Reinv inven enting ing Caribbean ibbean firms ms for the Future - - PowerPoint PPT Presentation

Reinv inven enting ing Caribbean ibbean firms ms for the Future ure

Silburn Clarke, FRICS Vice Chairman: Labour Market Reform Commission, MLSS Chairman: Technology, Innovation and Productivity Committee Chairman/CEO: Spatial Innovision Limited

10th ILO Meeting of Caribbean Ministers of Labour

ILO / MLSS / CCL / CEC

• Kingston. Jamaica

February 22nd, 2017

• a. The Innovation- Productivity-Competitiveness-Prosperity Challenge
• b. We are in the throes of Knowledge-based Economy / Fourth Industrial Revolution
• Emergence of Knowledge Economy
• Correlations
• c. Where does Firm Sustainable Competitive Advantage arise from
• Firm Level
• Knowledge, Innovation, Creativity (KIC Factors)
• d. Status of Caribbean Firms
• Review of Firm Capacity for Innovation
• e. Conclusion: The Triple Helix Model / Paradigm
• f. Take Home Thoughts to Ponder

PRESENTATION OUTLINE

DEFINITIONAL

Value creation in the market from New or Improved products, processes, methodologies, business models, or services

PRODUCTIVITY EFFECT

Productivity improvement is paramount for achieving sustainable and inclusive economic growth (GDP), growth in employment, improved living standards (GDP/Capita) and global competitiveness …… without productivity growth the well-being of society will either stagnate or deteriorate.

FIRM INNOVATION BEGINS WITH INDIVIDUALS

Clarke 2012

The Innovation-Productivity-Competitiveness-Prosperity Link

Innovative Capacity Competitiveness Improvement Prosperity

Begins with research and development Productivity Growth

Present Status: 2001-2015 period (JPC)

Average 14year TFP: -0.5% pa: (level of efficiency & intensity of labour and capital in producing output) Factors: Quality of management, governance, investment climate, innovation, technology, knowledge and information 2012-2015: +ve TFP trend

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).

Present Status: 2001-2015 period (JPC)

Average 14year CP: -0.1% pa: (Capital stock outpacing GDP) 2009-2015: +ve CP trend

INNOVATION CRISIS, PARADOX and CONUNDRUM

Over the 14-year period (2001-2015) labour productivity measured as

• utput (real value added GDP) per worker declined at average rate of

0.7% per annum (JPC) 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 fast- growing East Asian region (World Bank , 2011). One explanation of paradox : Low skills levels in the workforce

Global economy has been in transition since the 1980’s to what is variously termed a New Economy, Digital Economy or a Knowledge Economy

• B. THE NEW KNOWLEDGE ECONOMY

The traditional economic model is dead !!

• 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

Welcome the New Economy!!

Umemoto 2006

POLICYMAKERS PERSPECTIVE - VISION 2030

High Threat Levels: Jobs/Tasks/Activities that are simple, repetitive, routinized Low Threat Levels: Jobs/Tasks/Activities that require creativity, innovativeness, thinking, intellect

Fourth Industrial Revolution

Driven by continuous advances in: Machine Automation, Nanotechnology, Global Communications, Ubiquitous IT, Quantum Mechanics/Theory, Pervasiveness of Mobile Devices, Big Data / Analytics, Apps / Software, Robotics, Artificial Intelligence, Cloud Platforms, Particle Physics, Smart Energy Tecnologies

Global Shift to the Knowledge Economy

RESOURCE-BASED ECONOMIES EFFICIENCY-BASED ECONOMIES INNOVATION ECONOMIES

Transition I to II Honduras Venezuela Transition II to III Barbados Costa Rica Panama Stage II Guyana Jamaica Dom Rep Stage III Trinidad Stage I Haiti Nicaragua

Countries compete based on their factor endowments: primarily unskilled labour and natural resources. Compete on the basis of price and sell basic products or commodities, with their low productivity reflected in low wages. Countries begin to develop more efficient production processes and increase product quality. Competitiveness is increasingly driven by higher education and training. Wages have risen and they cannot increase prices 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

The Shift to Knowledge and Innovation

WEF 2014-15

INNOVATION EXPANDS THE PRODUCTION POSSIBILITY FRONTIER

• 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 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

How can businesses create wealth and prosperity?

• C. Sustainable Competitive Advantage

• 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)

How can businesses create wealth and prosperity?

SUSTAINABLE COMPETITIVE ADVANTAGE MODEL

Is the resource or capability valuable ? Is it heterogeneously distributed across all firms ? Is resource or capability imperfectly mobile ?

