Messages about innovation begin with awareness and attempts to overcome challenges so as to turn Vietnam into a developed country by 2045. This was emphasized by Minister of Information and Communications Nguyen Manh Hung at the "CEO Forum 2019". MIC would like to present the full text of his speech.
Innovation always has to start with awareness and thinking. To better understand innovation, I like to see it from a number of different perspectives.
Japanese have talked about society5.0. The society 1.0 is hunting, nomadism. Society 2.0 is agriculture and sedentary farming. Society 3.0 is an industrial society. Society 4.0 is an information society. Society 5.0 is a smart society. Now everything is Smart. Innovation in enterprises can be understood in the following sense: using technology, mainly digital technology, to automate and make smart the entire production and business process of the enterprise, from management to production and sales. With this approach, the most important keyword is: Be smarter and continue to be smarter in all activities, and the most important tool to help with this process is technology, especially digital technology, 4.0 technology.
A revolution happens and then the future will not lie on the extended line of the past. Innovation happens to be right at the moment. Old infrastructure, old ways of doing things, old knowledge, old products, old business models are no longer suitable. We need new infrastructure, new ways of doing things, new knowledge, new products, new business models. For a lot of things, it is simply do the opposite. Previously, it was finding every way to avoid mistakes, now it is to make and learn from mistakes faster. In the past, it used to be to study first and work later, now it is to do first and then study. Previously, it was having works first and then recruiting suitable employees, now it is finding the right person first and then thinking about what to do.
Because the work is new, it is necessary to have people who share the same thing - the passion of discovery. Previously, the power of businesses was in the number of employees, but now the power is to have few employees who react quickly and move quickly. With this approach, the most important thing for CEOs is to find a new approach in all business activities of their company.
A successful company often collapses when new technologies emerge. And the process of collapse is usually as follows. Step 1, breakthrough technologies are developed first by successful companies. Step 2, the marketing team researches critical customers' responses to the new technology, and receives no support, as the old products are still good and familiar to users. Step 3, successful companies turn to promoting the development of retention technologies, improving old products, enhancing efficiency, and increasing sales and profits. Step 4, newly formed companies rely on breakthrough, new technology and explore new markets, new customers, often lower-tier ones, by trial and making mistakes, and from there, new applications, influential new products are formed. Step 5, newly-formed companies will move into high-end markets. Step 6, successful companies join too late to keep their basic clients and the changeover occurs.
Thus, innovation often creates opportunities for new companies with breakthrough new technologies. With this perspective, large and successful companies have fatal defects, and create opportunities for new companies, small companies to rise and go from new markets to overthrow existing traditional markets.
So, is there any way for big, successful companies to handle this situation? Basically, there are three approaches as follows. First, promote emerging technologies and markets so that they become big enough, fast enough to contribute to company growth. Second, wait until the new market becomes clear and the new technology becomes clearer and join when the market is big enough and becomes attractive enough. Third, assign the responsibility of commercializing breakthrough technologies to new components, which are small enough so that their business performance depends only on new technology, new markets. But this new component must be driven by new processes and new value systems in order to be able to solve new problems.
Studies show that the third approach is more promising. The first way is difficult to succeed because new technology, new market does not create an explosion in a short time. The second way is too late. With this perspective, big and successful companies still have the opportunity to continue to exist and develop, but must be divided from one organization into two independent organizations with two different operating ways, two different cultures. And this is not easy.
Innovation requires change, but it is the mechanisms, processes, and value systems through which a company creates value and its success is the enemy of change. An organization's capacity consists of three elements: Resources, Processes and Value Systems. All of these factors, when the company is large and successful, are sustained. Therefore, it is the capabilities of an organization that determine its defects. And the CEO's job is to resolve this contradiction when innovation is required. CEOs have the following three options. First, acquire a company whose processes and values are similar to the new mission. Second, try to change the existing processes and values of the existing organization. Third, create an independent component and then develop new processes and new value systems to meet the new requirements. With this point of view, successful big companies face a huge challenge when it comes to innovation.
What will innovation look like from a digital economy perspective?
Digital economy includes economic activities that use digital information and digital knowledge as the main production factor; use the Internet and information networks as space for operation; and use ICT, that is, telecommunications and IT, to increase labor productivity, and to optimize the economy. In simple terms, the economy is related to digital technology. Digital economics is a long evolutionary process. It is the process of digital transformation on the national level. At different levels, every field, every business, every individual can use digital technology to better do their jobs, or even make breakthroughs to change the quality of their work.
The fastest way to accelerate the digital economy is to use digital technology to change the way we are manufacturing, working. Using cameras to reduce guardians, that's digital economy. Automatic watering when the soil dries, that's digital economy. Using electronic documents instead of paper is also digitizing the economy.
Who will do this? Digital technology businesses. Therefore, it is necessary to start digital technology and develop Vietnamese digital technology enterprises. Using digital technology to solve Vietnamese problems, and from the cradle of Vietnam, these technology businesses will go global. Technology is born to solve problems, where there is a problem, there is technology, there is a solution. Problems are everywhere, maybe in our daily work, and each of us can start a technology start-up to solve our problems.
Digital technology will create new business models, new challenge or replace old business models. For example, Uber is challenging taxi firms. Fintech challenges traditional banks. Mobile money will solve the problem of non-cash payments for 100% of people, but it challenges banks. Will the government dare to accept these new business models. If they do but are the last to accept, it is not of much value.
That is why many people say that digital transformation is more of a policy revolution than a technology revolution. The first is adopting new business models, new technologies that fundamentally change industries. Often creation destroys the old. If we accept the new, new technology of the world will come, talents from all over the world will come, a new industry will emerge, and the cradle of Vietnam will create exportable digital technology products. But it must be an early acceptance, earlier than others. If walking behind or at the same pace with others, there will be no chance to change Vietnam's ranking. When we accept the new, we may lose something. But we don't have too much to lose; that's our opportunity.
Thus, from the point of view of digital economy, or digital transformation, innovation means: Enterprises focus on digital transformation to become digital enterprises, while the government focuses on institutional building to accept new business models, breakthrough technologies. The challenges of innovation are always enormous. But the chances of a developing country like us are even greater. And this is also an opportunity for Vietnam to change its rankings and become a developed country by 2045. Each business has its own approach to innovation to develop its own business, reinvent itself and contribute to the development of the country.
Minister of Information and Communications Nguyen Manh Hung