1. INTRODUCTION TO THE INDEX:

INDEX DESIGN AND FRAMEWORK

The Dubai Innovation Index is designed to be comprehensive in measuring innovation at city and its private sector levels

TOP-DOWN (Macro-economic)

DUBAI INNOVATION INDEX

ECO

• Evaluating innovation capability, activity and impacts of innovation across industries and varying firm sizes • Supported by insights from selected Dubai industry leaders

BOTTOM-UP (Private sector view)

SYSTEM

1. Baseline

2. Challenges & Opportunities

3. Actions

“What is Dubai’s position on the global innovation map?” • Measuring the current state of innovation in Dubai • Defining a scorecard highlighting Dubai’s innovation performance on a global scale

“What are the key challenges & opportunities to innovation faces by firms?” • Identifying key challenges and opportunities - for policy makers, DCCI, companies, government departments and others

“How can businesses and goverment implement practices to further foster innovation?” • Recommendations for public policy changes that can help private sector to innovate • Actions for organizations to enhance innovation performance

Progress tracking and improvement over the years

Dubai has set a vision to become the world’s most innovative city in years to come. In order to measure Dubai’s progress in innovation, Dubai Chamber of Commerce and Industry (DCCI) has partnered with PwC to develop a comprehensive innovation index. While most innovation studies gather and analyze either macro data or survey data, the Dubai Innovation Index evaluates the macroeconomic data across the 28 selected global cities and contrasts Dubai’s macroeconomic measures with the microeconomic- private sector’s view (collected through surveys at firms’ level) across industries in Dubai. The categories of data points for both

macroeconomic and private sector level studies have been selected to ensure that they can be compared to each other. The study will be conducted annually in following years to track progress and identify opportunities for improvement towards a more innovative Dubai. The macroeconomic view of the index studies ecosystem elements at the city level in two parts, first those that enable innovation and second those that measure innovation performance. In line with the elements of macroeconomic study, the private sector view is a measurement of firms’ capability to innovate, their activities and their overall impact on innovation.

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“The index is expected to provide insights into the contribution of private sector to the overall Dubai innovation performance. It will also allow to identify gaps and areas of improvement”

In theory, the index aims at answering 3 main questions:

1. What is Dubai’s position on the global innovation map? 2. What are the key challenges and opportunities to innovation faced by private sector firms? 3. How can businesses and government implement practices to further foster innovation?

firms within Dubai. The involvement and contribution of the private sector towards Dubai’s overall innovation score as a city is a key characteristic of this index. As the inaugural version, this study helps set a strong baseline and will only help draw striking and impactful insights as future versions of the study are launched and a time series of the data is created. Addressing the questions above helps

paint an overall picture of innovation for Dubai by first determining Dubai’s position on the global innovation map, then identifying the key challenges and opportunities as well as the scope for improvement across organizations and finally defining concrete action points and recommendations to help Dubai improve its innovation position.

Calculated as an average of output from measurement of enablers for innovation and measurement of performance of innovation across global cities

City/Global Level

• Factual macroeconomic data compared across selected global cities • Comparing enablers and output performance of innovation across 28 selected global cities

The concept behind the Dubai Innovation Index is comprehensive and in a way unique. Where most innovation studies gather and analyze either macro data or survey data, Dubai Innovation Index considers and analyses both macroeconomic data gathered through secondary research at city level across the 28 selected cities and microeconomic data gathered at firm level across industries in Dubai. The data categories or pillars are the areas of the overall innovation ecosystem and these are carefully selected as macro and micro data indicators based on the concept of creating a fair and justifiable link between macro and micro data. This concept sets the foundation of the index and helps draw interesting insights by evaluating Dubai’s position in the global innovation space and linking that to innovation conducted by private sector

Enablers

Dubai Innovation Index Innovation Output Ratio

Performance

• Calculated as a ratio of performance to enablers • Measurement of innovation efficiency

Industry/Firm Level

YS ECOS TEM

The Index Definition and Scores – What Constitutes the Index?

