{"id":132,"date":"2011-02-03T14:52:39","date_gmt":"2011-02-03T19:52:39","guid":{"rendered":"http:\/\/www.sdaconseil.com\/blog\/?p=132"},"modified":"2011-02-03T14:52:39","modified_gmt":"2011-02-03T19:52:39","slug":"innovation-technology-are-we-on-track-to-lose-the-second-global-battle","status":"publish","type":"post","link":"https:\/\/sdaconseil.com\/?p=132","title":{"rendered":"INNOVATION & TECHNOLOGY: ARE WE ON TRACK TO LOSE THE SECOND GLOBAL BATTLE?"},"content":{"rendered":"

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The integration of the BRIC nations to global commerce during the last decade of 2000-2010 has been highly disruptive to Canadian manufacturing companies across the nation.\u00a0 Many SME have lost their competitiveness, profitability, market share or simply disappeared when whole industries were caught unprepared by new game changers in manufacturing.\u00a0 In a nutshell, we have lost the first globalisation battle in manufacturing to China and India<\/em>.\u00a0 Even smaller nations, for example from ASEAN, have seen their manufacturing productivity grow dramatically.<\/p>\n

The next decade (2010-2020) will see the rise of an equally important challenge to the competitiveness of Canadian firms:\u00a0 Technology and innovation.\u00a0 There is now a greater intensity of innovations and technologies in products and services, shortening not only product life cycles but also product development cycles.\u00a0 The launching of new products and services is done at an exponential rate in many sectors, such as media, healthcare delivery, consumer electronics, while distribution has been permitted to expand globally with a large array of free trade agreements. \u00a0\u00a0Technological innovation is simply accelerating.<\/p>\n

Worldwide R&D budgets have in the past 10 years doubled to about $1.2 trillion, with the top three countries being the USA ($400 bn), China ($154 bn) and Japan ($ 144 bn).\u00a0 As a reference, total R&D expenditures in Quebec, private and public, are estimated at $ 10 bn, a drop in the bucket.\u00a0 The innovative challenge is not just only financial but also human.\u00a0 John Gapper, from the Financial Time, was highlighting the fact that China was enrolling 15% of the world’s university students and 40% of new degrees there are in science and engineering, compared with only 15% in the US.\u00a0 Meanwhile 68% of US engineering doctorates are now awarded to non-US citizens.\u00a0\u00a0 These figures point to a potential paradigm shift in technology and innovation for the next 10 years.\u00a0<\/p>\n

We mostly promote in Canada Science and R&D programs as our innovation drivers. \u00a0Asian competitors focus their innovation efforts on product driven technologies; a subtle but critical difference.\u00a0 For instance, Japan has traditionally had a weak culture of venture capital, for the good reason that industry leaders were charged to incorporate process technologies and develop product technologies.\u00a0 They have thus been able to capture \u2018fields of technologies\u2019 and keep the edge in a number of industries such consumer electronics, cars, advanced materials, robotics, etc. \u00a0Many other Asian nations are following a similar pathway whereby technology and R&D priorities are integrated into industrial policies.<\/p>\n

This is raising a number of critical questions for us, if we are not to be left behind by large nations, like China and India, but also by smaller nations like Sweden and Singapore. \u00a0<\/p>\n

1. Where do we invest our collective R&D tax dollars, in which technology fields, and in which labs, private or public?\u00a0 Not all R&D budgets and strategies yield the same results. The commercial impact of these large investments has been so far rather disappointing.\u00a0 Technology clusters have successfully driven lab discoveries and inventions.\u00a0 But our record in nurturing emerging technologies and start-up companies, build them into commercial entities, and bring their new technologies to markets has so far been well below the expectations entrusted in the large public sums dedicated to venture capital.\u00a0 We have developed a lot of technical objects that have failed to find markets and customers.\u00a0 High tech ecosystems and clusters are by definition high risk proposals to market technological innovations.<\/p>\n

2. Canada has often been a preferred location for R&D centers of multinationals.\u00a0 Canada had a pool of qualified scientists, an advantageous R&D tax credit system, and a work ethic that moulded well to multinational cultures.\u00a0 This worked well before the rise of China and India.\u00a0 For the last ten years, multinationals have shifted not only production activities to these new countries, but increasingly R&D centers as well to meet the conditions required to win big orders in China and India. R&D investment in the local country is just one of a series of conditions to net large government contracts.\u00a0 In fact we are witnessing a new geographical distribution of technology innovations, driven by R&D dollars, scientific talent, and entrepreneurship. \u00a0For instance, Huawei, a Chinese telecoms manufacturer, claims that its R&D engineers cost 40% less than in the West, and work 40% more hours. \u00a0We are at risk of seeing our own position in the field of R&D labs gradually but steadily erode.<\/p>\n

3. Finally, and perhaps more importantly, Canadian companies are shy to invest in technologies and R&D. Small size has often prevented SME to buy into cutting edge technologies, either in production or product development. While most commercial innovations usually require some prior R&D bench work, either completed internally or externally, the opposite is far from being a reliable indicator. Mere R&D budgets are not a good predictor of commercial innovations.\u00a0 Management practices affecting innovation are in the midst of profound changes.\u00a0 Companies need to learn new skills and competencies to improve their innovation output and commercial success, such as client driven innovation tools, product development, leadership in exploiting and adapting new technologies, open innovation, etc.<\/p>\n

We may think that the horizon to address such a culture change in our companies provides us with plenty of time ahead of us.\u00a0 But the fact is that the emerging champions from the emerging countries are fast learning to innovate in their own ways and expand internationally.\u00a0 The second global battle is engaged.\u00a0<\/p>\n

Andr\u00e9 Du Sault<\/p>\n

ADS teaches \u2018Mastering Innovation\u2019 for executives with his partner, Andr\u00e9 Haddad.\u00a0 He also teaches \u2018Management practices in Asia\u2019, at McGill.\u00a0 The combination of the two provides a unique perspective.<\/p>\n","protected":false},"excerpt":{"rendered":"

The integration of the BRIC nations to global commerce during the last decade of 2000-2010 has been highly disruptive to Canadian manufacturing companies across the nation.\u00a0 Many SME have lost their competitiveness, profitability, market share or simply disappeared when whole industries were caught unprepared by new game changers in manufacturing.\u00a0 In a nutshell, we have […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5,7],"tags":[46,47,22,43,45,44],"_links":{"self":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/132"}],"collection":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=132"}],"version-history":[{"count":3,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/132\/revisions"}],"predecessor-version":[{"id":136,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/132\/revisions\/136"}],"wp:attachment":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=132"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=132"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=132"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}