Overcoming Barriers to Caribbean
Innovation
Towards a Restructuring of the Innovation Payoffs

Silburn Clarke, FRICS
Chair...
CARIBBEAN GROWTH FORUM
PRESENTATION OUTLINE
a.

The Innovation- Productivity-Competitiveness-Prosperity Challenge

b.

We ...
DEFINITIONAL

Innovation....
Value creation in the market from New or Improved products, processes,
methodologies, busines...
INNOVATION IS A FIRM LEVEL CONSTRUCT

Clarke 2012
The Innovation-Productivity-Competitiveness-Prosperity
Link
Prosperity

Competitiveness Improvement
Productivity
Growth

I...
INNOVATION CRISIS, PARADOX and CONUNDRUM
Jamaica’s economy had been trapped in a low-growth, low-productivity
mode for nea...
INNOVATION CRISIS, PARADOX and CONUNDRUM
The productivity of Jamaican firms is chronically low and uncompetitive
(JPC, 201...
B. THE NEW KNOWLEDGE ECONOMY
Global economy has been in transition since the 1980’s to what is variously termed a
New Econ...
3. The traditional economic model is dead !!
Welcome the New Economy!!

•The model of the last 2 eras (agricultural and in...
Welcome the New Economy!!
“The global pace of innovation is accelerating (not only in
products and services, but also in p...
Global Shift to the Knowledge Economy
The Shift to Knowledge and Innovation
Stage I

Transition
I to II

Stage II

Transition
II to III

Stage III

Honduras
Nic...
INNOVATION ACTIVITY EXPANDS THE
PRODUCTION POSSIBILITY FRONTIER
Henrekson, Stock
holm School of
Economics,
Micro Small Med...
C. Sustainable Competitive Advantage
How can businesses create wealth and prosperity?
•Through Knowledge, Innovation and C...
How can businesses create wealth and prosperity?

• Resources and capabilities which are Valuable, Rare, Inimitable plus s...
SUSTAINABLE COMPETITIVE ADVANTAGE
MODEL
NO

Is the resource or
capability valuable ?

YES

NO

Is it heterogeneously
distr...
Reorienting the Caribbean Firm
•Caribbean cannot assert any globally distinctive VRIO resources or capabilities from facto...
D. STATE OF CARIBBEAN FIRMS
WEF - Firm Capacity for Innovation
Pronounced uniform regional group inflexion
STATE OF CARIBBEAN FIRMS
How do we radically transform the Firm Innovation Outcomes ?
FIRM-LEVEL INNOVATION ACROSS CARIBBEAN
E. BUILDING a CULTURE and PROCESS
for CREATIVE PROBLEM-SOLVING
Innovation comes out of creative thinking and creative perf...
BUILDING a CULTURE and PROCESS
for CREATIVE PROBLEM-SOLVING
Innovative
Results
=
Content
+
Process
+
Process
Skills
+
Tool...
OPPORTUNITIES TO RAMP UP THE ICT VALUE-CHAIN
•

Ubiquitous resources and capabilities such as generic IT, does
not give an...
PROMISING POINTERS TO RAMP UP THE ICT VALUECHAIN
•

The GoJ/World Bank Digital Jam 2.0 Programme, has provided some
pointe...
EMPLOYEE CREATIVITY
Firm Innovation starts with individual employee creativity; creative
thinking and creative performance...
F.

PERSPECTIVES and CONSENSUS

Governments, Businesses and Academia tend to look at the challenge of firm
productivity an...
TOP CONSTRAINTS - Business Perspective
POLICYMAKERS PERSPECTIVE
TRIPLE HELIX - Model for Building Tripartite Consensus
The "triple helix" is a spiral model of innovation that captures mu...
TRIPLE HELIX
·
The second dimension is the symbiotic influence of one helix upon another, for
example, when the rules of t...
LACK OF CONVERGENCE ON MAJOR CONSTRAITS
Constraints / Perspectives

Source

Business

Inefficient government bureaucracy

...
G. MESSAGES TO TAKE HOME
•

Need to structure economic payoffs to favour innovators and the
innovating firms in order to d...
THANK YOU !
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Overcoming Barriers to Caribbean Innovation – Towards a Restructuring of the Innovation Payoffs :: Silburn Clarke

