Rising in the Innovation Rankings Requires 'Strengthening People'

"Innovation" keeps coming up in conversations lately. Not with the same frequency as "tot mom trial," but definitely a recurring theme when talking about outsourcing. Businesses want more "innovation" — after all, it does drive economic growth and even booms. Many companies, especially smaller ones, are turning to their sourcing partners for help with IT innovation. According to the latest Harvey Nash CIO Survey, nearly three-fourths of IT leaders said their companies have to innovate or will lose market share.

I had a chance to talk with PA Consulting's Chris Nuttall about that survey. The opportunities for Latin American companies who can partner up and deliver innovation to IT buyers are significant.

Then just a few days ago appears the 2011 edition of the Global Innovation Index. It's compiled by INSEAD ("the leading international business school") along with some "knowledge partners" from the corporate and organizational worlds. The index is meant to recognize countries that provide the best environment for innovation and have actual results to show for it. They seem to have a pretty fancy way of scoring the various factors and "pillars," but I won't begin to try to explain or criticize their methodology. Other, smarter people can do that much better.

Maybe it is a silly idea to think you can really assess and rate "innovation." It's an adaptable word and an effervescent concept open to many interpretations. But still, it's fun to look at the list, just like it's fun to look at a list of "100 best guitar players of all time," even though you know it's faulty because they rated Frank Zappa at #45. But still, you look. It's interesting to see where your favorites are ranked, whether it's a country or musician or sports team.

Number 1 on the Global Innovation Index is Switzerland. (Anyone out there sourcing Switzerland?) You have to scan down to number 38 to find a Nearshore country: Chile. The report notes Chile is using increased revenues from commodity exports to fund innovation. Costa Rica comes in at 45, and Brazil at 47. Brazil spends much more of its GDP on innovation than any other country in Latin America, according to a graph in the GII report. One positive trend is that most Latin American countries have moved up in the latest standings. For fellow factoid junkies, some other rankings from the region:

58. Argentina
64. Uruguay
71. Colombia
74. Paraguay
77. Panama
81. Mexico
83. Peru

Kazakhstan is next on the list. Algeria comes in last, at 125.

If nothing else, the index might inspire government officials and business executives to look at their country's ranking and ask, "How is it that as an enabler of innovation we are only x number of spots away from Afghanistan?" (Actually, Afghanistan is not on the list, but you get the idea.) Some of the supporting documents might help IT service providers and trade associations make the case that in order to boost the national economy, investment in innovation and R&D is necessary.

The GII text can get a bit dense in spots, but anyone involved in doing business in the Nearshore region ought to at least skim the Latin America section. The authors write about the role of public policy in fostering innovation, lessons that can be learned from the region, success stories like Brazil's efforts in sugarcane ethanol and bio-fuels production, and in general paint a pretty positive future for innovation, in at least some LatAm countries.

But the most important take-away for the Nearshore is this bit of advice from the project's compilers:

"Strengthening innovation in Latin America begins with strengthening people — researchers, entrepreneurs, managers, employees, suppliers, and customers of firms. Empowering people to innovate calls for more and better education for all. This involves developing different types of competencies: basic literacy skills, occupational skills, and global knowledge economy skills, as well as offering adequate retraining opportunities. As countries pursue these educational goals, they will equip their economies to become better able to absorb, adopt, adapt, and generate new ideas and technologies."