The meeting brought together Dr. Khater Abi Habib, Chairman and General Manager of the National Institute for the Guarantee of Deposits (KAFALAT), Dr. Bijan Azad, Professor at the Olayan School of Business and Co-director of Innovation at the Darwazah Center for Innovation Management and Entrepreneurship at the Olayan School of Business at the American University of Beirut, Mr. Tarek Sadi, Managing Director of Endeavor Lebanon, Mrs. Taline Assi, owner and CEO of Mosaic Marble and Ms. Hind Hobeika, inventor of Instabeat. Dubbed ‘Cracking the Code of Innovation’, the round table meeting is the third in a series organized by Endeavor, which aim to start or catalyze topical discussions engaging various stakeholders in the entrepreneurial ecosystem in Lebanon.
The discussions started by highlighting the critical importance of innovation for entrepreneurs to thrive in today’s constantly-evolving global markets, and to sustain their competitive edge as they adapt to fast-paced business environments. “Endeavor evangelizes innovation knowing its fundamental value as a pillar for the long-term sustainability and growth of the economy; That is why we mentor our entrepreneurs to build their competitive edge on the basis of innovation, whether in their product or service or business model”, said Mr. Tarek Sadi of Endeavor.
Although it is a widely held belief that some people are born innovators, historical research findings suggest that only 25-40% of human innovation stems from genetics. In fact, the ability to innovate can be learned and grown organically with experience, as championed by many academics and practitioners. Some of the key skills that could be learned from disruptive innovators include associating, questioning, observing, networking, and experimenting.
Dr. Bijan Azad of AUB emphasized two state-of-the-art innovation generation methodologies, Outcome-driven-innovation (Strategyn) and Job-to-be-done (Innosight), both of which are being taught to students of AUB as essential tools in a core MBA course on innovation management starting in 2013. The conveners agreed that marketing has evolved from the practice of pushing products into the market, to the practice of innovating products based on human behavior and market needs.
“The biggest challenge that we are facing with students, is getting them to systematically identify opportunities for innovation by rolling up their sleeves and getting their hands dirty via experiential knowledge of customer behaviors as opposed to doing market research at 40,000 feet which is more comfortable,” stated Dr. Azad.
The Darwazah Center at AUB bases its mission on the fact that innovative practices can be taught, learned and applied to all industry sectors. The center has been working to accelerate and promote innovation in the business community, through researching and documenting innovative practices, developing teaching materials and case studies that are geared towards transferring knowledge and promoting experiential learning, including how family businesses can transform themselves to tackle growth challenges through innovations in governance, HR, and finance. Dr. Azad added, “Students often think of innovation narrowly as a new technology product, so we have taken on to document and teach cases of successful innovations that are not purely technological. For instance, getting a start-up to professionalize its management team, a drug company to introduce strict quality processes, a mosaic design firm offering customization, all are examples of innovation in processes and business models that we are teaching to students. We are getting the students, our future innovators, sensitized to the fact that innovation exists in a variety of forms in all industry sectors and domains such as product design, supply chain management, manufacturing, marketing etc.”
The discussions also delved into the pivotal role of financial institutions in supporting innovation. Innovation is often championed by Venture Capital firms, given their vested interest in the success and growth of companies that they invest in. In contrast, lenders have a different mindset, rather focused on money back guarantees and collateral. Opinions in the discussion converged that seed capital is the ideal form of early-stage financing for innovative startups, so that entrepreneurs can benefit from the mentorship and guidance of investors. Once a startup has developed into a well-established business, the entrepreneur is advised to seek loans as needed to scale up, at which stage they can benefit from the support that organizations such as KAFALAT, Endeavor and others offer.
KAFALAT, the state-sponsored credit guarantee scheme, offers KAFALAT Innovative, a specialized guarantee for loans extended to innovative businesses. According to Dr. Khater Abi Habib of KAFALAT, the greatest number of applications for innovative products comes from the technology sector, with the core focused on applications, platforms and web-based products. Dr. Abi Habib affirmed that the number of applications for innovative businesses has grown in recent years and reached over 20 applications in 2012, pointing to the fact that innovative entrepreneurs apply for all types of guarantees and not just KAFALAT Innovative. “This growing demand is promising but there should be more and we hope to see more sophistication in the products being proposed”, added Dr. Abi Habib.
During the meeting, two innovative designers from Lebanon – Taline Assi and Hind Hobeika – described their inspiring stories. Assi founded Mosaic Marble, a mosaic business currently selling over 5000 mosaic designs and custom made orders to customers around the world including Oprah Winfrey. Her innovation lies in offering clients the option to customize their mosaic orders, in addition to exceeding customer expectation with fast delivery and overall efficient customer service. “Trends are changing in decoration and we constantly adapt to those changes; we introduce new marble colors, new finishing and new designs on a weekly basis, which sets us apart from other traditional mosaic suppliers”, said Mrs. Assi. Customization, which builds on an existing product or service and takes it to a personal level by altering its design or other features to suit the customer desire, is a popular form of innovation. According to Dr. Abi Habib of KAFALAT, in every industry sector in Lebanon there is plenty of room for innovation based on customization, which by itself is very important in the macro-economic view.
Hobeika, on the other hand, described her exciting story as she invented and produced Instabeat, a product that could be mounted on top of swimming goggles and allows swimmers to track their heart rates as they train. After winning the third prize in the Stars of Science competition, and first prize in the MIT Enterprise Forum, Hind embarked on a long and rough journey to take her winning product to the market. Today, she owns a prototype of her product and $45,000 raised through crowd-sourced funding, now financing the production. Hind is preparing to ship her first batch of the product in October 2013, to hundreds of customers around the world who have pre-ordered it. Hind’s invention responds to a basic and unmet market need, which is a ground-breaking form of innovation that requires exceptional creativity and vision fueled by a strong will from entrepreneurs. “The challenges I faced in Lebanon were that I couldn’t get hold of engineers to work with, nor the resources I needed to develop my product, and not even a supportive infrastructure to import the materials and produce in Lebanon. So although my dream was to have a team based in Lebanon, I had to look abroad for solutions,” said Ms. Hobeika who asserted that the process was an intensive learning curve for her. Hind’s case proves that having an innovative idea is not enough, but must be followed through to the end, with a strong will to cope with challenges along the road to success.
In the face of the country’s economic adversity and political instability, the entrepreneurial ecosystem developing in Lebanon offers a lot of support and essential resources for Lebanese entrepreneurs to leverage and get started. “We always look at our country as full of challenges but let’s not forget that Lebanon puts us at a unique competitive advantage, as knowing that our local market is restricted we are obliged to innovate with an international mindset right from the start, just like Hind did”, said Mr. Sadi of Endeavor.
Tuesday, June 11- 2013 @ 12:13 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.