In a rare interview, the two scholars explain why they hold out hope that bureaucratic government departments can change and Singaporeans can learn to be creative.

Q Have you seen any other country pursue creativity with such studiousness?

A America does it intuitively. In the Lisbon summit in 2000, the European Union also placed innovation as a top strategy priority for the first time.

But Singapore is probably unique in its systematic pursuit of creativity, realising that many countries have imitated its distinctive strengths and its earnest attempts to change the country's landscape right now.

Systematic path for creativity

Q : You use a very structured methodology to inculcate creativity. Isn't that an oxymoron?

A : When most people think of creativity, imagination, entrepreneurship, they tend to feel threatened because all these require risk-taking. Many Singaporeans also traditionally come from a more structured, engineering background. For them to reach out into pure creativity, the risks would seem too high.

What we try to do is provide a more comfortable framework in terms of the way they're used to learning and thinking. This systematically lowers the risk of taking actions and provides some structure for them to innovate.

Anyway, it is not creativity for creativity's sake we are looking for but commercially relevant innovations. Our database of 30 of the highest-performing companies worldwide over the past 150 years also shows that most of the companies that created new market space tend to follow a systematic path.

Q : So it's no blue-sky or random process. What are the misconceptions about value innovation lurking out there that annoy you the most?

A : When we talk about value innovation, most people skip past value and think product innovation. What comes to mind is new products, new ventures, market pioneering and first-mover advantage.

But value innovation is really about challenging assumptions about strategy, redefining market boundaries and making the competition irrelevant rather than competing on established ground. It is geared towards creating new market space and encompasses the entire value chain from product, service, delivery, costs to pricing, instead of any one function.

The most common reason most people don't make innovation a success is because they deal with only a partial piece of the picture. For example, you can be excellent in product innovation, have the most beautiful product in the world, but still lose money by executing delivery wrongly.

Another annoying misconception is that value innovation equals value creation. For example, some people think that if they keep on improving their factory and gaining 5 per cent in cost reductions each year, they are creating value.

But value innovation means much more than marginal improvements, which will get you only so far. It is about competely changing the way you do things. A good example is Cirque du Soleil, the Canadian circus that led to a rebirth and redefinition of the circus industry by collapsing the two industries of theatre and circus.

In doing so, it leap-frogged Ringling Brothers, Barnum and Bailey circuses and opened up the entire adult audience to its own brand of entertainment at - best of all - a price point many times higher than any traditional circus.

Q : You keep stressing that it's not that important to be first. What's the key difference between market pioneering and value pioneering?

A : In fact, it can be better to be second.

There are plenty of examples of companies that developed technology and failed to capitalise on it. In video recording technology, Ampex Corporation led the way technologically in the 1950s but value innovators like JVC and Sony brought it to the mass market.

Johnson & Johnson was first to market with diapers but it was Proctor & Gamble which hatched the eggs, launched Pampers and ended up reaping the rewards.

Value innovation without new technology

Q : To outrun the China threat, many assume the best way to go is R&D, high-technology and charging up the value chain. But you're saying hold your horses, go back to basics, and don't pit yourself against anyone else...

A: Yes, the war analogy we have used for business strategy so far is the wrong one. It is based on the assumption that there's only so much territory that exists. So it's been all about dividing up that territory, with a winner and a loser.

But our research shows that it's not a zero-sum game. You can create new land and a whole new market space.

Value pioneering is not about pursuing technology leadership through big research and development investments. There are so many companies today investing in getting their strategy right, increasingly looking like mirror images of one another, and facing mounting costs and price measures.

Yet, there are many examples of true value innovation occurring without new technology. Just look at Starbucks coffee shops, Borders bookstores, the furniture retailer Ikea, the fashion house of Ralph Lauren and Southwest Airlines.

Also consider the Sony Walkman that took over the world in the 1980s. It contained little of the cutting-edge technology of the time. It was simply a combination of Sony's existing stereo cassette tape machines and portable tape recorders which created an unprecedented buyer experience. For the first time, people could listen to music in stereo while walking, jogging or cycling. Soon after its launch in 1979, the name Walkman became synonymous with headphone stereo products and a new personal portable entertainment empire was born.

Of course, technology is not unimportant, just that innovation has to be linked to value.

Many of today's biggest employers and top money-spinners, such as US retailers from Walmart to Home Depot, are not the latest industries like bio-science or technology. We often think futuristic or big investment, but more often, it is the basic industries which provide the best opportunities to innovate.

Q : Other than suffering from its worst recession ever, Singapore, surveys show, also suffers from bochap or disengaged workers, which costs the economy more than $5 billion a year. What's the best way to motivate workers - especially when money is tight?

A : People tend to focus on money when they are not doing anything exciting. They also get bored when they are told to do things all the time like robots.

Without intellectual or emotional stimulation, they watch the clock, hoard their ideas and drag their feet.

It is very important for employees to believe that they can make a difference. This is where a dialogue based on fair process comes in.

Our research into the links between trust, idea-sharing and corporate performance shows that employees will commit to a manager's decision - even one they disagree with - if they believe the process the manager used to make the decision was fair.

Fair process signals to employees during tough times that there is a level playing field and that managers value employees' intellectual and emotional worth.

This starts with companies asking themselves whether they engage people in decisions that affect them. Do they ask for input and allow people to refute the merit of one another's ideas?

Do they explain why some decisions are made and other opinions are over-ridden? After that, is it clearly stated so that everyone understands the new standards, targets, responsibilities and penalties?

It is important to earn employees' intellectual and emotional engagement because it makes them more motivated and less focused on money. But the longer-term challenge for Singapore is to create exciting companies that create more varied and exciting job opportunities.

Bureaucracies can and do change

Q : In your experience, are lumbering government organisations harder to change than corporations? Are there any successful examples of the former at all?

A : Not necessarily. The challenges of governmental and corporate change are equal, just different.

Corporations are more willing to change but face stock market pressures and the need to show profits right away. The public sector tends to suffer from paralysis by analysis because each policy change affects so many people. But once it sees the positive effects of change, it can move rapidly, unhampered by short-term profit and result requirements.

One case study that made us believers that bureaucratic government organisations can do successful turnarounds was the New York Police Department (NYPD).

In the space of two years from 1994 to 1996, police commissioner Bill Bratton and his 38,000-strong force took New York City from the most dangerous to the safest city in the world. Despite budget cuts and wage freezes, it came out with its employees registering the highest motivation rate, enjoying the best reputation among the public and attaining the lowest crime rate ever in the city.

What you need are people in the organisation who have a commitment to change, as well as a clear strategy canvas. If you can engage people emotionally and intellectually, as we found in the NYPD example, you can even beat former General Electric (GE) chief Jack Welch.

Mr Welch took more than 10 years to turn GE around but Bratton did it in two years. Which goes to show if there is a will, there is a way.n