• Calculated as a ratio of performance and private sector innovation average • This will be measured across the whole private sector as well as key industries and sizes identified

Capability Activity

Private Sector Ratio Private Sector Innovation Score

Impact

• Calculated as average of sub-indices identified under capability and activity • This is the bottom-up measurement and calculation methodology will be in line with top-down measures

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What Constitutes the Index? – Macroeconomic View The macroeconomic view of the index studies elements of the ecosystem at the city level in two parts, first those that enable innovation and second those that measure innovation performance. Study is based on city level data from a range of widely used sources. Data for each indicator was collected from the same source for the same year and from credible sources. Only hard/factual data has been used in the study of macroeconomic indicators.

are forward looking and are expected to have a long-term impact. A higher enablers score implies investments are being made by the city to build a sound foundation to support innovation activities and initiatives in the future. Performance: Performance measures the outputs of innovation across the city. Intangible performance measures

Both tangible and intangible innovation outputs are considered and measured. Intangible performance measures refer to the development of talent, intellectual property and collaborative partnerships for innovation, whereas tangible performance measures include development of new products and services, and economic growth.

DUBAI INNOVATION INDEX

Dubai Innovation Index: This score is a top-down macroeconomic measure of innovation of a city based on city level data from a range of widely used sources. 28 global cities have been selected for the study. The score takes into account both enablers (as the input) and performance (as the output) as equal contributors towards innovation.

The private sector view (or microeconomic view) is a measurement of firms’ capability to innovate, their activities and overall impact of innovation. The data for this study is collected through an online survey and through interviews with Dubai’s business leaders for qualitative inputs. It measures innovation across the private sector for key industries and varying firm sizes. Private Sector Innovation Score: This score is a bottom-up measure of innovation at private sector level. This score represents the average innovation score for all firms responded to the survey across industries taking into account capability and activity (as the input) and impact (as the output) as equal contributors towards innovation. The innovation score represents Dubai’s innovation position as a collective measure of what private sector firms report as their contribution to innovation and the opinion of private sector firms regarding the innovation position of Dubai. Private Sector Output Ratio: Defined as the ratio of impact score to the average of capability and activity scores. This measure indicates the private sector’s abilities to translate its investments in creating environment for innovation to successful outcomes. This measure also indicates the extent of impact created by private sector firms in comparison to the existing capability of innovation within firms and the amount of innovation activities carried out at firms across industries in Dubai. • Private Sector Output Ratio is calculated as a ratio of average of impact measures to average of capability and activity measures

INNOVATION OUTPUT RATIO = Innovation Performance Score / Innovation Enabler Score

INNOVATION ENABLERS

“Performance refers to innovation today and Enablers refers to investment for future” Innovation Output Ratio: The Innovation Output Ratio is defined as the ratio of performance score to enabler scores for a city. This measure indicates the city’s abilities to translate its investments in creating ecosystem for innovation to successful outcome of innovation. Enablers: The term enablers of innovation refers to all elements of the innovation ecosystem that help create the ideal environment for innovation. Enablers of innovation include macroeconomic factors such as Political, Economic and Social Environment, Government, Funding, Infrastructure, Skills & Talent and Culture. Measures of these enablers

What Constitutes the Index? – Dubai’s Private Sector View

PES Environment measures political stability, economic environment and overall appeal of the city

Funding measure the extent and prevalence of funding, both private and public which helps develop new businesses

Skills & Talent measures the enablement of skills & talent through primary and higher education and institutions of education

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Government measures policies and regulations set by the government that impact the business environment

INNOVATION PERFORMANCE

Tangible Outcomes measures tangible results of innovation including new products & services, creative outputs, technology outputs and revenue generation in the city

• Calculated as average of sub-indices identified under capability, activity and impact • This is the bottom-up measurement and calculation methodology will be in line with top-down measures

• Impact measurements at industry/firm level will be in-line with macro data indicators of performance at city level • This will provide a fair indicative measurement for contribution of an industry towards the cities performance in terms of innovation

PRIVATE SECTOR INNOVATION SCORE

CAPABILITY

ACTIVITY

IMPACT

Capability Measures (specific questions tagged in survey)

Activity Measures (specific questions tagged in survey)

Impact Measures (specific questions tagged in survey)

• Strategy, Leadership & Culture • Management of Innovation • Organization enablers • Collaboration • Skills & talent

• Accessing new ideas • Selecting & developing new ideas • Implementing new ideas

Tangible Outcome

Intangible Outcome

• New Products & Services • Growth & Revenue Generation • Technology Readiness

• Intellectual Capital • Creation of Culture • Collaboration

Capability: Capability measures a firm’s ability to innovate using elements that can sustainably influence innovation activities, i.e., firm’s strategy, leadership and culture, management of innovation, organization enablers, collaborations, skills and talent.