  1. 1. Overcoming Barriers to Caribbean Innovation Towards a Restructuring of the Innovation Payoffs Silburn Clarke, FRICS Chairman, Digital Society Jamaica
  2. 2. CARIBBEAN GROWTH FORUM PRESENTATION OUTLINE a. The Innovation- Productivity-Competitiveness-Prosperity Challenge b. We are in the throes of the Knowledge Economy • • c. Where does Firm Sustainable Competitive Advantage arise from • • d. Emergence of Knowledge Economy Correlations Firm Level Knowledge, Innovation, Creativity (KIC Factors) Status of Caribbean Firms • Review of Capacity for Innovation e. Unleashing the Human Talent Potential • • Creativity Problem Solving / Training Talent in Creativity Supportive Firm Climate for fostering Creativity f. Perspectives and Consensus • • Businesses, Policymakers & Academia Triple Helix Model g. Take Home Messages
  3. 3. DEFINITIONAL Innovation.... Value creation in the market from New or Improved products, processes, methodologies, business models, or services Schumpeter 1934
  4. 4. INNOVATION IS A FIRM LEVEL CONSTRUCT Clarke 2012
  5. 5. The Innovation-Productivity-Competitiveness-Prosperity Link Prosperity Competitiveness Improvement Productivity Growth Innovative Capacity Begins with research and development
  6. 6. INNOVATION CRISIS, PARADOX and CONUNDRUM Jamaica’s economy had been trapped in a low-growth, low-productivity mode for nearly four decades resulting in the stagnation of the standard of living of its peoples (Jamaica Productivity Centre, 2010 and World Bank, 2011). Paradoxically, for the past two decades, Jamaica has enjoyed both exceptionally high levels of foreign investment (Williams & Deslandes, 2008) as well as a rate of total fixed investment, over the two decades from the 90’s to the mid-2000’s, which was close to those of the fastgrowing East Asian region (World Bank , 2011).
  7. 7. INNOVATION CRISIS, PARADOX and CONUNDRUM The productivity of Jamaican firms is chronically low and uncompetitive (JPC, 2010). The country’s global competitiveness ranking has slipped from 91 through 96 to 107 over the last three year period 2009 to 2011; WEF, 2010 and 2011). A sub-index of the “firm capacity for innovation” of Jamaican businesses revealed a dismally low collective national rating of 107 out of 139 when compared to national ratings in other economies around the globe in 2010, (WEF, 2010). On the recent 2011 Global Innovation Index Jamaica was ranked 92nd out of 125 countries (INSEAD, 2011 ).
  8. 8. B. THE NEW KNOWLEDGE ECONOMY Global economy has been in transition since the 1980’s to what is variously termed a New Economy, Digital Economy or a Knowledge Economy
  9. 9. 3. The traditional economic model is dead !! Welcome the New Economy!! •The model of the last 2 eras (agricultural and industrial ) indicated that Land, Labour (low-cost) and Capital (LLC) were the key factors of economic production •Knowledge has become the main resource
  10. 10. Welcome the New Economy!! “The global pace of innovation is accelerating (not only in products and services, but also in processes, markets, sourcing, business models, etc.) “ Umemoto 2010
  11. 11. Global Shift to the Knowledge Economy
  12. 12. The Shift to Knowledge and Innovation Stage I Transition I to II Stage II Transition II to III Stage III Honduras Nicaragua Jamaica Guyana Dom Rep Panama Costa Rica Trinidad Barbados ??? RESOURCE-BASED ECONOMIES EFFICIENCY-BASED ECONOMIES Countries compete based on their factor endowments: primarily unskilled labour and natural resources. Countries begin to develop more efficient production processes and increase product quality. Compete on the basis of price and sell basic products or commodities, with their low productivity reflected in low wages. Competitiveness is increasingly driven by higher education and training. Wages have risen and they cannot increase prices INNOVATION ECONOMIES Companies must compete by producing new and different goods using the most sophisticated production processes and through innovation. Wages will have risen by so much that they are only able to sustain those higher wages and the associated standard of living by higher value production
  13. 13. INNOVATION ACTIVITY EXPANDS THE PRODUCTION POSSIBILITY FRONTIER Henrekson, Stock holm School of Economics, Micro Small Medium Businesses Innovating Firms
  14. 14. 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, NonInimitable and Organisation (VRIO) resources and capabilities as the source of firm modern competition (Wernerfelt 1984, Barney 1991) •Valuable resources and capabilities ….only gives competitive parity •Valuable and Rare resources and capabilities ….. only gives temporary competitive advantage
  15. 15. How can businesses create wealth and prosperity? • Resources and capabilities which are Valuable, Rare, Inimitable plus supported by an Organisational context, culture and processes that can exploit these resources and capabilities especially where these are tacitly embedded or intangible (VRIO).…yields Sustained Competitive Advantage (Wernerfelt 1984, Barney 1991, Peteraf 1993, Bounfour 2003) •Dynamic Organisational Capabilities flows from a grounding in Knowledge, Innovation and Creativity (Teece et al 1997, Grant 1996, Eisenhardt and Martin 2000) •Knowledge resources are identified as being at the heart of the advantages under the Resource Based View (Conner and Prahalad, 1996) and in building national intellectual capital for global competitiveness (Stahle and Bounfour, 2008)
