Hong Kong's economic advancement has been linked squarely to that of the mainland. As a principal intermediary between China and the rest of the world, the city has thrived. But paradoxically, this symbiotic relationship has prevented it from recognising the importance of innovation and productivity as powerful economic engines. Among the developed economies, Hong Kong lags sorely in both areas. Innovation and the ability to deal with change, complexity and diversity are the major forces shaping today's economies. Countries can move up the economic value chain through the production and provision of innovative, differentiated and customised goods and services that command high value. But this requires a creative and adaptable workforce that can leverage ambiguity and uncertainty to think outside the box, and break the old rules and assumptions. The habits that most stubbornly resist change are those that worked well for a period of time and led to rewards for those behaviours. Hong Kong seems entangled in just such a quandary. The fast-trading mentality embedded in our psyche seems to prevent us from concentrating on higher-margin economic activities. To compensate, we spend ever longer hours at work in order to maintain our standard of living. Indeed, among 61 developed economies, Hong Kong leads the pack in terms of the number of hours worked (2,400 hours a year, compared to 1,560 for the French). Strikingly, it ranks a mere 27th in terms of labour productivity (economic output produced per hour worked). As Hong Kong's workers spend increasingly more time in the office, they are left with less free time and thus a lower quality of life. The resulting work-related stress, exacerbated by social and environmental ills such as pollution, in turn curtails freedom and clarity of thought, and ultimately leads to lower productivity. Employers are partly at fault for erroneously equating long hours with higher output, without considering the productivity factor. The emphasis on efficiency leaves little time for employees to discover, explore, or learn to question conventional wisdom. Hong Kong companies invest little in research and development, one of the chief determinants of productivity. To make up for this, they push their employees to put in longer hours. They would do better by adopting a 'more is less' management philosophy, and spending more on R&D. Workforce education levels and preparedness also affect productivity. But access to tertiary education is still limited to about one-third of students, and the education system is largely outdated: it is based on excessive specialisation, rote learning and memorisation. Because functional skills are necessary for initial employment, universities have traditionally emphasised specialisation. However, the rapid technological advancements of recent years, combined with business innovations such as outsourcing, have seen the useful life of many of these skills decrease. With universities steering towards a four-year programme, it is an opportune time to rise to break down the artificial walls around academic disciplines. Instead of just teaching specialised subjects, we should encourage freedom of thought, experimentation and discovery by creating more cross-disciplinary learning opportunities. Instead of teaching 'engineering', 'business' or 'arts', we would be better off instilling in our students a holistic sense and a culture of 'design', where different disciplines are intermingled. Seeing different possibilities from different perspectives helps to trigger creativity and innovation. Today, jobs go where the talent is, regardless of geography. Outsourcing and offshoring occurred initially in IT and some R&D areas, and are spreading rapidly. Hong Kong's workforce is particularly susceptible to such policies as its economy becomes further integrated with that of the mainland. We must find ways to sustain our competitiveness while improving our overall quality of life. We can begin by questioning the wisdom of outdated assumptions and beliefs ingrained in our education system and work practices. To address Hong Kong's productivity plague we need to reverse the government's policy of slashing education expenditure, provide incentives for companies to invest more in R&D, develop a tradition of inquiry and experimentation among our workforce, and provide working and living environments conducive to reflection, introspection and creative thinking. Our economic well-being and quality of life will depend largely on our ability to train and attract talent. For that we must foster - both at school and at work - a culture of creativity and discovery that rewards innovation and productivity, and not routine work and long hours. Ali Farhoomand is a professor of business and director of the Asia Case Research Centre at the University of Hong Kong