Global Rankings of Innovation, Productivity & Quality Competitiveness
© CMC Today and Doug Macnamara, CMC, CHRL
Capabilities of innovation, productivity and quality are critical to creating and sustaining value for clients and the marketplace. They are also the basis for economic and social wellbeing of countries – and ultimately competitiveness on the global scale. Much is being made recently of us being into the 4th Industrial Revolution (4IR) era.
In this article we’ll look at the different aspects of each of these organizational capacities and also show you how various countries stack-up for their progress in the past few years and their current global competitiveness rankings.
What follows is a blend of general concepts and excerpts from 4 key global reports of 2018 as referenced throughout. Consultants can bring significant added value to their clients by better understanding the facets of these reports and advancing them with their clients.
Innovation is the lifeblood of organizational value creation and sustainability.
According to McKinsey research, 84% of executives believe that innovation is the key to achieving their objectives. However, only 6% of them are satisfied with their performance.
Further research has shown that up to 65% of budgeted revenue assumptions in major organizations are expected to come from new products/services – yet few organization have specific innovation strategies in place to develop, then deliver these innovations to market in a profitable manner.
Adding to the confusion is, not all people think of innovation the same way.
A really great representation of this was outlined by Geoffrey A. Moore in his 2004 HBR article “Darwin and the Demon – Innovating Within Established Enterprises.”
How do you stimulate innovation and get viable new products & services to market?
THIS is the multi-million dollar question!
FIRST comes Creativity, then comes Innovation!
Nothing drives creativity better than personal interaction with clients, their challenges, scanning and seeing innovations in other market sectors, and exchange of ideas within communities of practice. And there is nothing like a personal or group need/challenge/problem to focus efforts! So help your people and organizations hunt for client needs/challenges or pay attention to novel ideas in other sectors that might generate ideas for your own adaptations!
Governments at all levels talk incessantly about investing in or stimulating innovation, but few really appreciate all the work involved to build creative new ideas, then work it through to tangible application and ROI. This is facilitative leadership rather than dictatorial leadership.
According to the authors of the Global Innovation Index (now in it’s 11th edition):
the GII is a detailed quantitative tool that helps global decision makers better understand how to stimulate the innovative activity that drives economic and human development. The GII ranks 126 economies based on 80 indicators, ranging from intellectual property filing rates to mobile-application creation, education spending and scientific and technical publications.
To better understand these 80 indicators and see how many apply to your (or your clients’) organization Download the full report.
Their theme for 2018 is “Energizing the World with Innovation.”
Innovation is clearly necessary to address the energy/environment equation, but let us keep in mind that such innovation cannot be only technological. New social, economic and business models are required, including through efforts to promote smart cities, mobility solutions based on shared vehicles - and a global citizenry with better information on the impacts of various energy policies." said Bruno Lanvin, INSEAD Executive Director for Global Indices. "Ultimately, we must ensure that the solutions to our energy challenges are suited to local needs, do not entail additional disruptions, and reduce inequalities.
2018 Top 20 Rankings
As important as Innovation is to our organizations and the world at large, so is ensuring continually improving productivity and overall competitiveness. Productivity is not the easiest concept to assess, but there are two common views of how to define/measure Productivity.
- The ratio between Output volume and Input volume; GDP per hr worked.
- Multifactor Productivity (MFP) – The relative measure of the efficiency of a person, machine, factory, system, etc. in converting inputs into useful outputs. Computed by dividing the average output per period by the total costs incurred or resources (capital, energy, material, personnel) consumed in that period. (BusinessDictionary.com)
Improved productivity is what allows us to improve our quality of living, and return enhanced profitability to shareholders. In the NFP and government sectors, improved productivity is what allows us to more effectively deliver on our mandate within a steady state of donations or moreso today - declining funding. Enhanced productivity should also result in enhanced wealth throughout the community, added purchasing power particularly in the middle class stimulates robust economies and reduction in poverty as well.
Two major organizations in the world focus on this productivity challenge and provide reports that measure and hope to assist in raising productivity around the world.
