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 February 22 nd , 2017 Kingston. Jamaica
PRESENTATION OUTLINE 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
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 Prosperity Competitiveness Improvement Productivity Growth Innovative Capacity Begins with research and development
Present Status: 2001-2015 period (JPC) 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). 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
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 output (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
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
The traditional economic model is dead !! Welcome the New Economy!! Umemoto 2006 • 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
POLICYMAKERS PERSPECTIVE - VISION 2030
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 High Threat Levels: Jobs/Tasks/Activities that are simple, repetitive, routinized Low Threat Levels: Jobs/Tasks/Activities that require creativity, innovativeness, thinking, intellect
Global Shift to the Knowledge Economy
The Shift to Knowledge and Innovation Stage I Transition Stage II Transition Stage III I to II II to III Haiti Honduras Guyana Barbados Trinidad Nicaragua Venezuela Jamaica Costa Rica Dom Rep Panama EFFICIENCY-BASED ECONOMIES RESOURCE-BASED ECONOMIES INNOVATION ECONOMIES Countries compete based on their Countries begin to develop more Companies must compete by factor endowments: primarily efficient production processes and producing new and different goods 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 commodities, Wages will have risen by so much that with their low productivity they are only able to sustain those Wages have risen and they cannot reflected in low wages. higher wages and the associated increase prices standard of living by higher value production WEF 2014-15
INNOVATION EXPANDS THE PRODUCTION POSSIBILITY FRONTIER
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 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? • 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)
SUSTAINABLE COMPETITIVE ADVANTAGE MODEL Is the resource or capability valuable ? NO YES Is it heterogeneously distributed across all firms ? NO YES Is resource or capability imperfectly mobile ? Indigenous Acquired /Imported YES Innovations Innovations NO YES Is the organisational model embedded ? Sustained Temporary Competitive Competitive Competitive Competitive parity Advantage disadvantage Advantage Mata, Feurst, Barney (1995)
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 • 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.
D. STATE OF CARIBBEAN FIRMS INNOVATION CRISIS, PARADOX and CONUNDRUM 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 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 ).
FIRM-LEVEL INNOVATION ACROSS CARIBBEAN Resource- rich ≠ capacity to innovate
WEF - Firm Capacity for Innovation Pronounced uniform regional group inflexion
IMPROVING STATE OF CARIBBEAN FIRMS How do we radically transform the Firm Innovation Outcomes ?
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)
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