Over the past decade, the term “innovation” has become ubiquitous, often drowning out a crucial truth: without a supportive ecosystem, it’s just a catchy slogan. 

While companies obsess over their unique offerings, the real game-changer is collaboration. 

In the Middle East, brands are increasingly recognizing that nurturing an innovation ecosystem demands a shift in strategy. And the strategy is simple: don’t just focus on having the best product. 

A shared vision and strong partnerships will spark real innovation, turning potential into impact and ideas into reality.

A CORE VALUE 

To make innovation a core value within industries across the Middle East, leadership must prioritize it as a key part of organizational strategy. 

This requires clearly defining challenges and regularly investing in Research, Development, and Innovation (RDI) to address internal needs, improve processes, and enhance efficiency, says Faisal Hamady, Managing Director and Partner at BCG.

Leaders must promote innovation at all levels to drive growth, ensure competitiveness, and future-proof organizations. This includes partnering with research institutions for multidisciplinary problem-solving and leveraging government incentives and grants to align RDI activities with national priorities, reducing risks and accelerating innovation. Implementing structured systems like idea banks and sandboxed environments enables employees to test and refine ideas collaboratively in a controlled setting.

For Christos Kolimenakis, Managing Director, Head of Payments Saudi Arabia & Head of Subsidiary Banking MENA at J.P. Morgan, innovation can become a core value through supportive regulatory frameworks, incentive regimes, and foreign direct investments, all underpinned by a clear regional vision. 

Through initiatives like the Saudi Basic Scientific Initiative and the Labs Reactivation Initiative, RDIA supports researchers with grants of $400,000 to $5.3 million, encouraging sustainable economic growth in Saudi Arabia.

The Middle East is steadily embracing innovation as a core value in policymaking, business, and education, says Ammar Al Malik, Executive Vice President of Commercial at TECOM Group PJSC and Managing Director of Dubai Internet City.

He believes that fostering a culture that celebrates experimentation and views calculated risks as stepping stones to progress is key to accelerating the transformation towards innovation, and visionary leadership and supportive physical infrastructure are all vital in this journey.

LARGE ENTERPRISES 

Malik says elevated leadership and infrastructure are essential for building an inclusive innovation ecosystem. Partnerships and networking enhance access to talent, supported by in5, TECOM Group’s incubator, which has nurtured over 940 startups since 2013. Located in Dubai Internet City, startups benefit from insights and collaboration with over 3,500 clients, including Microsoft, Oracle, and Nvidia, encouraging knowledge exchange and fresh perspectives for established companies.

For Hamady, large enterprises play a vital role in nurturing innovation across industries due to their significant influence on supply and demand. They can invest in high-risk, high-reward RDI projects that smaller firms cannot, as their scale allows them to absorb risks. Successful initiatives lead to advancements and substantial financial returns, making large enterprises the main beneficiaries in commercializing new technologies. They have an “unfair advantage” in rapidly rolling out innovative products and services, leveraging extensive infrastructure and market reach to pilot and scale innovations quickly, ensuring faster returns on investment.

One impactful way large enterprises can foster innovation is by supporting the startup community, he adds. 

Investing in startups through corporate incubators and venture capital or creating internal spin-offs like venture builders establishes a symbiotic relationship that grants access to emerging technologies and industry trends. Additionally, their purchasing power can create demand for cutting-edge technologies such as AI and digital tools, encouraging widespread adoption across industries.

In conclusion, large enterprises are pivotal in nurturing innovation. Strategic investments, risk-taking, scaling capabilities, and significant market influence drive both supply and demand for new technologies, shaping the global economy.

THE MOST SIGNIFICANT GAP 

The region has seen rapid growth, offering significant opportunities but also notable challenges, according to Kolimenakis. These challenges include navigating diverse market conditions, complex geopolitical landscapes, and varying regulatory environments.

To bridge these gaps, enterprises must stay agile and responsive, maintaining close connections with clients to understand their evolving needs. Businesses can drive innovation and contribute to the region’s development by addressing these pain points and adapting strategies.

Sector-agnostic innovation is essential to Dubai’s and the UAE’s future-focused programs, with ample opportunities, says Malik. For tech companies, a key opportunity lies in developing a larger pool of specialized talent in areas like AI, blockchain, and cybersecurity. Upskilling and reskilling the workforce, along with attracting global talent, is vital for long-term growth. 

A major challenge in fostering innovation is the inconsistent funding for early to mid-stage Research, Development, and Innovation (RDI) activities, according to Hamady. Governments should increase grants and support programs for early-stage RDI, while the private sector can contribute through corporate venture capital and incubators, ensuring startups have the necessary resources to thrive.

