Spotlight on

SME innovation
in the UAE

DEVELOPED AND PRODUCED BY:

CO-AUTHORED BY:

The Year of Innovation

Content
Founders note
4

Founders note

About this whitepaper

Executive summary

What is innovation?

Innovation is in the DNA

10

of UAE
Three learnings from
Innovation is in
the DNA of UAE

12

the Beehive roundtable

Re-defining innovation

14

in the UAE

10

How the UAE inspires

17

SME innovation
Innovation drivers and

Three learnings
from the Beehive
roundtable

18

challenges

12
How the UAE
inspires SME
businesses to
innovate
17

Conclusions

20

Thank you to

21

contributors
About Beehive

22

References

23

Founders Note
Apple. Ford. 3M. Tesla. Amazon
Their names roll off our tongues, without even a thought, when
we think of innovation. They made an eternal mark on history,
revolutionised industries, changed the world, and generally made a
positive impact in our lives.
They created industries and powered revolutions. They made the
seemingly impossible possible and the mundane incredibly exciting.
They are the innovators that symbolise the advancement of
humankind.

What unites all innovators is the singular drive

to tinker, to experiment, to try new ideas and
constantly strive to improve concepts.
Rick Pudner - Chairman
They are the inspiration for Beehive and they are the inspiration for this in depth study of SME innovation in the
UAE. Beehive aims to be a catalyst to the success of like-minded firms who embody the same vision.
With a focus on supporting those seeking to make a difference in the world and our community, we have sought
to help SMEs either by offering them favourable terms on financing, giving them access to Beehives thriving
community of SMEs and innovators, or simply by celebrating their accomplishments and successes.
We have done this because we believe deeply that innovation is the lifeblood of all SMEs, and SMEs are the
lifeblood of any local economy, and the global economy as a whole.
SMEs, by their nature, leverage innovation as a competitive edge to wage the proverbial battle of David versus
Goliath.
SMEs have to think differently, and they have to implement new ideas quickly.
This report outlines how SMEs in the UAE approach innovation, how they apply it for commercial success and
how they can learn from each others experiences.

For the past year, Beehive Group has led a campaign to spotlight and
cultivate innovation within our own community in the UAE.
Craig Moore - CEO
We hope this report will serve as a starting point for a broader conversation about innovation in the SME sector
in the UAE and beyond. We will look to continue engaging in this conversation with our community and our
industry to help the UAE become a centre of innovative thinking.
We at Beehive want to inspire and enable innovation, learning from the examples of the great innovators of our
time. We hope you find this report insightful and informative.

About this Whitepaper

Beehive initiated an in-depth study of SME innovation in
partnership with Thomson Reuters to better understand how
SMEs innovate in the UAE. We worked with the support of the
DMCC, Dubai SME, Khalifa Fund and Arabian Business.
The research began with a focus group of key SME innovators
from the UAE, and continued with multiple surveys.
The goal was to learn how SMEs in this market approach
innovation, how they use it to grow and improve their business,
and what challenges they face as they do so.
In June 2015, Beehive hosted a roundtable discussion with
some of the most successful SMEs in the country to discuss how
innovation happens and how to support innovators in the UAE.
The panellists were business owners from various industries,
ranging from online services to packaging companies. All
business owners had one central focus in common: they valued
innovation and embraced it as a recipe for success.
The second phase of the effort was an in-depth survey that
reached out to SMEs in the UAE, including organisations
connected to Thomson Reuters, DMCC, Dubai SME, Khalifa Fund
and Arabian Business.
The survey results reinforced many of the insights from the
roundtable discussions, while also raising a series of other
considerations for SMEs seeking to innovate. Beehive analysed
the results together with Thomson Reuters and the results are
the basis of this report.

Partners
Thomson Reuters
Arabian Business
Khalifa Fund
Dubai SME
DMCC

Executive Summary
In 2014 the UAE Government launched the National Innovation Strategy, declaring 2015 the
Year of Innovation. As part of the drive to make the UAE one of the most innovative countries
in the world, Beehive, the UAEs first Peer-to-Peer (P2P) finance platform, in collaboration with
Thomson Reuters, launched an in-depth study on innovation within the Small and Medium
Size Enterprise (SME) sector in the UAE.
This whitepaper presents the landscape for SMEs innovation in the UAE, how it is used for
growth and improvement of the businesses, the challenges, and the opportunities that SMEs
face when innovating.
Following the assimilation of multiple SME research sources and working with many SME
partners, we found compelling insights on how SMEs approach innovation, foster it within
their operations and apply it to enter new markets and grow.

