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Establishing a New Research and Education institute in an Emerging Market – A Feasibility Study

6/16/2014 Dan Cullen

The development of new Research Institutes in the Emerging Markets is an attractive but complex task. A recent study completed by Heidrick & Struggles in SE Asia identified a myriad of execution related issues to address before the launch of an institute, taking particular note of the complexities inherent in the emerging market locale.

1. Programmatic Scope

Building a research brand is an expensive and long-term project which requires the production of consistently outstanding research for upwards of a decade. Competition for the funding and talent to produce quality research is intense, with many existing players across academia, government, advisory & consulting firms, banks and existing research institutes. An education-driven approach, as opposed to a research-driven one, must contemplate the advantages of operational independence against the cost and prestige provided through university affiliation.

2. Governance

It is clear that the utilization of an international Advisory Board, with varying degrees of participation and influence, is useful. In most cases, stakeholder organizations hold at least one-two Board representatives each. Direct stakeholders typically held 50% or more of Board representation.
In an emerging market context of SE Asia, where there are multiple regulatory considerations that are subject to frequent change, it is crucial for the institute to have engaged Board representatives ensuring the institute stays informed and in compliance. Responsibility for the day-to-day navigation through the regulatory labyrinth can be delegated to a management-level director, but an informed and connected Board provides essential checks and balances.

3. Human Capital

There is a shortage of top talent relative to demand from research institutes throughout Asia. This shortage is even more intense in less developed markets where institutes can be less affluent or the market itself is a less preferred place to live due to being considered ‘out of the academic mix’. New institutes face the need to recruit ‘top talent’ but must be aware of the compensation (and overall package) and resource required to attract and then retain academic talent from overseas. Such compensation often falls outside the strict pay-bands of centres affiliated to Universities and thus, establishing flexibility to recruit the best, alongside the development of local research talent is crucial.

4. Partnerships

Partnership development with another institution is a common method to both raise awareness and to import domain expertise and academic content. However, few partner institutions have proved to have sufficient incentive to localize content, calling into question the academic benefit of such arrangements. Partnerships have been more beneficial as a source for teaching exchanges where top academics can stay in developing markets and conduct their own research. In any event, programmatic focus is an essential step before partnerships are enacted.

5. Funding

A diversity of funding sources committed over longer periods of time is essential to allow a new Institute time to establish its reputation as a research center, to attract the necessary talent and to build and pay for partnerships which will contribute to the long-term development of the Institute. Our research suggests it is useful to secure anchor funding to support a core group of researchers over a 10-15 year period of initial development. Ultimately, a healthy endowment is necessary to attract top talent into the institute and provide them with the ability to originate new research. As such, it is anticipated that the Development Director is set to become a key institutional figure during this decade.

6. Technology

As the operating environment evolves, new research institutes should think creatively in order to achieve their goals, specifically through enhanced utilization of an online platform. Although there are naturally concerns over brand dilution, offering fee-based classes can enhance awareness and build prestige through the immediate provision of cutting-edge data and knowledge. Ultimately, new institutions can gain from investment in an effective online/digital strategy and fast track their impact.

Dan Cullen Partner-In-Charge +65 63325001