RDI actors—research institutions, startups, and businesses—often work in isolation, leading to a disconnect between innovative ideas and market demand. Governments can bridge this gap by creating platforms and networks for collaboration, guided by a clear vision focused on solving significant challenges. This approach aligns innovation efforts across sectors, resulting in more commercially viable and socially impactful outcomes, he highlights. 

In high-tech fields, a talent shortage hampers the adoption and development of new technologies. Bridging this gap requires robust upskilling programs, attracting global talent, and incentivizing education in critical areas to boost homegrown innovation. Additionally, pro-innovation policies, such as talent mobility and investment incentives, are inconsistently applied. 

By establishing cohesive policies, governments can create a supportive innovation ecosystem that facilitates the flow of talent, ideas, and capital.

THE BROADER SOCIETAL GOAL 

Dubai’s smart city initiatives, like AI-powered traffic management and energy-efficient buildings, demonstrate technology’s impact on sustainable urban environments, says Malik. Success stories from Dubai Internet City and in5 highlight regional startups innovating in agri-tech, clean energy, fintech, and healthcare, including Detectiome’s AI-enabled cancer detection test ‘Revonco’ and Tabby, MENA’s first fintech unicorn.

The Education Cluster supports innovation by serving over 33,500 learners at top universities and vocational institutes in Dubai Knowledge Park and Dubai International Academic City. Specialized courses in green hydrogen, sports performance analysis, and financial technology help build a strong innovation base and prepare talent for future demands.

The innovation ecosystem can also significantly advance broader societal goals. Kolimenakis notes Saudi Arabia’s Vision 2030 illustrates how reforms, like the Financial Sector Development Program, can impact the economy. 

Hamady emphasizes that the Middle East’s innovation ecosystem has great potential to drive sustainability and economic diversification. As the region moves from reliance on natural resources to a knowledge-based economy, innovation will play a key role in establishing new industries, localizing manufacturing, creating jobs, and reducing import dependency. 

Focusing on sectors such as renewable energy, biotechnology, and advanced manufacturing can help Middle Eastern countries develop new economic pillars and become leaders in emerging global markets.

Governments are crucial in transforming the innovation landscape by setting strategic goals, or “north stars,” to guide efforts in addressing national challenges. For example, focusing on water scarcity and food security highlights water desalination technology and agritech as key innovation areas, ensuring economic and social returns on investment.

The benefits of innovation extend beyond profits. 

Technologies like GenAI democratize access to advanced tools, fostering economic growth and social benefits like job creation and improved education. Advances in healthcare also enhance societal well-being, contributing to a healthier, more productive population.

A well-structured innovation ecosystem, supported by government and private sector initiatives, can sustain ongoing innovation and its spillover effects. 

In summary, aligning innovation with societal goals enables the Middle East to achieve sustainable development, economic diversification, and improved societal well-being. Through focused strategies, targeted investments, and cross-sector collaboration, the region’s innovation ecosystem can drive significant positive change.

THE MIDDLE EAST – GLOBAL SCALE? 

Although the Middle Eastern innovation ecosystem is younger than those in the U.S., Europe, and Asia, it holds significant potential for growth, according to Kolimenakis. Achieving global scale requires a consistent regional vision and foreign direct investments to fuel growth and enable partnerships.

Protecting the innovation agenda across government, private, and nonprofit sectors is vital. Fostering a culture of innovation and maintaining investments during downturns are essential for driving productivity and growth.

Malik emphasizes Dubai’s leadership in strengthening its innovation ecosystem. Dubai attracts global talent by simplifying regulations and enhancing the quality of life. Initiatives like Dubai Internet City encourage collaboration among tech giants, offering industry-aligned courses, while the in5 Investor Hub connects startups with investors, nurturing innovation and sustainable growth.

Moreover, Hamady highlights that the Middle East has a unique opportunity to address global challenges such as water scarcity, food security, and climate change. To capitalize on this potential, sustained capital, talent, and infrastructure investment is crucial. Long-term funding will amplify economic impact, and collaboration with international research institutions can further accelerate innovation by merging local insights with global expertise.

Fast Company Middle East will produce a report and list of “The Most Innovative Companies in the Kingdom” in partnership with the Research, Development, and Innovation Authority (RDIA). This report will outline key milestones and opportunities in Saudi Arabia’s pursuit of global innovation leadership. It will focus on four national priorities: Energy and Industrial Leadership, Sustainable Environment, Health and Wellness, and Economies of the Future. Leading companies in these sectors will be surveyed and interviewed, and the RDIA will play a significant role in producing the report.