The key findings include:

There is no need to reinvent the wheel; the majority of innovation in the UAE comes
from taking existing ideas and improving them or adapting them to better suit a region
or market.
Building a culture of innovation inside companies is difficult, but companies that are
able to foster innovative thinking throughout every level of their business will be more
successful.
Building a strong SME community and a collaborative culture play a greater role in
fostering SME innovation and success than enforcing policy and regulations. Creating
an ecosystem for innovation to flourish is critical.
Government encourages innovation by establishing Free-Zone business hubs, businessfriendly regulations and most important of all, leadership by example.

The research showed that while SMEs in the UAE evidently see the value in developing a
clear innovation strategy, issues arise in terms of understanding how to actually execute that
strategy to deliver growth within their business. Gaining access to the appropriate funding to
finance an innovation strategy is also a barrier to optimum execution.
Most important, our findings affirmed that innovation is thriving in the UAE. Indeed, all our
survey respondents highlighted that innovation remains the lifeblood of this rapidly growing
nation, fueling its growth and growing sophistication.

Innovation in the UAE

There is no universal definition of innovation. Indeed,
innovation means different things to different organisations,
industries and individuals.
Innovation has many definitions but generally it is referred to
as the development of new solutions to enhance or improve a
product, process, technology, service or idea. This is in contrast
to Invention which is seen as the creation of something entirely
new and unique, which did not previously exist.

SME are

92%
of businesses
in the UAE

The UAE has long been seen as the centre of innovation in the
Middle East and continues to attract talent from all corners of
the world eager to launch new ideas and business models.
That is thanks, in part, to geography. The UAE is literally the
centre of the world today; its airlines, Emirates and Etihad, are a
bridge between continents and increasingly help turn the gears
of the global economy.
But Government policy plays a crucial role as well. The UAE
is decidedly pro-business, supportive of diversification and
embracing of technical and technological development. The
spirit of innovation thrives in every corner of the country.
In 2014, SMEs accounted for some 92% of all the businesses
in UAE; they contributed around 60% to the UAEs GDP and
provided 86% of all private sector employment, according to the
UAE ministry of Finance.
Yet what really sets SMEs apart is their drive and ability to do
things faster, better and more efficiently. Innovation is their
lifeblood and a key enabler for growth and differentiation.
The importance of innovation in growing businesses and
boosting market share is apparent in the most successful
companies around the world, a study by PWC showed recently.
It is no coincidence that the worlds most successful companies,
like Google, Amazon, Tesla and Apple are also some of the most
innovative. All have dedicated innovation strategies to fuel the
growth of their business, PWC noted, and all rank as some of the
biggest spenders on Research and Development (R&D), making
a major financial commitment to achieving their innovation
goals.

86%
of private sector
employment

60%
contribution
to the UAEs GDP

The UAE is already the most innovative Arab nation. Our target
is to be among the most innovative nations in the world. The
competitiveness race demands a constant flow of new ideas, as
well as innovative leadership using different methods and tools to
direct the change
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the
U.A.E. and Ruler of Dubai.

The alignment of the CEO, company directors and

team members to a specific innovation strategy, and
the investment in that strategy are crucial drivers
for the future growth of a business. Such alignment
marks a commitment to constantly improve, to
better engage customers and to find a competitive
advantage.
As the regions first P2P lender, Beehive embodies
these principles. Beehive introduced P2P lending
into the UAE in 2014. The concept, already extremely
successful in the West, allowed Beehive to lead in a
new market unfamiliar with the concept. P2P lending
answered a specific need in the market, serving as an
enabler for businesses in need of affordable finance.
That engagement gave Beehive access to hundreds

of SMEs in the UAE and elsewhere to observe how

they work, how they grow and how they innovate.
In their initiative to support innovation for the SME
community, Thomson Reuters, the worlds leading
source of information, and co-authors of this paper,
are pioneering a platform for SMEs where they
can successfully share information and knowledge
with other SMEs in order to make better decisions
regarding the growth and prosperity of their
business.
The emergence of such platforms provide
considerable opportunities for the increased
efficiency and output of the SME community in the
UAE.

