mental models for global venturing
DESCRIPTION
The causal chain linking motivation, innovation, knowledge, productivity, competitiveness, growth and prosperity is examined through the lens of human and intellectual assets.TRANSCRIPT
Mental Models for Global Venturing
Silburn Clarke, FRICS
Chairman, Spatial Innovision Limited
Chairman, Jamaica Business Development Corporation
a. The Innovation – Productivity – Competitiveness – Connexions
b. Macroeconomic Challenges and the SME’s Role in Export and Economic Stability
c. Nature of Global Knowledge Economy
d. Thoughts on Innovation Capacity
d. Innovation drives Productivity
e. A Sustainable Competitive Advantage Model
f. Findings on Motivation from US High-Tech firms
f. Case Study: Born Globals / International New Ventures
g. Case study: Jamaica’s first Global Enterprise
h. Take Home Messages
PRESENTATION OUTLINE
The Innovation-Productivity-Competitiveness-
Export Link
Innovative Capacity
Competitiveness Improvement
Competitive Global Marketspaces
Begins with knowledgeable engaged motivated human resources
Increased Productivity
Export Entry
Going Global
Typically the most productive local firms are the earliest to go global:
a. The firm has the confidence that they can play on the global stage
a. Having maxed out markets domestically, they need the global marketspace in order to maintain their growth trajectory
The Urgent National Export Imperative
Radical Reversal of Persistent Unsustainable Trade & Services Deficits
Current Account Deficit is Staggering
Avg 5yr CA deficit : US$1.8bln
Output must grow by 6% minimum to maintain economic stability
Planned Primary Surplus for 2012/2013 5.2% of GDP New Taxes 1.3% NHT Contributions 0.8% Planned Primary Surplus (post-implementation) 7.3% Interest Cost on Debt -8.2% NDX Interest Savings 1.3% Cost of Principal Repayment -6.5% Net Primary Surplus -6.1% Minimum GDP Growth Required 6.1%
Source: Caribbean Association of Actuaries
Economic Stability Model
In stable economies; Debt Primary Surplus approximates to ________ GDP Long Term Interest Rate The higher the tendency to a level of equality is the more stable the economy is. but in unstable economies ; Debt Primary Surplus is not equal to __________ GDP Long Term Interest Rate
Source: Caribbean Association of Actuaries
The higher the level of disequilibrium is the higher the tendency to instability
In Jamaica’s case: Our Debt to GDP ratio is
severely out of alignment with our ratio of Primary Surplus to LT Interest Rates
The numbers: 140% to 67%
Source: Caribbean Association of Actuaries
Economic Stability Model
SME’s are VITAL to Country’s Survival
Imagine 1000 SME’s exporting US$1million in goods and services: That’s US$1.0billion contributing to our Current Account
Now imagine 2000 SME’s exporting US$1million in goods and
services:
SME’s combined would add US$2.0billion and so
CLOSE OUR CURRENT ACCOUNT DEFICIT
GROW OUR GDP
STABILISE OUR ECONOMY
•The models of the last 2 eras (agricultural and industrial ) rested on Land, Labour (low-cost) and Capital (LLC) as key factors of economic production
• In the current period Knowledge is the main resource
The Global Knowledge Economy
Umemoto 2006
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 NEW KNOWLEDGE ECONOMY
Global Shift to the Knowledge Economy
(variance in GDP explained by KEI in model)
RESOURCE-BASED ECONOMIES EFFICIENCY-BASED ECONOMIES INNOVATION ECONOMIES
Transition I to II
Jamaica Guyana
Transition II to III
Trinidad
Barbados
Stage II
Dom Rep Panama
Costa Rica
Stage III
???
Stage I
Honduras 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
Thoughts on Innovation
Pronounced uniform regional group inflexion
Mission: To create new Innovation Outcomes for Firms
What is Innovation
Creation of added-value from new or Improved products, processes, methodologies, services, business models, or markets
NATIONAL INNOVATION BEGINS WITH INDIVIDUAL INNOVATION
Clarke 2012
Innovation drives Productivity
JPC: 2001-2010 period
Contribution of Industrial Sectors to Overall Performance
GDP Performance 2002-2011
Henrekson, Stockholm School of Economics
Growth Drivers and Firm Types
Replicative Firms
Efficiency Factors
Innovating Firms
Small
Businesses
GROWING SUSTAINABLE COMPETITIVE ADVANTAGE
Is the resource or capability VALUABLE ?
Is it homogeneously distributed across
all firms ? Ie RARE
Is resource or capability IMPERFECTLY mobile ?
Competitive disadvantage
Competitive parity
Sustained Competitive Advantage
Temporary Competitive Advantage
YES
NO
YES
NO
YES
NO
Mata, Feurst, Barney (1995)
Acquired /Imported Innovations
Indigenous Innovations
Is the ORGANISATIONAL
model embedded ?
YES
V.R.I.O MODEL
Study of IWB of Employees in US High-Tech Services Firms
Organisational Context
Individual Motivation
Employee Innovative Behaviour
in Workplace
Intrinsic Motivation
Integrated Motivation
Identified Motivation
Organisational Context β=0.327 β=0.267 β=0.195
Model explains (Rsq) 24% 21% 14%
Employee Innovative Work Behaviour
Autonomous Motivation Explains 36.1%
• Four 17 year olds straight out of school (Campion) decided on recording career
• Travelling, performing and harvesting revenues globally within 3 years of start-up
• Classic INV firm • SCA based on their unique content and
singing style (VRIO) • Recently completed a multi-year deal for
“The Voice / Guiding Light” to be on Japan Air Line (JAL) playlist for inter-continental and domestic flights
Born Globals / International New Ventures (INV)
T. O. K.
Case Study #1
At its peak in the 1920 the UNIA had over Divisions : 1,900 Countries : 40 globally including : United States, Cuba, Panama, Costa Rica, Ecuador, Venezuela, Ghana, Sierra Leone, Liberia, India, Australia, Nigeria, Namibia, Canada, Nigeria and South Africa.
The first Jamaican Global Enterprise
The UNIA
If you have not confidence in self, you are twice defeated in the race of life. With confidence, you have won even before you have started.
Case Study
• Need to structure economic payoffs to favour innovators and the innovating firms in order to drive sustainability, resilience, flexibility, competitiveness, export growth and prosperity • SME’s are vital to increasing exports and stabilising the economy
• Jamaica cannot assert any globally distinctive VRIO resources or capabilities from factors derived from and structurally bounded to the old agro-industrial era • Your mental models, global mindset, confidence, persistence, motivation are critical factors for taking your firm global • With confidence you are a winner before you get started (Garvey)
MESSAGES TO TAKE HOME