I have 6 topics that I want to cover in my 15 minutes and so this is going to be a bit like speed dating as by the time I introduce a topic I will have to move on to another one. So I am really looking forward to the more generous 45 minutes interactive Q&A. For that session I would really not like us to treat it as 4 high priests here up on high speaking to a general laity, but rather one big round table as it were where we brainstorm collectively so we learn from each other and so I myself will be throwing questions out for feedback
Although substantial gains can be obtained by improving institutions, building infrastructure, reducing macroeconomic instability, or improving human capital, all these factors eventually seem to run into diminishingreturns. The same is true for the efficiency of the labour, financial, and goods markets. In the long run, standards of living can be enhanced only by technological innovation. Innovation is particularly important for economies as they approach the frontiers of knowledge and the possibility of integrating and adapting exogenous technologies tends to disappear.Romer 1990; Grossman and Helpman 1991; and Aghion and Howitt 1992.Romer, P. 1990. “Endogenous Technological Change.” Journal ofPolitical Economy 98 (October): X71–S102.Grossman, G. and E. Helpman. 1991. Innovation and Growth in theWorld Economy. Cambridge, MA: MIT Press. Chapters 3 and 4.Aghion P. and P. Howitt. 1992. “A Model of Growth through CreativeDestruction.” Econometrica LX: 323–51.
(NB: Magnus Henrekson, Stockholm School of Economics, offers the helpful suggestion that it is useful to think of the innovative entrepreneur as one who shifts the economy’s production possibility frontierupward, while a replicative entrepreneur pushes the economy upward toward the current frontier).
Low Capacity for Innovation Means:Challenge: How to move the group outwards
Overcoming Barriers to Caribbean Innovation Silburn Clarke, FRICS Chairman, Digital Society Jamaica
CARIBBEAN GROWTH FORUM PRESENTATION OUTLINEa. The Innovation- Productivity-Competitiveness-Prosperity Challengeb. We are in the throes of the Knowledge Economy • Emergence of Knowledge Economy • Correlationsc. Where does Firm Sustainable Competitive Advantage arise from • Firm Level • Knowledge, Innovation, Creativity (KIC Factors)d. Status of Caribbean Firms • Review of Capacity for Innovatione. Unleashing the Human Talent Potential • Creativity Problem Solving / Training Talent in Creativity • Supportive Firm Climate for fostering Creativityf. Perspectives and Consensus • Businesses, Policymakers & Academia • Triple Helix Modelg. Take Home Messages
DEFINITIONALValue creation in the market from New or Improvedproducts, processes, methodologies, business models, or services
INNOVATION IS A FIRM LEVEL CONSTRUCT Clarke 2012
The Innovation-Productivity-Competitiveness-Prosperity Link Prosperity Competitiveness Improvement Productivity Growth Innovative Capacity Begins with research and development
INNOVATION CRISIS, PARADOX and CONUNDRUMJamaica’s economy had been trapped in a low-growth, low-productivitymode for nearly four decades resulting in the stagnation of the standardof living of its peoples (Jamaica Productivity Centre, 2010 and WorldBank, 2011).Paradoxically, for the past two decades, Jamaica has enjoyed bothexceptionally high levels of foreign investment (Williams &Deslandes, 2008) as well as a rate of total fixed investment, over thetwo decades from the 90’s to the mid-2000’s, which was close to thoseof the fast-growing East Asian region (World Bank , 2011).
INNOVATION CRISIS, PARADOX and CONUNDRUMThe productivity of Jamaican firms is chronically low and uncompetitive(JPC, 2010). The country’s global competitiveness ranking has slippedfrom 91 through 96 to 107 over the last three year period 2009 to2011; WEF, 2010 and 2011).A sub-index of the “firm capacity for innovation” of Jamaican businessesrevealed a dismally low collective national rating of 107 out of 139 whencompared to national ratings in other economies around the globe in2010, (WEF, 2010).On the recent 2011 Global Innovation Index Jamaica was ranked 92ndout of 125 countries (INSEAD, 2011 ).
