According to a recent survey, businesses in Singapore are pursuing innovation to keep pace with a fast-changing economy despite ongoing economic uncertainties.
The Singapore Business Federation’s (SBF) latest National Business Survey 2018/2019 has indicated that close to two in three large companies (64%) have implemented business innovations, and an encouraging 55% of SMEs have done so. Companies see innovation as crucial across all aspects of business, including customer experience (88%), operational processes (88%), business models (87%), and new products or services (85%).
This trend of business transformation was evident in 2017, where 28% of businesses found digital innovation crucial to their survival. Businesses will be persisting with innovation in the year ahead, as they are prioritising the development of digital capabilities (39%) and review of current business model or structure (33%) in 2019.
Manpower issues persisted from 2017 into 2018. But as a sign that businesses are transforming, hiring of people with right skills and attitude remains the top challenge for large companies (65%) and SMEs (60%) alike, similar to 2017. Rising labour cost continues to be an issue for companies (50%).
In the push for innovation, businesses have identified manpower issues as a key hurdle. Businesses ranked the availability (or lack) of suitable manpower with technological expertise (41%) as a main concern in 2018. This was followed by the retraining of workers to develop their digital capabilities (29%).
To address their manpower challenges, 36% of businesses are looking to the Industry Transformation Maps (ITMs) for ways to improve their manpower needs and talent pipeline in 2018. Launched in 2016, ITMs offer an integrated approach for trade associations and chambers, companies, and the government to work together to prepare each sector for the future. A total of 23 ITMs covering 80% of the Singapore economy have been launched to-date.
Both large companies (58%) and SMEs (59%) rank the cost of purchasing and implementing technology as their top challenge in 2018 when it comes to carrying out innovation within their businesses. Therefore, it is not surprising that businesses want Budget 2019 to offer support for accessing new and critical technologies (63%) as a top priority. This is a top need for both large companies (56%) and SMEs (64%).
Support for digital adoption and transformation (49%) is also high on the Budget 2019 wish list, particularly for large companies (64%) as they believe it will make the biggest difference to their business. SMEs, on the other hand, believe they will benefit most from more favourable financing mechanisms (71%) such as lower interest rates and fees.
The findings also reveal that smaller companies are still less likely to innovate — larger businesses report a higher rate of implementing new technologies (40%) compared to SMEs (31%). Priorities among large companies and SMEs for 2019 also reflect that large companies are more inclined to innovate. Large companies are prioritising the development of digital business capabilities (60%), nearly double that of SMEs (33%).
Large companies and SMEs also differ in their expectations with respect to the ITMs. Large companies believe that the ITMs can help in two aspects: rolling out initiatives, such as deploying technology to be more efficient or productive (40%) and improving business models (35%). However, these measures do not feature in the top three priorities for SMEs.
Referring to the findings of the latest survey, S S Teo, Chairman of SBF said, “It is important for businesses, both large and small, to press on with innovation so they can stay ahead of the curve and be globally competitive.Disruption is still happening in addition to the uncertain global geopolitical environment. Given thus, it is important for companies to continue focussing on the long term and innovate, so they can continue to sharpen their competitive advantage, while they keep an eye on the immediate term. The Government can play an important and deeper role in boosting innovation and building capabilities through advice and funding support, particularly in today’s challenging environment. SBF will work closely with its members and the business community to maintain this momentum in 2019.”
Teo added, “Businesses also need to invest more resources in continuous training, so their employees can deepen their skillsets and keep pace with the fast-changing technologies. Every year, SBF organises the Future Economy Conference and Exhibition (FECE) to raise awareness of the 23 ITMs, their horizontal strategies and the available tools to help businesses stay ahead of the competition and be future-ready. Our training arm, the SBF Business Institute (SBI) also offers relevant courses year-round to help our businesses build capabilities and achieve inclusive and quality-driven growth as Singapore restructures.”
He added, “It is heartening to note that businesses are now putting more focus on innovation and digitalisation, which can transform businesses, large and small, across the economy. Through innovation and digitalisation, our companies can transform their business model, develop new products and services, and reshape their business so they are more successful than before.
SBF is working closely with government agencies, research institutions, centres of innovation and institutes of higher learning to drive this. Many of our members such as banks and telcos have digital solutions for our companies. To optimise outreach in this area, SBF has also formed the SBF Digitalisation Committee with representation from other major trade associations and chambers. We want to help our businesses learn and adapt quickly in the face of digital disruption.”