectivity and convenience: Part 1

•  The three pillar framework (3Cs)

What should ideally be Sri Lanka’s development strategy? One of the things that we have heard over the years is that it should be an export-driven strategy. Some others would say that it should be a domestic investments-led development strategy. Various theories and viewpoints abound. What I have tried to do through this article, is not to proffer yet another theory, but rather, suggest an analytical framework which can be used to take a look at what needs to be done to get the Sri Lankan economy onto the right track. 

The framework that I have proposed is simple. It is based on three pillars, all starting with the letter ‘C’, i.e. Creativity, Connectivity and Convenience.As depicted in the diagram, the areas that can be classified under each pillar have been given. However, it should be noted that each pillar does not constitute a watertight compartment. There are invariably manifold interconnections between the three pillars, and what has been classified under one pillar (as depicted in the diagram), may very well be classified under another pillar too. The areas falling under each pillar, as depicted in the diagram, have been chosen by me only to help organise our thoughts in a meaningful way. 

The first pillar – ‘Creativity’

What I have classified under creativity are some crucial things that are required to be done in a creative manner to strengthen our economy with a view to achieving sustainable development. These things have to be done thinking about the long-term. Therefore, things like reforming education, our innovation strategies, plans for enhancing service exports, emphasis on R&D and need to upgrade technology/skills, and Artificial Intelligence (AI) will have to be given priority with a view to placing the country firmly on a sustainable development path. 

Emphasis on R&D and need to upgrade technology/skills gains added significance in view of PwCidentifying technological breakthroughs as one of five megatrends which are reshaping the world (the other four are rapid urbanisation, demographic and social change, climate change and resource scarcity, and shift in global economic power). According to PwC’s Global CEO survey, 51% of CEOs are now making significant changes on how they use technology to assess and deliver on wider stakeholder expectations (learn more about the megatrends on www.pwc.lk/issues/megatrends.html).

Do wetake a creative approach in relation to education, innovation, production of energy, delivery of public services, and public transport etc.? Indeed creativity is something that should be embedded in us from our very young days through our education system. Does our education system encourage us to think creatively or else is it just some machine that only focuses on passing examinations?When it comes to education, have we got our priorities right? In our universities we produce more and more arts graduates, and after qualifying, they expect the government to provide them jobs in the public sector. Shouldn’t our education system increasingly focus on STEM subjects and concentrate more on areas such as data science, artificial intelligence and nanotechnology?

Isn’t it pathetic what we have done to our youth?We have driven them in their droves to become arts graduates and three wheeler drivers. If we develop efficient public transport there won’t be a need for three wheelers, and three wheeler drivers, thereby releasing that segment of youth into more productive and skill oriented sectors, where they will be able to use their brains and imagination for the betterment of the country. Indeed Einstein famously said: “Imagination is more important than knowledge… knowledge is limited… imagination encircles the world.” Do we encourage imagination and innovation through our education system?

It is only through creativity, imagination, innovation and hard work that a country can be developed. No amount of mere monetary policy tinkering or fiscal stimulus targeting elections can make our country a developed country. It is in this context that Sri Lanka would have to increasingly focus on leveraging Artificial Intelligence (AI) to propel the country forward and to ensure that we will not miss out on the opportunities afforded by it.

The fourth industrial revolution, big data and the growth in smart, connected devices provide the ideal setting to leverage AI for creating jobs and improving economic growth, thereby bringing prosperity for all citizens. In an increasingly VUCA (Volatility, Uncertainty, Complexity, Ambiguity) world, AI will help organisations to be more agile and create robust strategies. 

