GE Global Innovation Barometer: Political and business leaders are united in seeing innovation as the answer to the challenges of job creation but there is an interesting paradox on the perceptions of which countries are in the lead.
On Tuesday in his State of the Union address, President Obama said America faces a challenge to maintaining its technological superiority, similar to what it faced in 1957 when it was shocked by the news that the Soviet Union had launched its Sputnik satellite into Space.
“This is our generation’s Sputnik moment,” the presidentsaid and instead of a goal of sending men to the moon, the US challenge today is to develop world-class teachers, engineers, cleaner energy, smarter scientists and faster trains.
“With so many baby boomers retiring from our classrooms, we want to prepare 100,000 new teachers in the fields of science, technology, engineering, and math,” he said.
Finfacts has often highlighted the changing model of globalization.
A HSBC Bank report, which was published last summer says investment in education and R&D is transforming Asia’s skills base. The model where the West did the development work and the East took care of low value production is dead. In future, forward looking businesses will take advantage of the growing skills of Asian workers.
Asian economies are a major global source of skilled workers not only in sectors such as engineering, technology, nanotechnology and sciences but also in those such as ICT services and consultancy. The most obvious example is probably India. Its leviathan Tata Group spans steel, cars and information technology. Tata Consultancy Services, a multi-billion dollar enterprise based in Mumbai, employs around 160,000 IT consultants in 42 countries. Wipro Technologies and Infosys, both headquartered in Bangalore, home to India’s “Silicon Valley” are also world names in ICT services, together employing more than 220,000. Delhi’s HCL, meanwhile, one of India’s original “garage” start-ups, is giving all three a run for their money.
Ireland is among countries which need to move beyond comfort food spin and fairytales; implement significant structural reform and open its eyes to the challenges that will otherwise engulf it.
Applied Materials, one of the world's biggest supplier of machines that make solar panels and computer chips, whose headquarters is in Santa Clara, in Silicon Valley, along with Intel's, has transferred its chief technology officer to China. Applied Materials has opened a research facility in Xi’an - - a city about 600 miles southwest of Beijing, known for the discovery nearby of 2,200-year-old terra cotta warriors - - which has 47 universities and other institutions of higher learning, churning out engineers with master’s degrees who can be hired for $730 a month, according to the New York Times.
Finfacts article, Sept 2010: US, China and the rickety state of conventional globalization
"There's a lot of evidence that what US companies do in China or India for example, actually has positive effects on the US economy in terms of jobs, research, sales, production, and investment in the United States," Dr. Laura Tyson, S.K. & Angela Chan Professor of Global Management at Berkeley University said to CNBC in Davos. Fred Bergsten, director of the Peterson Institute for International Economics and Sir Martin Sorrell, CEO of WPP also joined the discussion:
General Electric is America's biggest business conglomerate. In 1892, inventor Thomas Edison's Edison General Electric Company merged with a competitor, the Thomson-Houston Company and formed the General Electric Company. GE was one of the original 12 companies listed on the newly-formed Dow Jones Industrial Average in 1896 and is the only survivor. Jeffrey Immelt is the ninth chairman of GE and succeeded Jack Welch in 2001.
Last week, President Obama named Jeffrey Immelt to head
his outside panel of economic advisers, replacing former
Federal Reserve chairman Paul Volcker.
On Wednesday, Jeffrey Immelt's GE launched the GE Global Innovation Barometer (pdf), to coincide with the opening of the World Economic Forum in Davos, Switzerland.
The barometer is based on an independent survey of 1,000 business executives in 12 countries and it found that 95% of respondents believe innovation is the main lever for a more competitive national economy. But just how to accomplish that will take a uniquely 21st century path, as respondents are prioritizing technology that addresses local needs; looking for innovation from smaller organizations; and pursuing strategic partnerships to make tangible innovation happen. All of these areas are converging as problems are now bigger -- which involves a wider system of players.
Beth Comstock, chief marketing officer and senior vice president, GE, said the study illustrates that the rules around innovation are changing. Companies must “embrace a new innovation paradigm that promotes collaboration between all players - - big, small, public, and private - - fosters creativity, and emphasizes solutions that meet local needs.”
Comstock, who is a WEF panelist this year, added that the results reveal that “the new face of innovation” has shifted from “innovations that simply make money to innovations that also create good in people’s lives.” In the survey, more than three-quarters of executives (77%) said they believe the greatest innovations of the 21st century will be those that help address human needs, such as improving health quality or enhancing energy security, more than those that simply create the most profit. They believed innovation would be a catalyst for improving multiple areas of citizens’ lives in the next 10 years, including health quality (87%), environmental quality (85%), energy security (82%), and access to education (81%).
The survey also found that there is a focus on new players when it comes to innovating, with 75% of respondents saying that the way companies innovate in the 21st century will be “totally different” than the way they innovated in the past. The same percentage said that more than ever, individuals and small- to mid-size enterprises (SMEs) will be as innovative as large companies.
At the same time, 76% of executives said that innovation must be tailored to local market needs.
In terms of collaborations, 86% said that 21st century innovation is about partnerships between several entities as opposed to the success of a single organization.
Countries perceived as being the most innovative by their peers don’t necessarily seem that optimistic about their own innovation future.
For example, the survey asked executives to name the three countries they viewed as the leading innovation champions; the US topped the list with 67%, followed by Germany (44%), Japan (43%), and China (35%).
Then, the survey explored the degree to which executives believed innovation would improve the lives of their countries’ citizens and the likelihood that that improvement would happen based on current conditions. Ironically, none of the top four countries that were considered innovation champions by their peers were optimistic about the power and prospect of innovation. Both China and Japan were designated “pessimists,” while the US and Germany were designated “traditionalists,” falling in between optimism and pessimism.
The survey suggests that the innovation-optimism paradox may be due to perceived barriers to innovation in specific countries. For example when asked what would help their companies to innovate, 56% of respondents in China cited the need for more financial support from public authorities. In Japan, 36% cited the need to work with universities and research labs for product development.
In the survey, “optimists” were convinced that their countries’ transformations will be innovation- and education-driven. More than others, they believe innovation is about partnerships with public authorities and universities - - and about tapping into the creativity of individuals and small- and medium- sized businesses.
For example, when comparing the results from optimists such as Brazil to the global results, that country sees a stronger appetite for innovation among its youth and more positive results from public-private partnerships. But, there are also challenges, as in Brazil’s case, there’s a view that it’s harder for companies to specifically partner with universities for their R&D needs.
Alternatively, the outlook for “traditionalists” - - the camp that the US fell into - - is that innovation has not changed that much and is mainly driven by hard science. The view is that innovation is seen as serving global markets or service needs, but not specifically societal needs.
Meanwhile, the “pessimists” see that innovation serves the common good, but that it’s mainly developed in large companies. For example, Japan and South Korea, which fell into the pessimist camp, were less inclined to find society as a whole taking risks when it comes to innovation. They also see less support from public authorities for innovation - - and also see private investors as staying too much on the sidelines.
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