B. THE NEW KNOWLEDGE ECONOMYGlobal economy has been in transition since the 1980’s to what is variously termed aNew Economy, Digital Economy or a Knowledge Economy
The traditional economic model is dead !! Welcome the New Economy!! Umemoto 2006•The model of the last 2 eras (agricultural and industrial ) indicatedthat Land, Labour (low-cost) and Capital (LLC) were the key factors ofeconomic production•Knowledge has become the main resource
Welcome the New Economy!!“The global pace of innovation is accelerating (not only inproducts and services, but also in processes, markets, sourcing,business models, etc.) “ Umemoto 2006
The Shift to Knowledge and Innovation Stage I Transition Stage II Transition Stage III I to II II to III Honduras Jamaica Dom Rep Trinidad ??? Nicaragua Guyana Panama Barbados Costa Rica RESOURCE-BASED ECONOMIES EFFICIENCY-BASED ECONOMIES INNOVATION ECONOMIES Countries compete based on their Companies must compete by Countries begin to develop more factor endowments: primarily producing new and different goods efficient production processes and unskilled labour and natural using the most sophisticated increase product quality. resources. production processes and through Competitiveness is increasingly driven innovation. Compete on the basis of price and by higher education and training. sell basic products or Wages will have risen by so much that commodities, with their low they are only able to sustain those Wages have risen and they cannot productivity reflected in low higher wages and the associated increase prices wages. standard of living by higher value production
INNOVATION ACTIVITY EXPANDS THE PRODUCTION POSSIBILITY FRONTIER Micro Small Medium Businesses Innovating Firms Efficiency FactorsHenrekson, Stockholm School of Economics
C. Sustainable Competitive Advantage How can businesses create wealth and prosperity?•Through Knowledge, Innovation and Creativity (KIC)•The Resource Based View (RBV) identifies the combination of Valuable, Rare, Non-Inimitable and Organisation (VRIO) resources and capabilities as the source of firmmodern competition (Wernerfelt 1984, Barney 1991)•Valuable resources and capabilities ….only gives competitive parity•Valuable and Rare resources and capabilities ….. only gives temporary competitiveadvantage
How can businesses create wealth and prosperity?• Resources and capabilities which are Valuable, Rare, Inimitable plus supported by anOrganisational context, culture and processes that can exploit these resources andcapabilities especially where these are tacitly embedded or intangible (VRIO).…yieldsSustained Competitive Advantage (Wernerfelt 1984, Barney 1991, Peteraf 1993, Bounfour 2003)•Dynamic Organisational Capabilities flows from a grounding in Knowledge, Innovation andCreativity (Teece et al 1997, Grant 1996, Eisenhardt and Martin 2000)•Knowledge resources are identified as being at the heart of the advantages under theResource Based View (Conner and Prahalad, 1996) and in building national intellectualcapital for global competitiveness (Stahle and Bounfour, 2008)
SUSTAINABLE COMPETITIVE ADVANTAGE MODEL Is the resource or NO capability valuable ? YES Is it heterogeneously distributed across NO all firms ? YES Is resource or capability imperfectly mobile ? Acquired /Imported Indigenous Innovations YES Innovations NO YES Is the organisational model embedded ? Sustained Temporary Competitive Competitive Competitive Competitive parity Advantage disadvantage AdvantageMata, Feurst, Barney (1995)
Reorienting the Caribbean Firm•Caribbean cannot assert any globally distinctive VRIO resources or capabilities from factorsderived from factors structurally bounded to the old agro-industrial model•They are no longer relevant; have not been relevant for a long time•We have no distinctive land assists, no low-cost labour factor, no unique capital factor•We have to start investing our time and energies into creating, enhancing, preserving our ownKIC factor for maximal global economic leverage•Caribbean has to build its own capacity for creating indigenous innovations. The English-speaking Caribbean continues to be the only regional block of the world that is yet to develop asoftware exporting capability; (Duggan, 2008 citing Erran Carmel)•That is where our unique and special VRIO resources and capabilities lie
D. STATE OF CARIBBEAN FIRMS WEF - Firm Capacity for InnovationPronounced uniform regional group inflexion
STATE OF CARIBBEAN FIRMSHow do we radically transform the Firm Innovation Outcomes ?
