HQ Asia: In our last issue, Peter Williamson argued that Asian companies are innovating in interesting and impactful ways that companies all over the world would do well to learn from. Do Asian companies really innovate or are they just copycats?

Russell Tham: Being innovative can mean many things. To me, it is about creating or generating something meaningful that has sustainable value, whether this is through new processes and methods, new products, new services or new business models. Asian companies are certainly innovative, especially from the perspective that innovation involves creating something meaningful. They are adept at using existing models and reconfiguring, not copying, these models to suit the needs of the markets that they operate it. New ways of thinking are also naturally encouraged in Asia, where a diverse realm of ideas, cultures and markets give rise to new opportunities. Those who have the ability to take advantage of the heterogeneity are also being innovative. In Asia, both global MNCs and local Asian players are contributing in different ways to the region’s cauldron for innovation.

How do American companies such as Applied Materials foster innovation? And, do they differ in their approach when compared to their Asian counterparts?

The work culture and environment in America has a degree of tolerance for risk taking. In Applied Materials, a failure isn’t labeled as a stigma. Instead, failure is viewed as an opportunity to learn and improve oneself. This difference in perception, coupled with the ability to mitigate risk, leads to an environment that encourages innovation. Recognising innovation is ingrained in the culture within Applied Materials. We recognise our best technical innovators and confer them the title of Technical Fellows, which is on par with the company’s upper management. Fellows are driven by their passion to create technical innovations and the ability to commercialise such innovations. A company that is open to diverse perspectives, and a culture where ideas are contested openly, will have a higher propensity for innovation. These aspects may be less prevalent in companies where the culture is less challenging of the status quo. Regardless, it is critical that the company converges on the best ideas, and funnels them into an environment that is oriented towards adaptive execution: an execution mode that constantly monitors and adapts strategically to a dynamic environment.

In Asia, there may be a higher expectation on the leadership to develop solutions to complex challenges. These solutions are then communicated and executed with limited debate. In contrast, the Western context encourages the contesting of opposing ideas without the fear of failure. There will be failures despite the best intentions – what is important is how to deal rapidly and learn from these failures without being bogged down in perpetual discourse and debate. Applied Materials has been very successful and fostering innovation. As a result, our company has, for three years in a row, been featured in Thomson Reuters’ Top 100 Global Innovator awards. The Wall Street Journal ranks us the top innovator within the semiconductor sector.

As an Asian leader, how do you personally encourage innovation?

Leaders in our company foster an environment where ideas can be generated and smartly debated. Hence, it is essential that people speak openly and enhance the ability to articulate points based on critical thinking. This may mean allowing for a “noisy” debate, not being too prescriptive, and seeding idea generation towards a wider spectrum of people. And it’s perfectly fine as a leader to say that you do not have a ready answer or a solution at hand. There will be times when a leader himself needs to be innovative by adapting a strategic narrative or global practices into the local context. So long as a leader has clear objectives, and a strong logical and principled foundation, leaders themselves should have the courage to challenge the status quo while articulating why and offering alternatives.

Many MNCs are concerned about losing intellectual property (IP), particularly in China and other East Asian countries. Is that an issue for Applied Materials, and how do you address it as a potential barrier to innovation and collaboration?

Protecting our IP is a top priority for us. The livelihood of a technology company like Applied Materials depends on how well we can commercialise our innovations, while protecting the investment we have made into developing these new technologies. The right set of protective measures is important when operating in countries that have weaker IP frameworks. However, every country has its own ways of contribute to global innovation and collaboration. Ultimately, it is a fine line that you have to balance, between preserving your own ability to innovate while partnering with a nation for mutual benefit.