Innovation is in the
DNA of UAE
A considerable driver to innovation in the UAE is the leadership of the Government itself.
During 2015, now formally embraced as the Year of Innovation, the Government paid
considerable attention to innovative thinking and behaviour. The strategy targeted seven key
sectors: renewable energy, transport, education, health, technology, water and space.
The initiatives within the strategy offer a way forward for the UAEs entrepreneurs and beyond.
Emirates such as Dubai and Abu Dhabi project a sense of innovation and accessibility, and
reflect, a constant strive to be regional leaders of innovation.

Home to over 30 Free-Zone business hubs with tax-free

operations, business-friendly processes and 100% ownership
10

As the home to over 30 Free-Zone business hubs with business-friendly processes, tax-free
status and 100% ownership, the UAE is fertile ground for entrepreneurship and innovation,
fuelling the development and growth of the SME sector. (See Graph 1)
The UAE attracts talent from all over the world with its central geographical location, topdown Government policy that supports business and embraces technical and technological
innovation.
Demographics, too, are evolving and the UAE is a highly-competitive and advanced market.
Consumers are always looking for new and improved ideas and products further fuelling the
need for rapid innovation to compete.

When we launched, we were aware there was a funding

gap for SMEs in the region, but we didnt realize what a big
impact this was having on innovation. His Highness Sheikh
Mohammed Bin Rashid al Maktoum has said that innovation
holds the key to Dubais progress, and we hope to be one of
the catalysts for innovation within the SME community and to
make a positive difference in the SME ecosystem in the UAE.
Rick Pudner, Chairman Beehive

Important Characteristics in Attracting SMEs to the UAE

40%
35%
30%
25%
20%
15%
10%
5%
0%
Tax-Free
Status

Young
Market

Infrastructure

Geographic
Location

Access to
Finance

Access to
Skilled Talent

Graph 1: UAE is an attractive market for SMEs because it is tax free, Free-Zone infrastructure, relatively young in demographics
and centrally located in the world.

Regulatory
Support

Three learnings from the

Beehive Roundtable
In a roundtable discussion held with prominent business owners, Beehive discovered a world of innovative
thinking and gained crucial insights from some of the most successful entrepreneurs in the UAE. The roundtable
discussion became the starting ground for this paper.
The predominant question was this: How can firms like ours foster a culture of innovation and support
these innovators? Three key learnings emerged;

1. Fail, but fail quickly

When companies innovate they work on something
that has never been tried before in their market or
business and success isnt guaranteed at the start.
To innovate successfully, these companies build in
checkpoints to determine if their developments are
fit for purpose and they dont hesitate to change
course when they need to, while always keeping the
end goal in mind. It is also important that innovative
leaders know when to call time on a project and
reassess rather than blindly pursuing a goal with an
ill-fated strategy.

The key to innovation is failing

fast and integrating
Dany Eid, founder and CEO of Pixelbug
This is especially true for creative companies like
Pixelbug, a technology company that develops
advanced augmented reality applications. Clients
contact Pixelbug because they know that the
company is synonymous with innovative ideas and
can come up with new, untested solutions. Their
clients understand that Pixelbugs solutions are
explorative, experimental and deliver some surprises,
but will deliver the desired objective and results in
the most creative and innovative form.
12

2. Encourage your people and engage your

stakeholders
Employees play a central role in achieving innovation,
so it is crucial for business owners to find people
who can - and want - to co-create with them. The
most successful businesses are those that empower
their teams and give them the encouragement and
flexibility to run with good ideas and build upon
them.
Engaging talent is one of the biggest challenges for
these innovators, which means companies must
mold employees to be partners in creation.
More widely SMEs must bring their stakeholders
and partners with them on their innovation journey.
Many in the UAE struggle to innovate when forced to
work with companies that do not share their vision
of innovation. Suppliers and customers that are not
open to innovation, make business processes less
efficient, and hamper the ultimate goal.

