Sri Lanka must increase focus on technology and innovation as drivers of economy

“Sri Lanka has a number of strong points but very much needs to focus more on technology and innovation as drivers of the economy in going forward,” urged Technology and Information Management Operations Professor Soumitra Dutta in an interview with Daily FT recently.  Dutta is well-known as a global innovation guru with a vast knowledge on the fast-growing digital transformation and its effect on the world’s economy. Not only is he an author, academic and businessman, but he is also the Professor of Management at the Cornell S.C. Johnson College of Business.

In this interview, Dutta shares his industry observations and insights on what and how Sri Lanka can learn from its member countries that are on the fast track of the digital economy and how digitalisation and innovation will lead to a stronger economy in the years to come.

Following are excerpts. 

By Shannon Jayawardena

Q: Could you share with us your background and as to what your expertise are?

A: My name is Soumitra Dutta. I am a Professor of Management at the S.C. Johnson College of Business and I am a Professor of Technology and Innovation. I am also the founder of the Global Innovation Index, which is published by the World Intellectual Property Organisation. 

Q: What are a few areas that you consider most important in the field of technology and innovation?

A: A lot of my work really revolves around technology and innovation and how countries succeed in creating more wealth and prosperity through innovation. Now what we are going through is a period of remarkable technology change. Technology is progressing at a very rapid phase and technology is changing. The world is operating on digital transformation and there are new disruptions happening in businesses. The challenge out here for countries is how countries can create innovative companies and how companies can stay in the frontier of technology to be among the leading countries when going forward. The important question is how Sri Lanka can learn from other countries’ experiences because there are other countries that have progressed over time. There’s Korea, there’s Israel, there’s Finland and Singapore that have made the progression from a less technology knowledge-based economy to a more technology knowledge-based economy.

Q: How does a country innovate along these challenges?

A: Innovation requires multiple things to be strong. It’s like the links in a chain. You have chains and you have to have each link strong. In the innovation index, we think that there are five input conditions. One is around the regulatory government macro conditions, the other is around the people invested in the economy, the third is on the infrastructure of the economy, the fourth is around the markets in the economy and the fifth is really around the motion of knowledge economy in the country. Then you have the outputs which are outputs of technology and on creative services like media. To create the innovation outputs, you need all the input conditions, and if you don’t have all the conditions strong and linked to each other, the results will not happen. For example, you need to have good universities, but if the university is not linked to the industry, you will not have the real power of that knowledge creation. So, you need to be able to create that and create the links across. 

Q: How can one drive growth and innovation by embracing the digital economy?

A: Digital technology is really creating new ways of doing things. New ways of delivering services and reaching new markets and clearly, like I said earlier, there are new disrupters emerging whether it is Millionspaces, whether it is Airbnb, whether it is Tesla or all kinds of new products. What you have is a situation where digital is a big force of change, and with change comes new opportunities and also new risks. Companies have to be at the leading edge of this change to be able to benefit from the digital technology opportunities.

Q: How and what can Sri Lanka learn from other countries that are on the fast track of the digital economy?

A: I think Sri Lanka has, of course, a number of benefits and a number of strengths. Sri Lanka has invested a lot in its people, in healthcare and the quality of life. Sri Lanka also has a very good image of a culture that is very warm, friendly and open to tourists. These are all positive strengths yet at the same time, Sri Lanka needs to focus more on technology and innovation as drivers of the economy in going forward. I think we’ve seen it happen already where technology today is the fifth biggest export sector for the economy and I am confident that it will keep on rising to higher levels in the future. Technology and innovation have to be key drivers for Sri Lanka’s government, Sri Lanka’s private sector and you need to have the public, private and civil actors working together to make it a reality. 

Q: How important is digitalisation for a company’s overall growth?

A: It is extremely important because what you see today is that the real ‘value added’ is more and more digital-based. If you take, for example, the mobile phone, the physical part of the mobile phone is very important, but more and more the actual value adds to the application, various software services available in the mobile phone, the more the time people spend calling. The same thing is happening with cars. When it comes to electric cars right now, the physical part of the car is becoming simpler and what’s much more important is the information delivery in the car, whether it’s to gas stations, music or other kinds of services. So, this trend of physical products transforming to include more information service elements to it is very important. The trend of digital technology is allowing us to reach new markets. If you open an app on App Store, sitting in Sri Lanka, you have access to the global market and there is nothing stopping you. You have access to the global market which is absolutely incredible, also very easy, and it allows you to sell to more people, create more value and generate more revenues for your organisation. Digital technology, in my view, is critical for helping create new ways of value addition for companies today.