Competitive disadvantage Competitive parity Sustained Competitive Advantage Temporary Competitive Advantage

YES YES YES NO NO NO

Mata, Feurst, Barney (1995)

Acquired /Imported Innovations Indigenous Innovations

Is the organisational model embedded ? YES

• 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
• The English-speaking Caribbean investments in social capital (including education and

training) lags the rest of the Caribbean and the general CALA region (Beckles, 2017)

• Blue Ocean Strategy: 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 continuous improvement and for creating

indigenous innovations.

Reorienting the Caribbean Firm

Review of Firm Capacity to Innovate The WEF GCR sub-index “firm capacity for innovation” for Jamaican businesses revealed a dismally low collective national rating of 107 out

• f 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

• ut of 125 countries (INSEAD, 2011 ).

INNOVATION CRISIS, PARADOX and CONUNDRUM

• D. STATE OF CARIBBEAN FIRMS

FIRM-LEVEL INNOVATION ACROSS CARIBBEAN

Resource-rich ≠ capacity to innovate

WEF - Firm Capacity for Innovation

Pronounced uniform regional group inflexion

How do we radically transform the Firm Innovation Outcomes ?

IMPROVING STATE OF CARIBBEAN FIRMS

• E. Building Tripartite Consensus – The TRIPLE HELIX Model

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-industry- government relationship as one of relatively equal, yet interdependent, institutional spheres which overlap and take the role of the other.

Triple Helix – DNA for National Innovation

Rests on Pillars of: Vision, Leadership, Innovation, Collaboration · The first dimension of the triple helix model is internal transformation in each of the helices, · The second dimension is the symbiotic influence of one helix upon another, · The third dimension is the evolution of new overlays of trilateral networks among the partners, ( adapted from Etzkowitz 2002)

• 1. Are the institutions comprising the training and education

ecosystem presently optimised for delivering the workforce of today and of the future (ECLAC, 2015)

• 2. Are the level of investments (public & private) supporting the

creation of knowledge and intellectual capital adequate to energise and drive the necessary economic growth which the region seeks

• 3. How do we ensure that our Helix partners continually improve the

training and educational ecosystem for most effective delivery

• 4. How do we mitigate the loss / leakage / outward migration of talent

to the metropoles

F: Some THOUGHTS for TRIPLE HELIX Partners to Ponder

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

• F. BUILD a CULTURE and PROCESS

for CREATIVE PROBLEM-SOLVING

Firm Innovation starts with individual employee creativity; creative thinking, fact finding and creative performance. Firm Leadership which builds Supportive Work Contexts facilitate Intrinsic Motivation which nurtures Employee Creativity

EMPLOYEE CREATIVITY

CREATIVE PROBLEM-SOLVING

Creativity Thinking Skills

Innovative Results = Content + Process + Process Skills + Tools + Style

Create Options

No Judgment No Logic

Evaluate Options

Yes Judgment Yes Logic

Basadur 2012

“If we remain in pretence We will be on the wrong side of the fence“ (adapted from Bob Andy, Fire Burning)  Strategic plans projections for a future of sustained high growth in Caribbean economies must be undergirded by growing current investments in training, education, skills development, managerial quality. The one will not happen without the other  Need to restructure economic payoffs to favour innovators and the innovating firms in

• rder to drive sustainability, flexibility, competitiveness and prosperity

 Expand / Enhance the quality & quantity of the human talent pool by infusing creative thinking, creative problem finding and solving within schools, universities, business firms and the government  Adopt Triple Helix Model as broad collaborative framework for building tripartite consensus and providing a structure, process and culture for operationalising a sustained shift in national and regional innovation outcomes

• G. MESSAGES TO TAKE HOME

About the Author: https://www.researchgate.net/profile/Silburn_Clarke https://www.linkedin.com/in/silburnclarke/ Labour Market Reform Commission: https://www.linkedin.com/in/labourmarketreform/ Publications: https://www.researchgate.net/publication/313314490_Breaking_down_barriers_to_Caribbean_prosperity_through_a_ restructuring_of_the_economic_payoffs_for_innovation https://www.researchgate.net/publication/260638458_Strategies_for_enhancing_Jamaican_competitiveness_in_the_gl

• bal_knowledge_economy

https://www.researchgate.net/publication/305687139_Priority_policy_recommendations_for_transforming_individual _productivity_and_SME_competitiveness_in_Jamaica https://www.researchgate.net/publication/299747565_Towards_a_talent-driven_outward-oriented_globally- competitive_SME_framework_Discussion_Paper https://www.researchgate.net/publication/303114038_Synthesis_of_major_cross- cutting_recommendations_from_the_TIPC_Working_Groups https://www.researchgate.net/publication/299604127_Human_Factors_Affecting_Productivity_in_Jamaica_Technical_ Report_on_Preliminary_Findings

Links

THANK YOU !

Silburn Clarke, FRICS silburn@spatialvision.com