Infrastructure measures the infrastructure for innovation including R&D labs, ICT infrastructure and the environmental performance of the city

Culture measures the presence of an entrepreneurial and open, employee friendly culture in the city which boosts innovation

• This provides a measure of efficiency of innovation activities at industry level which is comparable to the Innovation Output Ratio calculated at city level

PERFORMANCE

PRIVATE SECTOR OUTPUT RATIO

Intangible Outcomes measures outputs in terms of intellectual property, creation of culture and the extent of collaboration for innovation

Activity: Activity measures a firm’s activities across the innovation lifecycle from accessing, developing and implementing ideas. Activity of innovation is distinctively measured at private sector level since real innovation activity elements can practically be measured at firm level only. Activity of innovation at firms encompasses putting innovation in motion such as conducting activities relating to accessing, developing and implementing innovative ideas. Activity of innovation is distinctively measured at micro level since real innovation activity elements can practically be measured at firm level only. The combination of capability and activity measures at firm level are compared to assess whether they are at par or not with the measure of enablers at city level in Dubai. Impact: Impact measures the outputs of innovation across private sector firms in Dubai. Both tangible and intangible innovation outputs are considered and measured. Intangible performance measures refer to the development of talent, intellectual property and collaborative partnerships for innovation, whereas tangible performance measures include development of new products and services, and economic growth.

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Macroeconomic and Microeconomic data indicators

Derivation of the Index and Scores – Macroeconomic View

The macroeconomic measures are based on 8 categories or pillars – 6 pillars within enablers, which cover the ecosystem elements and 2 pillars within performance, that consist of the tangible and intangible outcomes. The data points are collected as indicators at the level of sub categories of each of the eight pillars.

MACROECONOMIC MEASURES PERFORMANCE

ENABLERS PES ENVIRONMENT

• Political Environment • Economic Growth • Demographics

GOVERNMENT

FUNDING

• Policies • Regulation • Business Environment

• Public • Private Investment • Banking

TANGIBLE OUTCOME • New Products & Services • Growth & Revenue Generation • Technology Readiness • Creative Outputs

There are 6 categories or pillars within Enablers and within each pillar, there are 2-3 sub categories. Therefore, in total there are 16 sub categories within Enablers. Each of the 16 sub categories have 2-4 indices, therefore, there are 43 indices to measure innovation Enablers. There are 2 categories or pillars in Performance, namely tangible and intangible outcomes. Within each pillar there 3-4 sub categories, totalling to 7 sub categories. Each sub category as 2-4 indices, overall, there are 18 indices to measure the innovation performance of a city. In total, there are 8 pillars, 23 sub categories within the pillars and 61 indices. Each index has a score at city level and has been normalized to a scale of 0-100 based on its nature, i.e. good indicator or bad indicator. Good indicator means higher score is good and bad indicator means higher score is not good. Enabler score is the average of the normalized index scores of all 43 indices. Similarly, Performance score this the average of normalized index scores of all 18 indices. The Innovation Index is calculated as average of Enabler score and Performance score. Innovation output ratio is the ratio of Performance score and Enabler score. Note: For details, please refer to appendix - 4

INFRASTRUCTURE

• ICT • Institutions • Environmental Sustainability

SKILLS & TALENT

• Education • Higher Education

CULTURE

• Entrepreneurial • Incentives

INTANGIBLE OUTCOME

16 SUB CATEGORIES

• Intellectual Capital • Creation of Culture • Collaboration 6 categories or pillars

The microeconomic measures are the private sector view of a city. These measures are based on the data points collected through a questionnaire around capability elements that firms have and what activities they conduct utilising these capabilities. The questionnaire also collects the data for various tangible and intangible outcomes of Innovation within the firm.

MICROECONOMIC-PRIVATE SECTOR VIEW MEASURES PERFORMANCE CAPABILITY

• Leadership & Culture • Management of Innovation • Organization enablers • Collaboration • Skills & talent

ACTIVITY

TANGIBLE OUTCOME • New Products & Services • Growth & Revenue Generation • Technology Readiness • Creative Outputs