FIRM-LEVEL INNOVATION ACROSS CARIBBEAN Resource-rich ≠ capacity to innovate
E. BUILDING a CULTURE and PROCESS for CREATIVE PROBLEM-SOLVINGInnovation comes out of creative thinking and creative performance;we must learn to think creatively and to do creativelyRequires reshaping the mental models and mindsets by learning bydoingRequires both Divergent and Convergent thinking
EMPLOYEE CREATIVITYFirm Innovation starts with individual employee creativity; creativethinking, fact finding and creative performance.Firm Leadership which builds Supportive Work Contexts facilitateIntrinsic Motivation which nurtures Employee Creativity
BUILDING a CULTURE and PROCESS for CREATIVE PROBLEM-SOLVINGInnovative Results Creativity Thinking Skills = Content + Process + Process Skills + Create Evaluate Options Options Tools No Judgment Yes Judgment + No Logic Yes Logic Basadur 2012 Style
OPPORTUNITIES TO RAMP UP THE ICT VALUE-CHAIN• Ubiquitous resources and capabilities such as generic IT, does not give any advantages; they are Valuable and hence gives comparative parity at best.• Competitive Advantage comes from IT-enabled processes, systems, applications and routines that are novel, unique and inimitable flowing from the creative minds of motivated talent• The Caribbean is traditionally a heavy consumer of basic and ubiquitous IT• But a poor creator/producer of IT solutions and Export IT• Region must shift focus to producing value products, services and solutions for domestic and global spaces
PROMISING POINTERS TO RAMP UP THE ICT VALUE- CHAIN• The GoJ/World Bank Digital Jam 2.0 Programme, has provided some pointers as to the untapped potential of Caribbean talent for ICT Creativity• Over 300 youngsters have responded to call to showcase their creativity using ICT ; 200 on the Mobile Apps track and 100 in the 24 hour Sports-based CodeSprint or Sports Hackathon• 60 mobile application proposals submitted with over half adjudged as being of value to market
F. PERSPECTIVES and CONSENSUSGovernments, Businesses and Academia tend to look at the challenge of firmproductivity and national competitiveness from very different perspectives.These differing viewpoints may partially explain why the regional innovationoutcomes have been underwhelming for decadesThe perspective portrayed by the Doing Business Survey is a reflection of the BusinessSector and so is understandably not critical of businesspractices, leadership, management practices, or entrepreneurial orientation.Business owners and TMT’s tend to be severely critical of governmental policy-makersin discourses on business challenges.
POLICYMAKERS PERSPECTIVE - They’ve Got it Right
LACK OF CONVERGENCE ON MAJOR CONSTRAITSConstraints / Perspectives Source Business Policy AcademiaInefficient government bureaucracy GCR/DB XPoor work ethic in national labour force GCR/DB XFirm Capacity for Innovation is low GCR XBusiness sophistication is low GCR XLow absorptive capacity X XLow level of business networking X XPromote Innovative Entrepreneurship X XCreative Firm Leadership X XFacilitate growth and development of software JCS/WITSA X Xdevelopment industryMain Development Constraints are knowledge USES Elliott Xand CREATION (MORE basic and ubiquitious “ICT” does notnecessarily translates to Improved Competitiveness )Economic payoffs should encourage high skilled, Elliott X Xentrepreneurial behaviours
Building Tripartite Consensus – The TRIPLE HELIX ModelThe "triple helix" is a spiral model of innovation that captures multiplereciprocal relationships at different points in the process of knowledgecapitalization. The triple helix denotes the university-industry-government relationship as one of relatively equal, yet interdependent,institutional spheres which overlap and take the role of the other.· The first dimension of the triple helix model is internaltransformation in each of the helices, such as the development oflateral ties among companies through strategic alliances (clustering) oran assumption of an economic development mission by universities orby the building of synergistic lateral ties amongst government researchinstitutes and labs·
TRIPLE HELIX· The second dimension is the symbiotic influence of one helix upon another, forexample, when the rules of the game for the disposition of intellectual propertyproduced from government sponsored research were changed in the USA, technologytransfer activities spread to a much broader range of universities, resulting in theemergence of an academic technology transfer profession and in facilitation for thecapitalisation of knowledge spillovers through commercialisation or where recipients ofgovernment-sponsored innovation and competitiveness awards are encouraged toshare insights and strategies and also to mentor other firms· The third dimension is the creation of a new overlay of trilateral networks,frameworks, organizations and institutions from the interaction among the threehelices, formed for the purpose of coming up with new ideas and formats for high-techknowledge-based development. These trilateral networks operate at both the macrostrategic level as well as the micro operational level( adapted from Etzkowitz 2002)
G. MESSAGES TO TAKE HOME• Need to structure economic payoffs to favour innovators and the innovating firms in order to drive sustainability, flexibility, competitiveness and prosperity• Expand / Enhance the human talent pool by infusing creative thinking, creative problem finding and solving within schools, universities, business firms and the government• Adopt Triple Helix Approach as broad model for building tripartite consensus and providing a structure, process and culture for operationalising a sustained shift in national and regional innovation outcomes
THANK YOU ! Silburn Clarke, FRICS firstname.lastname@example.org