  16. 16. SUSTAINABLE COMPETITIVE ADVANTAGE MODEL NO Is the resource or capability valuable ? YES NO Is it heterogeneously distributed across all firms ? YES Is resource or capability imperfectly mobile ? Acquired /Imported Innovations YES NO Competitive disadvantage Mata, Feurst, Barney (1995) Competitive parity Temporary Competitive Advantage Is the organisational model embedded ? Indigenous Innovations YES Sustained Competitive Advantage
  17. 17. Reorienting the Caribbean Firm •Caribbean cannot assert any globally distinctive VRIO resources or capabilities from factors derived 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 own KIC factor for maximal global economic leverage •Caribbean has to build its own capacity for creating indigenous innovations. The Englishspeaking Caribbean continues to be the only regional block of the world that is yet to develop a software exporting capability; (Duggan, 2008 citing Erran Carmel) •That is where our unique and special VRIO resources and capabilities lie
  18. 18. D. STATE OF CARIBBEAN FIRMS WEF - Firm Capacity for Innovation Pronounced uniform regional group inflexion
  19. 19. STATE OF CARIBBEAN FIRMS How do we radically transform the Firm Innovation Outcomes ?
  20. 20. FIRM-LEVEL INNOVATION ACROSS CARIBBEAN
  21. 21. E. BUILDING a CULTURE and PROCESS for CREATIVE PROBLEM-SOLVING Innovation comes out of creative thinking and creative performance; we must learn to think creatively and to do creatively Requires reshaping the mental models and mindsets by learning by doing Requires both Divergent and Convergent thinking
  22. 22. BUILDING a CULTURE and PROCESS for CREATIVE PROBLEM-SOLVING Innovative Results = Content + Process + Process Skills + Tools + Style Creativity Thinking Skills Create Options No Judgment No Logic Evaluate Options Yes Judgment Yes Logic
  23. 23. 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
  24. 24. PROMISING POINTERS TO RAMP UP THE ICT VALUECHAIN • 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
  25. 25. EMPLOYEE CREATIVITY Firm Innovation starts with individual employee creativity; creative thinking and creative performance. Firm Leadership which builds Supportive Work Contexts facilitate Intrinsic Motivation which nurtures Employee Creativity
  26. 26. F. PERSPECTIVES and CONSENSUS Governments, Businesses and Academia tend to look at the challenge of firm productivity and national competitiveness from very different perspectives. These differing viewpoints may partially explain why the regional innovation outcomes have been underwhelming for decades The perspective portrayed by the Doing Business Survey is a reflection of the Business Sector and so is understandably not critical of business practices, leadership, management practices, or entrepreneurial orientation. Business owners and TMT’s tend to be severely critical of governmental policy-makers in discourses on business challenges.
  27. 27. TOP CONSTRAINTS - Business Perspective
  28. 28. POLICYMAKERS PERSPECTIVE
  29. 29. TRIPLE HELIX - Model for Building Tripartite Consensus The "triple helix" is a spiral model of innovation that captures multiple reciprocal relationships at different points in the process of knowledge capitalization. The triple helix denotes the university-industrygovernment 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 internal transformation in each of the helices, such as the development of lateral ties among companies through strategic alliances (clustering) or an assumption of an economic development mission by universities or by the building of synergistic lateral ties amongst government research institutes and labs ·
  30. 30. TRIPLE HELIX · The second dimension is the symbiotic influence of one helix upon another, for example, when the rules of the game for the disposition of intellectual property produced from government sponsored research were changed in the USA, technology transfer activities spread to a much broader range of universities, resulting in the emergence of an academic technology transfer profession and in facilitation for the capitalisation of knowledge spillovers through commercialisation or where recipients of government-sponsored innovation and competitiveness awards are encouraged to share 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 three helices, formed for the purpose of coming up with new ideas and formats for high-tech knowledge-based development. These trilateral networks operate at both the macro strategic level as well as the micro operational level ( adapted from Etzkowitz 2002)
  31. 31. LACK OF CONVERGENCE ON MAJOR CONSTRAITS Constraints / Perspectives Source Business Inefficient government bureaucracy GCR/DB X Poor work ethic in national labour force GCR/DB Policy X Firm Capacity for Innovation is low GCR X Business sophistication is low GCR Academia X Low absorptive capacity X X Low level of business networking X X Promote Innovative Entrepreneurship X X Creative Firm Leadership X X Facilitate growth and development of software development industry Main Development Constraints are knowledge USES and CREATION (MORE basic and ubiquitious “ICT” does not JCS/WITSA X X Elliott X necessarily translates to Improved Competitiveness ) Economic payoffs should encourage high skilled, entrepreneurial behaviours Elliott X X
  32. 32. 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 and culture for operationalising a sustained national innovation processes
  33. 33. THANK YOU !

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