8 July 2002

SPEECH BY MR. THARMAN SHANMUGARATNAM, SENIOR MINISTER OF STATE FOR EDUCATION AND TRADE AND INDUSTRY AT THE STANFORD GLOBAL ENTREPRENEURS CHALLENGE 2002 ON MONDAY, 8 JULY, 9.30 AM, AT GUILD HALL, NUS GUILD HOUSE

Professor Tom Kosnik, Consulting Professor, Stanford University and Advisor to the Stanford Global Entrepreneurs Challenge

1. I am very pleased indeed to be here this morning to address such an exciting and dynamic group of young talents from around the globe. You have come from top universities in the US, Europe and Asia. In coming to Singapore to participate in this Global Entrepreneurs Challenge, you have demonstrated a small dose of the entrepreneurial spirit itself - a desire to take on a new challenge and push your boundaries.

2. We have entered the knowledge-based economy, globally. Among the higher income Asian countries, economic growth will be increasingly driven by the ability to innovate - not the ability to absorb and adapt advances made elsewhere, or to make existing products efficiently. Growth will be innovation-driven, not efficiency-driven.

3. The most successful countries will be those that build and sustain vibrant innovation systems - the institutions and networks that support continuous innovation. How well they do this will depend on the deliberate actions of governments, universities and industry players, and the interactions between the three. And there will always be an unplanned or serendipitous dimension to innovation, given the flux of social and market circumstances.

4. There is some consensus on what it takes to build innovative economic systems, and stay in the new, knowledge-based global competition.

5. First, and most fundamental, are skills and research capabilities. Innovative economies will depend on an adequate supply of highly educated manpower. Without skills of a high order, we will not be able to create new and differentiated products, develop new business models, or manage complex international supply chains. University-business linkages are increasingly critical in developing these capabilities.

6. Second, markets have to be allowed to work. Intellectual property protection, competitive domestic markets and an openness to trade and foreign investment enhance innovation. New ideas with commercial potential must also have access to funding. Venture capital has to be in adequate supply, and banks have to develop the skills and risk management systems needed for lending to young companies without collateral.

7. Third, an innovative economic system requires entrepreneurs, and a culture that respects entrepreneurs. A society with high levels of knowledge and management skills will not produce the breakthroughs in products or processes needed for economic advance without a strong base of entrepreneurs, and a spirit of entrepreneurship that extends across society. It will not create value from knowledge. This entrepreneurial culture is what the famed economist J M Keynes called 'animal spirits' - the gut instincts to create and find a market or perish.

8. Each of these three dimensions - skills and research, competitive markets governed by the rule of law, and the entrepreneurial culture - and the interaction between them, are essential for a vibrant innovation system. Further, while innovation systems have strong national characteristics, success now depends critically on openness and linkages with innovation systems in other countries - and especially with the global centres of excellence among universities, research institutions and commercial laboratories. Strong innovation systems depend not only on the local environment but on the global connectedness of local research activities and industry clusters.

9. There is a growing body of research on the mystery of entrepreneurship, and we now know a little more about it than when Keynes spoke of animal spirits. Entrepreneurship, put shortly, is the act of discovering, evaluating and exploiting opportunities. Exploiting opportunities involves anticipating risk, and accepting the possibility of failure.

10. Most people agree that the basic ingredients of entrepreneurship lie in personality traits, especially a creative imagination, the desire to achieve and make a difference, and the tenacity to persevere in the face of failure. Very little of this can be taught. But what we do know is that entrepreneurship can be brought to the surface and nurtured by the environment, just as it can be thwarted. A favourable environment makes it much less likely for entrepreneurial talent to stay latent.

11. For entrepreneurial talent to surface and thrive, we need the support and recognition - of teachers and parents, and of peers - of individuals who want to venture out and try doing something new. Society at large should see failure as a stage to success. It is these social values that distinguish the pro-enterprise cultures of countries like the US from the anti-enterprise cultures of countries like Japan, or even the UK. Surveys find that a majority of people in Japan and the UK, even after Thatcher, do not regard starting a business as a respected occupation. I do not have equivalent findings for Singapore. From all accounts, social respect for those who start a business, and the tolerance for failure, has been low. But I suspect it is now rising.

12. It helps to have role models - local examples of individuals making serious amounts of money by taking a different route and working hard at it, and those that have made it big after first failing.

13. Finally, some of the skills required for entrepreneurship can be taught, in educational institutions and through mentoring by real-world practitioners - skills such as market opportunity analysis, hedging your risks, raising funds, team building, networking and negotiation with investors.

14. Educational institutions, especially tertiary educational institutions, can therefore play a significant role in giving room for the entrepreneurial spirit to develop, and in nurturing the entrepreneurial skills of a society. It has been said that "The best way to think about the future is to invent it." To which we might add that the best way to invent the future is to educate and nurture the people who will invent it.

15. To play this role, educational institutions must themselves be prepared to innovate. They have to be willing to experiment with new methods of teaching and learning, as we are seeking to do in Singapore. They will have to bring the excitement of the world of scientific and business innovation into the classroom, and provide opportunities for students to learn through practice and access to practitioners.

16. Business plan competitions are one such device that is proving useful. Besides learning business planning skills, the whole process of the competition encourages students to engage in team-building, hones their presentation and networking skills, and facilitates feedback and mentoring by the practitioners who serve as judges and advisors. Many leading universities in the world have now introduced business plan competitions, and many "real" and successful ventures have emerged from these competitions. I am pleased to note that the National University of Singapore has initiated a nation-wide business plan competition in Singapore called StartUp@Singapore since 1999, and that dozens of new ventures have been created as a result.