Engagement is important.
When you get a team that has
great ideas, you get them to
run with it and build it.
Omnia co-founders

3. Embrace failure and learn from it

Many of the business owners actively encourage their teams to try new ideas, make mistakes
and learn from them, instead of requiring them to simply follow orders every day. They
want their employees to be creative and empowered, as this will not only make them more
productive, but will enable them to foster better relationships with clients too. It is key to
create a culture of encouragement where employees are not fearful of being penalised for
thinking outside of their daily job requirements, a scenario which appears more common in
some cultures than others. Companies must address the fear of failure and learn to build
trial and error into their everyday operations and processes in order to keep growing and
developing as a business.

Many of the business owners we spoke to would prefer for their

team to try new ideas, make mistakes and learn from them

Participents (left to rigth) Ravi Bhusari: DUPLAYS, Shahriar Khodjasteh: DDE, Dany Eid: Pixelbug, Adam Booth,
Steve Haysom: Omnia, Craig Moore, Peter Tavener: Beehive, Vishaal Shah: Panache International

Re-defining innovation
in the UAE
As outlined earlier in this study, innovation can
be defined and represented in many different
ways. Almost 45% of SMEs we surveyed believe
that adapting an existing idea to a new market is a
definition of innovation in the UAE. (See graph 2)
Delivering innovation by adapting tried and tested
ideas from other markets can often prove a more
efficient, simpler and often lucrative means of
delivering a competitive advantage. The UAE has a
strong history of taking the best examples of many
industries such as architecture, retail and the arts
and improving and tailoring them to better deliver
for local market needs.
Our findings identified innovators in Dubai as
generally second-movers in the concepts they apply,
but first-movers in the local market, adapting existing
concepts to the local environment quickly and
efficiently.
The importance of innovation among SMEs
is certainly well-recognised, but while many
respondents saw their business as innovative, our

results showed that only 25% of SMEs said they had

a clearly defined strategy for innovation (See graph 3).
The results indicate that many SMEs feel they have
an innovative mindset and ability to generate
creative ideas but they dont fully understand how
to successfully execute an innovation strategy in
practice.
The main limitations to fully leveraging an innovation
strategy are driven by a lack of Research &
Development (R&D), innovative skill sets, as well as
financial challenges.

Innovation in much of the world

is defined as developing and
implementing new ideas and
improvements
Clearly, generating new ideas is only one element of
innovation. The real challenge lies in applying those
ideas to real business operations and resources.

How SMEs define innovation in the UAE

Developing more efficient
business process

Adapting an existing idea to a new market

Creating a new product or technology

10

20

30

Graph 2: SME innovation in the UAE tends to be defined as adapting existing ideas to this market.

14

40

50

Large organisations are able to allocate spending on

innovation consultants and advisors to help them
create and deliver products and services that will
engage new or existing customers. However, most
SMEs must strive to invest in their own abilities,
leveraging the intelligence and willingness of their
teams to generate new ideas and better products to
help turbo charge their growth.
The UAEs demographic profile includes a large
youth segment and a high proportion of working-age
consumers. The younger population, are frequent
users of the latest technologies, and are more
likely to embrace change. In addition, the UAE has
a considerable expatriate population comprising
nearly 90 percent of the population. Expatriate

innovators and entrepreneurs can bring with them

diverse and varying business experience, practices
and ways of thinking.
Pioneers in the UAE work to bring what they view
as the best ideas theyve encountered from around
the world, and apply these in new ways, tailored to a
local context.
This approach inspires other home-grown innovators
and attracts pioneering talent from around the
globe. They are eager to participate in the successful
implementation of new regional models to become
the new drivers of transforming the good into great.
In turn, nurturing this innovative talent will fuel the
broader innovation strategy of the region, creating a
virtuous cycle

First you imitate, and then you innovate.

Ravi Bhusari, Duplays CEO

SME innovation strategy in UAE

My company is innovative

Innovation is the core culture of my company

serious about creative ideas

We know how to use original and

creative ideas well in our company

Does your organization have

innovation strategy

20

40

60

80

Graph3: SMEs in the UAE describe themselves as innovative, but are unsure how to develop or put innovation strategies into practice.

100

16

How the UAE inspires SME

businesses to innovate
Respondents highlighted that what inspires and
drives the UAE businesses towards innovation is the
very same thing driving the UAE to be a global leader
and a first-mover innovator: making the good; great.
Both SMEs and the Government are finding new and
exciting ways to advance their industries and push
the limits of innovation.
In its quest to create the most innovation-friendly
environment possible, the UAE Government has
made its greatest strides simply in leading by
example. The rise of Emirates and Eithad, the
world-class retail shopping experience offered by
brands like The Dubai Mall, and innovative property
development that has transformed the desert into
an iconic skyline have all served as examples for a
Government seeking to instill a culture of innovation,
possibility and leadership into its economy.