VUCA is an acronym used in terms of the unpredictability of life due to the change of pace brought about by technology, big data and other external shocks such as terrorism and natural disasters. Volatility is the speed of change in an industry. Industries and markets are more volatile when the rate of change is faster. Uncertainty stems from the level of predictability in today’s markets as well as a person’s ability to understand what happens around. Complexity is the number of variables to consider when making business decisions. It also stems from interdependencies between those variables which make it harder to analyse business environments and make effective decisions. Ambiguity is the lack of clarity or information which affects the ability to draw complete conclusions. (‘StaxInc approaches a world with increasing VUCA’ – Daily FT 3 July 2019).

As pointed out by the Managing Director of Stax Inc., RuwinduPieris, “Highly volatile and complex business environments demand businesses to be more agile and have a built-in feedback mechanism during the implementation phase of a strategy, which will help a business enterprise to respond to changing dynamics. This ensures the timely feedback between the enterprise/organisation and the strategy, in response to changes and external shocks in the market place.” (‘StaxInc approaches a world with increasing VUCA’ – Daily FT 3 July 2019).AI will be an indispensable tool in facilitating this process. 

The next section begins by taking a look at the application of AI in a global context, and then moves on to examine the application of AI in the Sri Lankan context. 

Creative use of AI 

Artificial Intelligence refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The term also refers to machines that exhibit traits associated with the human mind such as learning and problem-solving. The goals of AI include learning, reasoning, and perception. AI is evolving to benefit many different industries. It is wired using a cross-disciplinary approach based in mathematics, computer science, linguistics, psychology and more. A wide range of simple to complex algorithms plays a vital part in the structure of artificial intelligence.(https://www.investopedia.com/terms/a/artificial-intelligence-ai.asp). 

In the global context, AI is estimated to have contributed a whopping $ 2 trillion to global GDP in 2018 and could contribute as much as $ 15.7 trillion by 2030 (AI will add $ 15 trillion to the world economy by 2030, Forbes, 25 February 2019). McKinsey expects AI will add about 1.2% of additional global GDP growth per year through 2030. 

AI patents have surged in the past five years alone, according to the World Intellectual Property Organization (WIPO). From 2013, till the end of 2017, the number of patents grew nearly three times, from 19,000 to more than 55,600 (AI will add $ 15 trillion to the World Economy by 2030, Forbes, 25 February 2019).

Applications of AI range from the healthcare industry, financial industry, to computer games and self-driving cars. The healthcare industry uses AI for dosing drugs and different treatment in patients, and for surgical procedures in the operating room. Moreover, earlier and more accurate medical diagnosis powered by AI, means earlier treatment of life-threatening diseases. Artificial Intelligence also has applications in the financial industry, where it is used to detect and flag activity such as unusual debit card usage and large account deposits. 

Banks can use AI to detect fraud in screening vast amounts of customer data against publicly available data with a view to nabbing suspicious activity. In the automotive industry, self-driving cars, once on the market, will free up an estimated 300 hours the typical American spends driving every year. (AI will add $ 15 trillion to the world economy by 2030, Forbes, 25 February 2019, When AI becomes an everyday technology, Harvard Business Review, 7June 2019, https://www.investopedia.com/terms/a/artificial-intelligence-ai.asp).

The industry that has been the slowest to adopt AI is manufacturing, including industrial products and raw materials. However, not all mining companies are lagging behind, e.g. Goldspot Discoveries became the world’s first exploration company to use AI and machine learning in the discovery process for precious metals and other natural resources. (AI will add $ 15 trillion to the world economy by 2030, Forbes, 25 February 2019).

If companies increasingly become open to AI and automation it can bring a host of benefits to the society. By way of an example, The New York Times is preserving a priceless archive of millions of photos, covering more than 100 years of its history. The media publication uses AI to scan and analyse images and words on thousands of archived photos (When AI becomes an everyday technology, Harvard Business Review, 7June 2019, MGI research highlights technology’s role in improving societal well-being and smoothing disruption). 