Q: How can governments assess and plan their technology and innovation policies to enhance the country’s economy?

A: Governments have to realise that technology is essential for the future compatibility of their countries. So, I think if the President, Prime Minister, and Ministers of a country don’t know that and realise that, they will not be able to push it with the full aggressive, proactive nature that is required. You see, other countries, for example China or India, give high regards to technology and innovation and this kind of national level push is absolutely critical, otherwise you don’t really get the kind of momentum behind a change happening. I think that national top level leadership is critical. Then you need some kind of strategy that brings together the key players, the key players in the government, the key players in the private sector, the key players in the civil society and coming together is very important. If not, you can’t make change across the entire system. Then, of course, you need to execute and have companies that actually create these products, rules and so on, and for that, you need the infrastructure in terms of implementation, health, roads and all things. It’s really a different, three-level action required inside the economy to make it all come together. 

Q: What role does social media play in all of this?

A: Social media is extremely important because it’s a way of both communication and engagement. If you want to make any change happen, you have to be able to successfully communicate what the change is. You also have to be able to get people engaged in the change process, otherwise they will not change. Social media is a great tool for doing both, communicating and engaging people. Social media is here to stay, and social media obligations and social media approaches are extremely popular. Private sector companies, public sector companies and governments all need to be smarter as to how use social media.

Q: How can businesses use data techniques to provide valuable insights for executives?

A: The information component of businesses is increasing tremendously. Today, almost all businesses are data businesses. If you take, for example, retailers today, they monitor every single aspect of what is happening in a store and not just what is being sold. If you go to some of the latest stores of Amazon, they have a technology called ‘Just Walk Out’. You go to a store and the store keeps track of what you are picking up, what you are buying and not buying. There is no checkout counter, you just walk out and all you have to do when you enter is to scan your phone with the entry machine and style. Technology is essentially monitoring and keeping track of what you are doing and what is happening with physical stores today, or what will happen tomorrow, which is to some degree already happening on online stores. On online stores, you can actually see which places to click and you can monitor the peoples’ behaviour on a very minor level. This kind of role of technology, enabling companies to be able to understand what the behaviour of the customers are, is going to keep on increasing. The question really is how do you employ the data and use it effectively for serving the customer? Today, most companies are really not able to do it effectively. If you look at, for example, most airline companies, we are members of frequent flyer programs, but very few airline companies are sophisticated enough to actually give back information to you about which frequent flyer program is serving your needs effectively or is a better program.

Q: What, in your opinion, are the biggest challenges of digitalisation?

A: I think the biggest challenges in digitalisation are in two folds, really around getting people to be able to accept the kinds of changes that digital technology is bringing. A lot of people use technology in a personal environment and in their personal lives quite easily. That we see today in young people who use technology, but often the changes happen in working environments. Often organisations are not able to change fast enough. The challenge you see is that the people, when they are looking at work environments, are often unable to change the work environments fast enough. When you take the media business, the whole media sector is getting transformed to digital journalism, digital real time accounting, and the whole nature of it is changing. That implies a different way of conceptualising the media business. That re-conceptualisation of the work environment and the business models are going to be very hard for people to do. The second thing which is hard, maybe less hard but still hard, is actually bringing the technology together. While on paper it is easy, the reality is that, in most companies, there are multiple systems where the data is not clean, and in that kind of environment, it is very hard to even have a clean IT infrastructure. On one hand is the challenge of re-conceptualisation the working environment, and on the other hand, there’s the challenge of having a technology which is strong and flexible enough to deliver to the new kinds of markets. 

Q: You’ve recently published a book centred on leadership development. What is the key to leadership development, and could you share some insights on this?

A: A lot of my books are really around the topics of how you bring people and technology together. I really believe that you need to combine technology and people to create innovation. Technology alone will rarely do it, and people alone will rarely do it. You need to combine both the factors together in the proportion of one or the other varying, but in effect, it is really a combination of people and technology and that’s what my books talk about. 

Pix by Lasantha Kumara