World Economic Forum – Global Competitiveness Report 2017-18
In many advanced economies the value of economic growth for society has come into question as a result of increasing inequality, the challenges of technological change, and the complex impacts of globalization— including those related to trade in goods, services, and data, and to the movement of people and capital. In emerging economies, record decreases in poverty and a growing middle class have fuelled higher aspirations and demands for better public goods; these demands are now clashing with slower growth and tightening government budgets.
The goal of human-centric economic progress is the increase in sustainable and equitable welfare
for a country’s population. And while economic growth, as measured by GDP, is not an end in itself, it remains a precondition for enhancing human welfare. It provides the resources necessary for improving health, education, and security. It is therefore important for countries to monitor closely the factors that determine competitiveness, while keeping an eye on the wider societal goals and related trade-offs.
Ensuring future economic growth will require solutions that are more creative than any we have seen so far.
3 Key Findings of this report:
1. 10 years after the [global financial] crisis, the financial sector remains vulnerable.
2. More countries are able to innovate, but they must do more to spread the benefits.
3. Both labour market flexibility and worker protection are needed to ensure shared prosperity in the 4IR era.
Some Key Graphic Information:
Global Competitiveness Index 2017-18 Rankings
Covering 137 economies, the Global Competitiveness Index 2017–2018 measures national competitiveness—defined as the set of institutions, policies and factors that determine the level of productivity.
Inclusive Development Index
The Inclusive Development Index (IDI) was introduced by the World Economic Forum in 2017. It attempts to benchmark the socioeconomic development of countries in a way that provides a more nuanced vision for inclusive economic progress.
IDI data can be compared over time to show whether an economy is becoming more or less inclusive (Figure 2). Of the 103 economies for which data are available, 51 percent saw their scores decline over the last five years. This attests to the legitimacy of public concern about translating economic growth into broad social progress and underlines the challenge facing policymakers. In 42 percent of countries, the IDI overall score decreased even as GDP per capita
increased. In three-quarters of these cases, wealth inequality was a chief culprit; across all economies, it rose 6.3 percent on average during this period.
Efficient markets and macroeconomic stability are essential for economic growth. But how well growth benefits society as a whole depends on the framework of rules, incentives, and institutional capacities that shape the quality and equity of human capital formation: level and patience of real-economy investment, pace and breadth of innovation, effectiveness and flexibility of worker protections, coverage and adequacy of social insurance systems, quality and breadth of access to infrastructure and basic services, probity of business and political ethics, and breadth and depth of household asset-building.
The OECD Compendium of Productivity Indicators 2018
This second group and annual report has themes quite similar to the WEF!
From their Executive Summary:
Graphically this group has some interesting trend-charting…
1.6. Growth in GDP, labour productivity, average hours worked and employment
Selected countries, total economy, percentage change at annual rate
Improved quality touches all our lives on a daily basis, with consumer goods manufacturing, services provision and environmental protection/repair.
It wasn’t long ago that the average age of vehicles on the road in the USA was 7yrs, now it is over 10yrs. Not only are we more frugal as a society and perhaps environmentally more conscious, global manufacturing and safety standards have led to products that simply last longer and perform more highly during that longer life.
The ISO organization has been important at setting our standards for quality processes in manufacturing, in environmental practices, and services delivery – including our own ISO 20700 standards for consulting practice standards. LEAN, Six Sigma and other similar programs have been well taught around the world today. CMC-Global ISO 20700 Standards for Consulting.
Deloitte Global Manufacturing Competitiveness Index Report
This report combines aspects of quality practices with the impact of public policy and trained workforces. The report was done by Deloitte Touche Tomatsu Ltd, Japan.
Detailed assessments are provided for the Top 10 countries at the end of the report.
In looking to the future, CEO’s surveyed identified 12 drivers of advanced manufacturing technologies.
Finally, another interesting aspect of the study is the 12 drivers of global manufacturing competitiveness identified by Deloitte. These can be very helpful to consultants working with their clients.