AI in the Sri Lankan context

Technology has transformed the way companies are doing business while impacting the day-to-day lives of individuals. Despite many countries utilising the technological revolution for their long-term sustainability, Sri Lanka continues to backtrack and has failed to exploit the advantages of technology. It is sad to note that many local companies are well below the curve in terms of digital adoption according to a World Bank study, where Sri Lanka was ranked at 130 out of 183 countries in 2016. The failure by local companies to embrace modern technology has resulted in these companies falling behind in terms of profit (Beating the economic downturn: a PwC perspective – Daily FT, 8 July2019).

According to a Harvard Business Review research, companies which embraced modern technology reported 18% higher gross margins and 4% higher net income margins than companies which lagged in adoption, primarily due to improved efficiencies and data-driven decision-making (Beating the economic downturn: a PwC perspective – Daily FT, 8 July2019).

Sri Lankan businesses have the potential of leapfrogging into technologies such as Blockchain, machine learning and Artificial Intelligence (AI), which can play an important role in improving efficiency of production processes and in building customer engagement tools, thereby helping to develop globally competitive businesses. These coupled with a focus on Sri Lanka’s unique strengths like access to world-class talent and its geo-strategic location, will help the country to emerge stronger from the challenges that it is facing at present (Beating the economic downturn: a PwC perspective – Daily FT, 8 July2019).

In the above context, It is encouraging to note the recent launching of the ‘AI Policy Framework Draft for Sri Lanka’ in Colombo (26 June2019).

At the launch, Sri Lanka Association of Software and Service Companies (SLASSCOM) Chairman JeevanGnanam had announced that SLASSCOM will lead the way for Sri Lanka to adopt a national AI policy in six months, with the collaboration of Government and private stakeholders.

AI is projected to generate $ 15 trillion worth of new business opportunities globally by 2030.Gnanam has stressed that Sri Lanka needs to grab a share of this pie with a clear strategy in place, which would support Sri Lanka’s aim to achieve $ 5 billion from the IT/BPM exports by 2022. In Sri Lanka, AI will be introduced as a new pillar on top of the two predominantly-relied pillars which steered the IT/BPM sector’s growth over the last few years – software development, and finance and accounting outsourcing (FAO). (Daily FT 27 June2019, Daily Mirror 27 June2019). 

According to Gnanam, the goal is to apply AI to issues in different economic and social sectors that can make a real difference to the wellbeing of Sri Lankan citizens, ranging from education to healthcare, government to agriculture and skills development to policymaking. Once successful, Sri Lanka should strive to replicate these solutions as exports in other similarly placed developing countries. 

The proposed AI strategy will try to address the current shortfalls in the ecosystem such as lesser numbers of data science graduates, low amounts of research being conducted, lack of implementation, lack of skill availability, low awareness, absence of special data laws that protect from personal information theft and lack of data sets to solve problems.

The strategy encompasses seven high level objectives which are increasing awareness and adaptation of AI in both public and private sector, introducing regulations for a level playing field for AI, equipping society and people for the AI nation, showcasing AI’s capabilities for the greater good, incentivising fundamental and applied research in AI, identifying niche opportunities and attracting leading global technology and AI companies to set up in Sri Lanka.

The draft also proposes the setting up of a Centre of Excellence for Artificial Intelligence either as a public-private partnership or as an independent body. 

The next section deals with data science and how it can be used creatively to add value to people’s lives. 

Creative use of data science

Data science is defined as a blend of various tools, algorithms, and machine learning principles with the goal to discover hidden patterns from the raw data. In simpler terms, data science is the study of data. It involves developing methods of recording, storing, and analysing data to effectively extract useful information. The goal of data science is to gain insights and knowledge from any type of data – both structured and unstructured. 

Data scientists engage in exploratory analysis to discover insights from the data and use various advanced machine learning algorithms to identify the occurrence of a particular event in the future. In business, the use of data science spans many areas such as advertising, marketing, pricing and selection and is therefore invaluable for businesses in their decision making process. Data science is primarily used in business and other sectors to make decisions and predictions making use of predictive causal analytics (a model which can predict the possibilities of a particular event in the future), prescriptive analytics (a model which has the intelligence of taking its own decisions and the ability to modify it with dynamic parameters), and machine learning. 