17. Stanford University pioneered the first Global Entrepreneurs Challenge in 2000 at its campus, in the heart of Silicon Valley. By bringing winning teams and organizers of business plan competitions from around the world together, the GEC plays a catalytic role in raising standards and encouraging the use of business plan competitions as a tool for entrepreneurship education. I am pleased that Stanford has chosen to partner with the National University of Singapore (NUS) to bring the second GEC to Singapore this year. It points to Singapore's role as an emerging hub of innovation in Asia. It also reflects NUS' record of excellence in teaching and research, and status as a leading player in the Asia Pacific in entrepreneurship education. (In 1999, NUS collaborated with MIT to organize in Singapore the first Global Start Up Workshop outside the US. The success of that event has led to subsequent annual replication of the workshop around the world. I am sure that this first GEC outside the US will likewise lead to many more such events around the world in the future. NUS has also collaborated with Stanford University and the University of Pennsylvania in launching its entrepreneurship-focused Overseas College Program in the Silicon Valley and Philadelphia regions respectively. NUS recently partnered with the Herbert Quandt Foundation of Germany to initiate a German-Asian Young Entrepreneurial Leaders Forum. NUS is now also playing a leadership role in promoting entrepreneurship education among member universities in the Association of Pacific Rim universities.)

18. These initiatives by our universities are very much in line with the Ministry of Education (MOE)'s goal of nurturing students with the skills, knowledge and character to succeed in a knowledge-based era. Nurturing entrepreneurial skills and habits is part and parcel of preparing our young for this future. More of our students will have to be exposed to activities that promote these skills, especially through co-curricula programmes outside the classroom.

19. Our approach to entrepreneurship education in schools is reflected in two dimensions of the school experience. First, through the curriculum, we are seeking to develop students who can think, explore and experiment, independently and creatively. This is the reason MOE has cut down curriculum content, to free up space for more open-ended learning and creative pursuit. Under the Thinking Schools, Learning Nation programme, we have also infused critical thinking skills across the curriculum and in revised assessment methods. We want students to question, to understand how theories are arrived at, to probe their assumptions, and to test them against reality.

20. To give students an additional platform to develop thinking skills, project work has been introduced in both primary and secondary schools. Project work encourages students to explore the inter-connectedness of different areas of knowledge, to experiment, and to work collaboratively with their peers. All this is more akin to the real world experience.

21. Second, the non-academic curriculum plays a critical role in nurturing the skills and habits required for success in the business world - being a good team player, being willing to take a risk, and showing determination and resolve in the face of setbacks. Through participation in co-curricular activities (CCAs) such as sports, students learn to interact and collaborate with each other to achieve common goals, and to lead with confidence in adversity. They learn to respond on their feet without relying on instructions or directions. And tough training for competitions nurtures endurance and ruggedness in our students.

22. Students also engage in a number of activities aimed more specifically at promoting entrepreneurial skills. A number of schools and junior colleges have set up Enterprise Clubs, giving students the experience of running mini-markets and other business activities. A growing number of schools are participating in the Youth Entrepreneurship Challenge organised by Singapore Polytechnic. Bizworld, a programme conceptualised by Tim Draper of the VC firm Draper Fisher Jurvetson, teaches business, entrepreneurship and business concepts, and has seen more than 40 schools signing up since it was launched in March this year. A Youth Entrepreneur Network, started by Youth Challenge, provides youth between the age of 16 to 25 with access to top entrepreneurs in Singapore.

23. To encourage students to look beyond their examinations, our university admission criteria have been revised to take into account students' achievements in CCAs. In future, Project Work will also be part of the admission criteria.

24. Looking ahead, MOE will continue to explore new ways in which teachers and schools can deliver the kind of educational experience that will help us grow our students into creators and entrepreneurs. We will tap on experience around the world in exposing students to lessons of one form or another in entrepreneurship, in schools and tertiary institutions.

25. More tie-ups between our schools and our tertiary institutions, as well as with corporations, entrepreneurs and the community sector, will help schools develop a richer programme of exposure to the world outside the school, to excite and challenge their students. An example of schools' collaboration with the private sector is the Citibank programme, Citisuccess: Partners in Innovation. Besides the private sector, some of our schools are also working with the CDCs to fund programmes to promote student entrepreneurship.

26. Finally, we need a spirit of enterprise and innovation among educational institutions, teachers and lecturers themselves. Teachers and lecturers who keep up with the times, and who try new approaches in teaching and school management can infect their students with a certain openmindedness and an enthusiasm for experimentation. A teacher or lecturer who is textbook bound, wants only one answer, who errs on the side of caution, and who is a stickler for following past practices will pass these attitudes on to his students.

27. We have undertaken a comprehensive review of the Teaching Service, resulting in Edu-Pac or Education Service Professional Development and Career Plan. Through the Edu-Pac Plan we aim to motivate teachers to upgrade and re-orient themselves professionally, and to continually think on their job so as open up new freeways and byways for students to explore.

28. MOE has also introduced a variety of awards and Funds to induce and reward teachers and schools to search for better ways to do their work. (These included the Best Practice Award, the Outstanding Contribution Award, the School Innovation Fund, MOE Innovation Fund and the INNERGY Award.)

29. In closing, let me thank the organizers of GEC for giving me the opportunity to address you this morning. May I wish all the participating teams every success in your entrepreneurial endeavours, and for everyone, have a productive conference and a pleasant stay in Singapore.