• Intellectual Capital • Creation of Culture • Collaboration

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PERFORMANCE

ENABLERS

INTANGIBLE OUTCOME • Intellectual Capital • Creation of Culture • Collaboration

2-3 sub categories within each category

2-4 indices within each sub category

Normalisation to a scale of 0-100

Average of 43 indices

7 SUB CATEGORIES 2 categories

2-4 indices within each sub category

43 indices

Good indicators

Bad indicators

value - min/max - max x100

value - min/max - max x100

∑ 𝑵𝒐𝒓𝒎𝒂𝒍𝒊𝒔𝒆𝒅 𝒊𝒏𝒅𝒆𝒙 𝒔𝒄𝒐𝒓𝒆𝒔/𝟒𝟑

Innovation Output Ratio Dubai Innovation Index

3-4 sub categories within each category

Enabler Score

Normalisation to a scale of 0-100

Average of 18 indices

18 indices

Good indicators

Bad indicators

value - min/max - max x100

value - min/max - max x100

∑ 𝑵𝒐𝒓𝒎𝒂𝒍𝒊𝒔𝒆𝒅 𝒊𝒏𝒅𝒆𝒙 𝒔𝒄𝒐𝒓𝒆𝒔/18

PERFORMANCE SCORE/ENABLER SCORE

(PERFORMANCE SCORE + ENABLER) / 2

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Performance Score

Derivation of Scores – Microeconomic (Dubai’s Private Sector View)

Summary

The Microeconomic or private sector view is an overall measure of firms’ innovation impact, their capability to innovate, and their innovation activities. For the microeconomic measure, Dubai’s private sector view, an online survey was conducted and business leaders were interviewed for qualitative inputs. There are nearly 600 useable responses to the survey.

The Dubai Innovation Index is based on a framework combining macroeconomic analysis with microeconomic-level data based on a private sector survey. The Innovation Index is a macro indicator score comprising of Enabler and Performance scores, measuring innovation inputs and outputs respectively. The Private Sector Innovation Score is the indicator of private sector innovation in Dubai.

Capability is measured through 25 questions in 5 capability areas - Leadership & Culture, Management of Innovation, Organization enablers, Collaboration and Skills & talent. Innovation activity is measured through 16 questions in 3 activity areas - Accessing new ideas, Selecting & developing new ideas and Implementing new ideas. Impact has been measured using 22 questions on both Tangible and Intangible outcomes of innovation.

Dubai Innovation Index uses both a top-down and bottom-up approach to gain a comprehensive view of Dubai’s innovation landscape. In doing so, Dubai Innovation Index aims to link the macroeconomic view with private sector businesses’ views and identify any opportunities for improvements. This is a distinct feature of this study which makes it unique and significant. Additionally, the Dubai Innovation Index is the only innovation study inquiring as to the state of innovation within a city, allowing a more nuanced view of the challenges faced by businesses.

All the responses to the questions are assigned a value on a scale of 1-5, where 1 means least and 5 means most innovative. The overall score of a question on a 5-point scale is calculated as an average of, sum of number of responses to the questions multiplied by the score. The private sector innovation score is calculated as an average of all three averages of impact, capability and activity. The private sector output ratio is calculated as an average of impact measures to the average of capability and activity measures. Note: For detail, please refer to appendix - 6

SURVEY QUESTIONNAIRE MEASURE AREAS

CAPABILITY

ACTIVITY

IMPACT

25 QUESTIONS (INCLUDING SPECIFIC OPTIONS)

16 QUESTIONS (INCLUDING SPECIFIC OPTIONS)

22 QUESTIONS (INCLUDING SPECIFIC OPTIONS)

FOCUS AREA

TYPE OF MEASURE MACRO DATA

QUESTIONNAIRES

NARROW

ECOSYSTEM

NARROW

ECOSYSTEM

TOP DOWN BOTTOM UP MOST GLOBAL INDICES

DUBAI INNOVATION INDEX

Figure 1.1: A comparison of Dubai Innovation Index with other global indices*

Overall Score for a Question on 5-point scale

All responses assigned values on a scale of 1-5 (least to most innovative)

∑h▒𝑵ormalised score of capability tagged questions/25

∑h▒𝑵𝒐. of responses x Assigned Score/Total No. of Responses

∑h▒𝑵ormalised score of activity tagged questions/16

Average of Capability and Activity Measures

∑h▒𝑵ormalised score of impact tagged questions/22

*Please refer to Appendix 3 for further comparison with other studies

Average of Impact Measures

Private Sector Output Ratio

AVERAGE OF IMPACT MEASURES / AVERAGE OF CAPABILITY AND ACTIVITY MEASURES

Dubai Innovation Index

(AVERAGE OF IMPACT MEASURES + AVERAGE OF CAPABILITY + AVERAGE OF ACTIVITY) / 3

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The Dubai Innovation Index offers a highly relevant view, comparing innovative cities at the global scale, as well as offering insight within the city itself. This is a tool that will greatly aid Dubai in it’s quest to become a global innovation centerpoint. By measuring progress and collecting feedback from Dubai’s businesses, allowing to create an objective portrait of Dubai’s innovation ecosystem, highlighting Dubai’s strengths and weaknesses and offering guidance to stakeholders as to how to improve areas that are lacking.

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