Data science is often confused with data mining. However, data mining is a subset of data science. It involves analysing large amounts of data (such as big data) in order to discover patterns and other useful information. Data Science covers the entire scope of data collection and processing. (https://www.edureka.co/blog/what-is-data-science, https://techterms.com/definition/data_science)

Application of data science can be illustrated through an example. Amazon.com Inc had a recent promotion for US shoppers where you could earn credit during a 48-hour marketing blitz if you let Amazon track the websites you visit.The deal was for new installations of the ‘Amazon Assistant’, a comparison-shopping tool that customers can add to their web browsers. It fetches Amazon’s price for products that users see on Walmart.com, Target.com and elsewhere. 

In order to work, the assistant needs access to users’ web activity, including the links and some page content they view. The catch, as Amazon explains in the fine print, is that the company can use this data to improve its general marketing, products and services, unrelated to the shopping assistant. The terms underscore the power consumers routinely give to Amazon and other big technology companies when using their free services. Amazon already has more than seven million customers using its assistant via Google Chrome and Mozilla Firefox, according to data published by those web browsers. Other companies offer similar shopping tools. 

While another technology known as tracking pixels shows Amazon information from visitors to roughly 15% of the top 10,000 websites, the assistant lets Amazon follow a smaller set of users from page to page, according to Bennett Cyphers, a technologist at the nonprofit Electronic Frontier Foundation. Amazon’s combination of tools still pales in comparison to data collection by Alphabet Inc’s Google, which has tracking pixels on most web pages (Reuters, 15 July2019). 

The next section ventures into another area under the “creativity pillar” by exploring Singapore’s creative approach to attract investments into the country by leveraging its R&D capabilities.

A creative approach to attract investors: The case of Singapore

Singapore has succeeded in creating an environment that is attractive to many international innovative start-ups, which may then want to set up base in Singapore. By way of an example, Spanish Artificial Intelligence (AI) start-up, Taiger, relocated to Singapore, with a view to taking advantage of Singapore’s innovative, and vibrant ecosystem.This achievement can partly be attributed to its strong commitment to Research and Development, which can be seen by the fact that the Government of Singapore has set aside $ 13.9 b towards research and development, enterprise, innovation and entrepreneurship, over the next five years, as part of the Government’s Research, Innovation and Enterprise Plan (RIE) for 2020.

The money is to be used for improvement in various strategic sectors that are seen as high-growth areas for the economy. These include advanced manufacturing and engineering, health and biomedical sciences, urban solutions, sustainability, services and the digital economy. (Singapore: A global hub for innovation, Forbes Custom, 1 August 2018).

Research and Development should not be penalised in economic downturns. In fact more resources should be allocated to R&D in economic downturns, thereby enabling affected economies to boost their resilience to face the new challenges that lie ahead.The approach adopted by Singapore, as highlighted above, demonstrates the behaviour of a mature government which fully understands and complies with this reality. 

The second pillar – ‘Connectivity’

Connectivity can be categorised in many ways such as transport related connectivity, logistical connectivity, trade connectivity and all efficient forms of networking and communication including digital connectivity.

Efficient public transport helps people to move about faster, thereby saving them time and money. Therefore, efficient public transport helps to improve the productivity of people. 

Efficient digital connectivity through improved telecommunications, ICT, the internet and social media are crucial for the advancement of science, business and commerce as well as to share ideas. The synergies brought about through these means are crucial for sustaining and supporting the first pillar, i.e. ‘Creativity’, and also the third pillar, i.e. ‘Convenience’. 

Connectivity is crucial since that is what helps people to move about, interact, transact and share knowledge and information. Working in silos is not going to take the country forward.Both intra industry connectivity and inter-industry connectivity are required to take the economy forward. Enhanced connectivity and the related multidisciplinary approach are required to unleash the true springs of economic growth. 