1%

Survey respondents cited the competitive pressure

of the market and the need to grow market share
as single biggest driver of innovation in the UAE.
But the desire for industry leadership and meeting
consumer demand were also significant drivers to
innovate. (See graph 4)

HH Sheikh Mohammads
brand Dubai is different. It cuts
through any trouble and gets to
business. That really keeps us
motivated.
Steve Haysom, Omnia, Founder

1%
33%

25%

Drivers of innovation in UAE

Competitive Pressure and Market Share growth
Desire for Industry Leadership
Consumer Demands
Keeping up with new Technologies
Regulations

26%

Graph 4: The level of competitive pressure and desire for first in market positioning
are factors that drive innovation in the UAE.

Innovation drivers and

challenges

70
60
50

30
20

Providing alternative finance options alleviates the

10

Companies like Beehive, are

revolutionising the SME funding
model, we apply the innovative
technology of crowdfunding
to provide alternative finance
solutions to fuel growth in this
critically under-served sector of
the economy
Craig Moore Beehive CEO

18

0
Graph 5: Factors that limit innovation in SMEs

Regulations

40
Partners do not support

Not surprisingly, survey respondents highlighted the

need for greater financial stability as a central barrier
to innovation, particularly in a market where the
consequences of a default can be challenging to a
young SME and its owners.

What limit innovation in the UAE

Market factors

This issue is underlined by the International Finance

Corporation (IFC) which estimates that the current
SME funding gap is approximately USD 260 billion
within the MENA region.

80

Knowledge factors

The lack of funds and accessible finance options

proved particular challenges. Despite their significant
contribution to the economy, SMEs continue to
struggle in securing funds.

constraints and high cost of conventional lending

and addresses a need for faster access to lower cost
financing to fuel business growth

Cost Factor

The survey results show SMEs have a clear desire

to build an innovative culture. What is less clear,
however, is how they execute these desires in
practice, and leverage them for the long term benefit
of the company. Factors such as limited R&D budgets,
rapidly changing demographics and lack of support
from partners and clients can considerably limit
innovation.

When asked about the key factors spurring future innovations, the
surveys revealed three important themes: Knowledge, community, and
transparency are crucial.

Knowledge management is forefront in the minds

of SMEs. Businesses realise the importance of
transparency and creating a culture where ideas are
shared in order to spur innovation.
Community matters: The ability to meet likeminded innovators and engage with peers proved
another crucial driver of innovation. From grassroots
innovators to Government programmes to breed
and encourage SME collaboration, all members of
the community can increase their value by sharing
their knowledge and expertise. Government plays
a crucial role in the development of innovation
networks to allow knowledge to be shared efficiently.

Business factors in driving innovation

8%

8%

8%
25%

10%
18%

24%

The future of such a community will see SMEs

hiring other SMEs, creating referral mechanisms
that facilitate public ratings, reviews, and offer
recommendations by peers while providing exposure
to freelancers and other workers in the industry.

Better access to knowledge

Transparency emerged as both a challenge and

an opportunity for SMEs. The ability to evaluate
competitive position and gauge where a business
stands in relation to peers is crucial to development.
The opportunity in transparency proved immense
and lies in improving community ties, supporting

Decreased government regulation

suppliers, understanding market forces, and

engaging in better budgetary practices.

We dont have a program that

identifies and awards innovation
as such
Shahriar Khodjasteh, DDE CEO

Better access to capital

Cultivating an SME community
Better infrastructure
Innovation supportive company culture
Attracting more innovative employees

Graph 6: Access to knowledge and a collaborative

community are the main two enablers for
innovation for the SME sector in the UAE.

