Talk explains the current state of Pakistani SMEs and discusses how strategy of innovation and digital transformation can help them to become leaders in the region and compete globally....

1. Innovation and Digital Transformation
of SMEs
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 1
Mir Dost, PhD in Entrepreneurship & Innovation
Management
▪ Assistant Prof. of Entrepreneurship and Innovation Management,
▪ Ex-Head Department of Management Sciences,
▪ Ex-Director ORIC, Lasbela University
▪ Former Country Director GEB
▪ Visiting Assistant Prof. at Indus University, Karachi
▪ Global Trainer and Motivational Speaker
▪ Founder of ILM Academy (alpha)
▪ Co-Founder and CEO Bolan Consultancy (alpha)
Google Scholar Profile:
https://scholar.google.com/citations?user=5PxlBXAAAAAJ&hl=en&oi=ao
ResearchGate Profile: https://www.researchgate.net/profile/Mir_Dost
Email: Pandrani_md@yahoo.com
Mobile: +923168898425

2. Agenda
• Current Economic Situation, and challenges
• State of SMEs
• Innovation, Types/degrees and Sources
• Industry 4.0 or 4th Industrial Revolution
• Pillars of Industry 4.0
• Digital Transformation
• Areas of Digital transformation
• Digital Information Strategy
• Integration and Managing Business Growth
• Recap
• Q&A
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 2

3. Current
Situation
Innovation and Digitalization of SMEs of Pakistan 7/22/2020 3
Exports
38%
Imports
62%
Trade Deficit
Exports Imports
79%
21%
Agriculture in Exports
Agriculture others
Agriculture
21%
Others
79%
Agriculture Share in GDP
Agriculture Others

4. Major
Challenges
Pakistan’s main drivers of industrial decline included:
• Myopic mindset in some quarters of the government.
• Cumbersome (complicated) tax laws.
• Difficulties in doing business alongside lack of use of
technology.
• Scant skilled individuals and experts, and
• Lack of know-how of modern industrial practices.
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 4
Source: https://www.phoneworld.com.pk/industry-4-0-a-solution-to-pakistans-economy/
World Bank’s Report on
‘Doing Business in 2020’
Pakistan 108 ☺
Online One-stop-shop

5. State of SMEs in Pakistan
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 5
SMEs
90%
Others
10%
Enterprises
SMEs Others
80%
20%
Contribution in Employment
Non-Agri Others
40%
60%
Contribution in GDP
SMEs Sector Other Sectors
Source: https://smeda.org/index.php?option=com_content&view=article&id=7:state-of-smes-
inpakistan#:~:text=SMEs%20constitute%20nearly%2090%25%20of,by%20financial%20and%20other%20resources.

6. Solution
7/22/2020
Innovation and Industry 4.o
or Digital Transformation
Innovation and Digitalization of SMEs of Pakistan 6

7. Innovation
“The process of translating
an idea or invention into a
good or service that
creates value or for which
customers will pay.”
(business dictionary)
7/22/2020
Innovation and Digitalization of SMEs of Pakistan 7

8. Incremental vs. Radical Innovation
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 8
Incremental Innovation Radical Innovation
❖ Builds upon existing knowledge
and resources
❖ Requires new knowledge and
resources
❖ Competence-enhancing ❖ Existing competence loses
value.
❖ Relatively small changes in the
performance and utility
❖ Significant Step changes in
performance
❖ Lifeblood of innovation ❖ Relatively rare
Source: Davilo, Epitien & Sheldon (2005)

9. Sources of Innovation
Innovation and Digitalization of SMEs of Pakistan 7/22/2020 9
Generation of
Innovation
Adoption of
Innovation

10. Frugal/Jagaad/Reverse
Innovation “Certain degree of changes made into the
products/ services which minimize the cost of
production, offer adequate functionalities and
sustainability in use” Dost et al., (2019).
Innovation and Digitalization of SMEs of Pakistan
7/22/2020 10

11. 7/22/2020 11Innovation and Digitalization of SMEs of Pakistan

12. Industry 4.0
or 4th
Industrial
Revolution
A name for the current trend of
automation and data exchange in
manufacturing technologies, including
cyber-physical systems, the Internet
of things, cloud computing
and cognitive computing and creating
the smart factory.
Innovation and Digitalization of SMEs of Pakistan 7/22/2020 12

13. Industrial Revolutions
7/23/2020 Innovation and Digitalization of SMEs of Pakistan 13
Industry 5.0!
‘when you begin to allow customers to
customize what they want’.