Information sharing through better connectivity and networking

Information sharing through better connectivity and networking is crucial in taking the country forward in the spheres of business, economics and national security, etc. In relation to national security, it is pertinent to refer to a recent lecture made by the former US Ambassador to Sri Lanka Robert O. Blake at the BMICH (7 May 2019). 

During the course of his lecture, Blake had recommended the establishment of a high-level group of technocratsensuring that different branches of the intelligence shared information and then shared that information up to the senior level people, so that they in turn could make sure that somebody was looking into those concerns and making sure that the terror attacks won’t take place. It is through such connectivity and sharing of information within a framework of clearly defined goals and objectives that the desired results can be achieved. This type of connectivity and networking is required to achieve the desired results not only in relation to national security but also in relation to other spheres such as science and technology, business and commerce, and economics. 

According to an article in the Harvard Business Review, the most effective innovators do not make the entire decision by themselves. Rather, they gather ideas from everyone in their organisation, to draw on a centralised architecture, in order to get the most out of their efforts. 

By way of an example, the CEO of the Bosch group, VolkmarDenner invited the entire workforce of the company to help him come up with a new business model for the company. He ended up receiving about 1,800 ideas in six days. Once an idea was selected from this pile, team members were brought in from around the world to help build up on the project. Their final project ended up being “community based parking”, which is a system which makes use of the car’s sensors in order to detect empty parking spaces. Information collected from a network of cars is uploaded onto a cloud, which can then help in creating an up-to-date map of all the free parking spots in the area. (What sets the most effective innovators apart, Harvard Business Review, 8tMarch 2019). 

This kind of collaboration and networking is also backed up by another article that appeared in the Daily FT, which stated that leaders should always go to lunch with their team, and encourage views from everyone (even if these views may counteract their own), so that a more informed decision could be made. The idea of everyone coming together to build one project is nicely termed a “co-creation” in this article. (Seven big ideas for leaders in 2018: Reflections from the 9th Global Peter Drucker Forum, Daily FT, 26 January 2018). 

Transport, logistics, and trade related connectivity

The next section explores the efforts taken by Singapore to improve connectivity in the spheres of transport and trade, and thereby propel the Singaporean economy to greater heights.

The Singaporean Government has made significant investments with a view to making Singapore a transport hub in Asia. In 2015, the aviation sector accounted for 3% of Singapore’s GDP and employed over 50,000 people. Further, the Port of Singapore is essential to maritime trade, and the government is currently investing to transform Tuas into a major sea port. This port will be equipped with the latest technology, such as big data analytics and smart computing.The Port has worked closely with shipping lines to help build one of the world’s most dense maritime networks. Upon completion of the Next Generation Port in 2040, the Singapore Port will be able to process the equivalent of 65 million standard shipping containers, making it the largest integrated facility in the world.

Singapore also has an extensive network of Free Trade Agreements with more than 30 trading partners enabling it to gain access to the major markets of the world. This facilitates many logistics chains to easily operate from Singapore.As many as twenty of the world’s top 25 logistics firms manage their global and regional operations from Singapore. 

Having this many major international players in the country will mean that domestic firms will now have to benchmark against international standards, encouraging creativity and innovation. 

Extensive consultation with the private sector is encouraged by the Singaporean government before a public investment is made, to make sure that investments are only made on things that will actually have a very good impact on Singapore’s economy. Furthermore, the Government encourages the private sector to invest in complementary infrastructure, e.g. private sector operators such as FedEx have invested in air cargo facilities such as the cold chain centres and regional express cargo facilities, with the Government helping to build the business case for such investments. Challenges are resolved together, so that the investment would make commercial sense to the private sector.