Conclusions
As the Year of Innovation draws to a close, the Government focus placed on innovation has
added considerable weight to making the UAE one of the most innovative countries in the
world. As a centre of innovation in the region, attracting talent from all corners of the world
to come here to work and create new businesses and ideas, the UAE now plays on the world
stage, standing as a symbol of pioneering success in the region. The UAEs airlines, industry
and hospitality sector are the envy of many nations, attracting talent, skills and innovators
from all over the world.
At the heart of this innovation are the SMEs, addressing gaps and niches in the market and
continuously seeking new ways to do things better.
The most successful entrepreneurs in the Middle East have relied upon their innovative
thinking to drive new ideas forward. Their success is driven by the traits they all have in
common: imitating and improving on what already works; making decisions quickly; ensuring
ideas are better capitalised; and being willing to take calculated risks.
Inspired by the countrys leaders, driven by the market, and fuelled by demographics, the SME
sector is growing rapidly and bringing prosperity with it.
Being regarded as one of the worlds most innovative nations will rely heavily on cultivating
SMEs as the engine of the economy, helping them to apply innovation best practice and grow
through key enablers such as:
Better access to funds to enable execution of innovation strategies
A collaborative SME community and culture to share learnings and connect
experienced innovators with SMEs eager to learn and develop
Knowledge and transparency in information to enable competitive benchmarking
Guidance and advice on the development and execution of innovation strategies
The UAEs innovation strategy will pave the way for the countrys SME community,
providing the knowledge base, the guidelines, best practices for strategy development and
implementation, and a formalised ecosystem for innovation. These steps can only further
develop the optimum environment to foster innovation within SMEs in the UAE and deliver
against the vision to be regarded among the worlds most innovative.
Beehive, utilising technology to develop innovative new finance solutions, continues to support
strong businesses with the funds they need to innovate and grow their businesses. Together
with Thomson Reuters, Beehive will continue to work on developing platforms that provide the
necessary information and transparency helping to accelerate the innovative culture within
the SME sector in the UAE.

20

Thank you to all

contributors
We would like to extend our gratitude to all the partners that have contributed their input,
support and dedication to the development of this report.
A special thank you goes to Thomson Reuters, our co-authors research partners; the DMCC;
the Khalifa Fund; Dubai SME and Arabian Business.
We also thank Brunswick, our communications partner, for the editorial contribution in this
paper.
Last but not least, we extend our gratitude to the SMEs who participated in this study for
providing the answers and insights for the research.

About Beehive
Launched in November 2014, Beehive has rapidly grown into the
UAEs leading online peer-to-peer finance platform. The brainchild
of serial entrepreneur Craig Moore, supported by Rick Pudner,
former Group CEO of Emirates NBD, Beehive facilitates flexible
funding solutions for established SME businesses seeking finance
for up to AED 1,000,000 for the duration of 1 to 3 years.
Since Launch, Beehive has been awarded Start-Up Business for the
year at Gulf Capital SME Awards 2015, received over 2,600 investor
registrations and has successfully funded more than AED 25 million
to around 50 businesses.
Individual investors can invest from as little as AED 100 into each
business listed on the platform and receive monthly repayments
at target rates ranging between 8% APR and 20% APR. Beehive
undertakes thorough due diligence on each business listed on
the platform and the company facilitates the finance agreement
between the business and investors, charging a small percentage
fee of the finance amount.
Investors are also able to buy or sell their finance parts to other
investors on the platform through Beehives secondary market,
giving investors access to a liquid market place where they can
trade finance parts, in a similar manner to a bond market.
Following the success of its UAE platform, Beehive is currently
exploring expansion into new markets.

22

Reference
Roundtable by Beehive; attended by business owners; Dany Eid - founder and CEO of
Pixelbug, Adam Booth and Steve Haysom Founders of Omnia FZ LLC, Ravi Bhusari
Co-Founder and & Managing Director at DUPLAYS, Shahriar Khodjasteh - Founder of
Dubai Desert Extreme (DDE) and Vishaal Shah - Panache International
SME funding gap: P2P lending to the rescue

http://www.businesspulse.ae/Enrich/story/read/ZAWYA20150510114042
Dubais ruler launches National Innovation Strategy

http://businesspulse.ae/Grow/story/read/WAM20141019152048057
SME innovation potential high, but stumbling blocks remain

http://businesspulse.ae/Grow/story/read/ZAWYA20140928110507
PWC - The top innovators and spenders
http://www.strategyand.pwc.com/global/hhttp://www.strategyand.pwc.com/global/
home/what-we-think/innovation1000/top-innovators-spenders#/tab-2015