14. 7/22/2020 Innovation and Digitalization of SMEs of Pakistan 14
Industry4.0–
TechnologicalPillars

15. Industry 4.0 is often used interchangeably with the notion of
the fourth industrial revolution. It is characterized by, among
others:
1) Even more automation than in the third industrial revolution
2) Bridging of the physical and digital world through cyber-physical systems, enabled
by Industrial IoT,
3) A shift from a central industrial control system to one where smart products define the
production steps
4) Closed-loop data models and control systems and
5) Personalization/customization of products.
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 15

16. Closed-loop
production
system
7/23/2020 Innovation and Digitalization of SMEs of Pakistan 16

17. Industry 4.0 – A
Brief History
• https://www.youtube.com/watch?v=JCswJIdVoXk
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 17

18. 7/22/2020 18Innovation and Digitalization of SMEs of Pakistan

19. Digital
Transformation
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 19
Integration of digital technology into all areas of a
business, fundamentally changing how you
operate and deliver value to customers.
It's also a cultural change that requires
organizations to continually challenge the status
quo, experiment, and get comfortable with failure.

20. Main Areas of Digital
Transformation
• However, large corporations often focus solely on process or
organizational transformation.
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 20
Digital transformation in
business process
Digital transformation in
business model
Digital transformation in
business domain
Digital transformation in
business culture/organization

21. 1. Digital
Transformation
in Business
Processes
7/22/2020
• A significant focus of corporate activity has been
in business processes.
• Data, analytics, machine learning and other
technologies offer corporations valuable new
ways to reinvent processes throughout the
corporation—with the goal of lowering costs,
reducing cycle times, or increasing quality.
• For example, Domino's Pizza have completely re-
imagined the food ordering process; Dominos’
AnyWare lets customers order from any device.
Innovation and Digitalization of SMEs of Pakistan 21

22. 2. Digital
transformation in
business model
7/23/2020
• It describes the rationale of how an
organization creates, delivers, and
captures value, in economic, social,
cultural or other contexts.
• Also how value is delivered in the industry.
• For example, Netflix’s reinvention of video
distribution, Apple's reinvention of music delivery
(I-Tunes), Uber’s/Careem’s reinvention of the taxi
industry.
Innovation and Digitalization of SMEs of Pakistan 22

23. 3. Digital
transformation
in business
domain
7/22/2020
• Transformation in business domain offers
the greatest opportunities to create new
value.
• For example, Amazon expanded into a new
market domain with the launch of Amazon Web
Services (AWS), now the largest cloud
computing/infrastructure service, in a domain
formerly owned by the IT giants like Microsoft
and IBM.
Innovation and Digitalization of SMEs of Pakistan 23

24. 4. Digital
transformation in
business
culture/organization
7/22/2020
• Full, long-term digital transformation requires
redefining organizational mindsets, processes, and
talent & capabilities for the digital world.
• Cultural/organizational change is a long-term
requirement of success, but best in class companies
regard the building of these capabilities as a
product of, rather than a prerequisite for a
business transformation initiatives.
Innovation and Digitalization of SMEs of Pakistan 24

25. Digital Transformation Strategy
Innovation and Digitalization of SMEs of Pakistan 7/22/2020 25
1. ANALYZE THE
CULTURE
2. SET BUSINESS
GOALS
3. DOCUMENT THE
RISK
4. RUN PILOT TESTS
5. ASK FOR
FEEDBACK
6. ROLL OUT THE
NEW TECHNOLOGIES
7. KEEP ANALYZING
THE IMPACT

26. Integration and Managing Business Growth
https://www.youtube.com/watch?time_continue=1&v=NVyPNy-
pZS0&feature=emb_title
7/23/2020 Innovation and Digitalization of SMEs of Pakistan 26

27. RECAP
• Current government has inherited serious economic problems; however, today’s
economic crisis isn’t novel.
• It occurs every five to six years not because previous rulers were sellouts but
because Pakistan faces a very fundamental problem that no government could fix
in decades.
• The country couldn’t produce enough exports to counter its whooping imports.
• SMEs and corporations can play a significant role.
• Adoption of industry 4.o / digital transformation is critical.
• However, businesses must analyze and ensure the areas in which they need
digital transformation i.e., process, business model, domain or
culture/organization.
• There must be proper strategy to follow and nurture the culture of adaptability.
• Adoption of digital transformation is beginning; however, businesses will have to
manage the growth as well.
7/23/2020 Innovation and Digitalization of SMEs of Pakistan 27

28. RECAP
It is also important to mention that:
• Pakistan, like many underdeveloped countries, has a unique
advantage over developed countries that it isn’t weighed down by
infrastructure and other legacy issues and face comparatively little
resistance when embracing disruptive technologies.
• With CPEC around the corner, Pakistan can stride for setting up smart
factories (strengthening existing SMEs as well) in its special economic
zones and can leapfrog its way to the front of the line by adopting
industry 4.0/digital transformation practices.
7/23/2020 Innovation and Digitalization of SMEs of Pakistan 28

29. Thank You ☺
7/22/2020 Innovation and Digitalization of SMEs of Pakistan 29By Dr. Mir Dost