The Conference Board of Canada’s Report Card on Canada: Underperforming in Most Subjects
Canada possesses huge natural resource wealth, skilled human capital, and next-door access to the world’s richest economy. We have a remarkable combination of social cohesion, and cultural and linguistic diversity; enjoy relative safety in a risky world; and are benefiting from our resource endowment at a time of exploding commodity demand. We are in the gifted class among nations.
Yet, despite all of these advantages, this year’s Report Card on Canada once again tells the story of our underperformance in almost all subjects. The results are uneven. We receive “B” grades on our economic, education, and social performance, but “C”s on environmental performance and health, and a “D” on innovation. Canada has been doing better absolutely, but worse relatively.
What is to blame? It’s lagging productivity according to the Conference Board of Canada. It also reports Canada is not taking the steps to ensure that science can be successfully commercialized and used as a source of economic advantage. See the overview of the Innovation report card.
What about the people side of innovation? I think the Board puts too much emphasis on science.
We need to expand the scope of innovation
Innovation has traditionally been focused on R&D and new product development, but the scope of innovation spans the entire enterprise, from (1) offerings, (2) platform, (3) solutions, (4) customers, (5) customer experience, (6) value capture, (7) processes, (8) organization, (9) supply chain, (10) presence, (11) networking, and (12) brand. (Sawhney, Wolcott, 2006)
A recent global study of CEOs conducted by IBM reveals a shift in focus to three areas that contribute to wealth creation: Business Model Innovation, operations Innovation, and new products/services. Here are some examples of innovation beyond the scope of R&D:
- Business Model Innovation: New offerings, new distribution channels, new revenue streams. Restructure and extend the enterprise, improving both the effectiveness and efficiency of functions and processes within an organization. iTunes revolutionized the music industry. Google’s Page Rank re-invented how we look stuff up making it a uniquely effective advertising model. Dell changed the way we buy computers.
- Operations Innovation: Improving the effectiveness and efficiency of core business processes and functions. Michael Hammer defines Operational Innovation as the invention and deployment of new ways of doing work,” as distinct from process improvement. “At its heart, every operational innovation defies an assumption about how work should be done. Zero in on the assumption that interferes with achieving a strategic goal, and then figure out how to get rid of it.” Progressive Insurance chose to increase profits by focusing on customer retention and strove to initiate claim within 9 hours. Other insurance companies view claims as a nuisance and an expense, thus making claims a low priority. “It out operated its competitors. By offering lower prices and better service than its rivals.” (1)
- Products, Services and Markets: Innovation applied to customer-focused, go-to-market areas, launching new channels and delivery paths, and reaching out to new audiences. Lego collaborates with MIT to create new games, and uses customers as its R&D lab. Chicken Soup for the Soul expanded from one book to a franchise of 70+ titles, diaries, calendars, seminars, toys and games. Most content is now contributed by readers. Customers are helping companies like Nokia, Procter & Gamble, Peugeot and Lego come up with come up with new advertising campaigns, design, award-winning products, or industry-defining strategies and getting paid for their input. Source: Trendwatching.com
Canada’s D for innovation is a paradox, given we have a thriving creative economy:
The Conference Board estimates that the culture sector generated about $46 billion in real value-added GDP in 2007, which constituted 3.8 per cent of Canada’s real GDP. However, when considering the effect of culture industries on other sectors of the economy—accounting for indirect and induced effects—the overall impact was much larger. According to our estimates, the economic footprint of the culture sector was valued at about $84.6 billion in 2007, or 7.4 per cent of total real GDP.
This presents an excellent argument to apply arts-based principles and practices to business and science.
References: 1) ”Deep Change: How Operational Innovation Can Transform Your Company,” Harvard Business Review, Vol. 82, No. 4, April 2004.