In addition to the above, the major infrastructure projects on public transport that will unfold over the next 10 years, will greatly improve connectivity within Singapore. (Three factors that have made Singapore a global logistics hub, World Bank Blogs, 26January 2017; Refreshing Singapore’s Infrastructure for Future Generations, Singapore Government Budget 2018).

The next section deals with digital connectivity and cites Canada as an example.

Digital connectivity

In Canada 5G connections are expected to be rolled out by 2026, according to a report commissioned by the Canadian Wireless Telecommunications Association (CWTA), and these new networks are expected to create more than 250,000 permanent jobs and contribute an estimated $ 40 b annually to Canada’s economy over the next few years. 5G will eventually become the backbone to smart cities and self-driving vehicles, and its benefits will extend well beyond consumer applications. These 5G networks will fuel Canadian innovation across industries, with new applications and emerging technologies (such as the Internet of Things (IoT), augmented and virtual reality, digital healthcare and robotics) vastly improving productivity and boosting efficiencies. (How 5G connectivity will keep Canada competitive, Financial Post, 10 January 2019).

The third pillar – ‘Convenience’

The concept of convenience is fundamental to improving the quality of life. People are constantly on the lookout to see how they can get things done more conveniently because all of us value time and do not want to waste time. Therefore, people constantly seek convenient housing, convenient transport, convenient education (such as online education), convenient shopping, convenient banking, convenient tourism, and so on and so forth. Thus we can see that people look for convenience in relation to almost anything.

What I have identified under the third pillar – ‘Convenience’, are things like eliminating red tape and corruption, and all other things that will help people to do things faster and in an efficient manner. Therefore, invariably the first pillar - ‘Creativity’, and the second pillar - ‘Connectivity’ will help to enhance the third pillar - ‘Convenience’.It goes without saying that greater convenience will lead to greater productivity. Greater productivity, in turn, will help to achieve higher GDP growth rates.

Better accessibility to government agencies, and effective and efficient delivery of public services are also important elements in improving the convenience afforded to people, and this in turn helps to increase the productivity of people.Improving the ease of doing business is also important since that will go a long way in encouraging more investments including foreign direct investments. 

Various mobile apps have gone a long way in improving the convenience afforded to people.Online grocery shopping apps that enable delivery right to your doorstep could also save a whole lot of time, especially for the elderly community, who find it difficult to physically go to a grocery store, and spend time picking vegetables and fruits and waiting in ques. (MGI research highlights technology’s role in improving societal well-being and smoothing disruption).

By way of another example in relation to making life convenient for people, some of the latest Amazon stores around the world have this concept named “Just walk out”, where you walk into the store, and the store keeps track of what you pick up, and what you’re buying/not buying. There is no checkout counter, and you just have to scan your phone to pay. This example nicely shows how convenience and creativity can combine to help save time and effort of the average consumer in the country.(Sri Lanka must increase focus on technology and innovation as drivers of economy, Daily FT, 20 June 2018)

Increasing the efficiency of public transport will help to increase the productivity of people by saving time that they have to spend on the roads. By way of an example, due to the work put in by the Singaporean government to improve public transport, eight in 10 households will be able get to a railway station within a 10 minute walk. (Refreshing Singapore’s infrastructure for future generations, Singapore Government Budget 2018).

The above examples show how things can be made more convenient for people, enabling them to channel more time to engage in productive endeavours. 

Conclusion

The three ‘C’ framework proposed by the writer and explained above provides a guide for a country which is serious about sustainable development. It is only through such a holistic approach that a country could achieve sustainable development. 

All the developed countries in the world have got the three ‘C’s right. Those countries have diligently pursued such a strategy over a considerable period of time. It is important for Sri Lanka too to pursue such a strategy, diligently and consistently. That is the only way in which the country could achieve sustainable development.

[The writer counts over two-and-a-half decades of experience in the field of economic research in the private sector. He has earned a BA (Hons) in Economics, an MA in Economics and a PhD in Economics at the Department of Economics of the University of Colombo. He can be reached at [email protected].]