Innovation is a Key Ingredient to Competitiveness

In. Abdulwahab A. Al Maimani

Global Indicators Expert

National Competitiveness Office

Sultanate of Oman

Innovation is a key ingredient to competitiveness through a process of innovation creation, then diffusion, and, lastly, impact. The process of innovation creation answers a fundamental question: how is innovation created, and what factors influence innovation creation? Innovation diffusion is about the spread of innovation to the users, systems, and a certain economy. Where the impact occurs after innovation is absorbed and adopted creates an impact on different magnitudes and time intervals.

The typical innovation process starts with the need to solve a problem, and there is a saying that “need is the mother of innovation.” Innovation is a cycle of need, followed by ideation which is the stage to plot the solution, and problem-solving is done. Finally, the production stage is where the process of prototyping and production of the final end solution to the problem happens.

Innovation creation for competitiveness can adopt an approach from the report published by a certain organization. For example the Global Innovation Index, the report is published in a certain year will go through a cycle of Innovation Creation that will take a mere six months, followed by the stage of Innovation Diffusion for another six months, and Innovation Impact will only be achieved and reflected in the reports after at least a cycle or two of the report.

A major stage in innovation in competitiveness is Innovation Diffusion, and this stage is about how initiatives float into reality, and how they diffuse to the end users. The initiatives can be classified into five types that are; Quick Initiatives, Air Initiatives, Soft Initiatives, Medium Initiatives, and Hard Initiatives.

Quick Initiatives which tackle data-relevant issues take less than three months. Air Initiatives are supposed to be always running regardless of countries ranking. These act like air to the countries. Soft Initiatives require no new assets to be formed, however, such initiatives would require at least six months. Medium Initiatives usually are in a layer that includes most policy-changing initiatives. Hard Initiatives are initiatives requiring large capital, and large resources to improve a country’s ranking.

The last stage of innovation in competitiveness is the Innovation Impact which is realized in different time intervals such as; Instant, Short, Medium, Long, and Strategic. The Instant impact occurs instantly to the target end users, and also reflects the nearest version to the release. The Short term impact achieved, and usually not very high in the magnitude of the impact. The Medium-term impact is where the most impact of innovation occurs. This is explained by the normal to slow adoption rate, and also absorption of different segments of end users also reflected after 2–3 cycles of the index. The long-term impact is achieved usually in a period of 3–5 years, such impact occurs by creating a shift in culture, perception, and adoption of new products or processes, and also the changes might reflect only in major changes in the reports. Strategic impacts are extended term impact that is mainly generational impacts that are perceived by the next generations. However, these impacts serve a better purpose than only improving the ranks of countries.

The effects of innovation in competitiveness can be summarized as follows:

● Innovation cycle serves a large portion of what improvements countries initiate in tackling competitiveness issues.

● Different countries adopt many different methods in improving their respective ranking, and generally, most methods fit into the cycle of innovation.

● Major report of Innovation is the Global Innovation Index, stating that innovation consists of inputs and outputs.

● Different initiatives can create different levels of magnitude of impact of innovation on a certain economy. More complex economies usually benefit more from disruptive innovations, while less developed benefit more from iterative innovations.

Experience from the Sultanate of Oman in implementing a Project Management Approach as an innovation-driven approach to tackle competitiveness issues. The approach is about treating every cycle of the index as a project. This ensures that continuous improvement on the approach to improve rank is in place. The approach serves different benefits to competitiveness since it is measured on a defined cycle and with pre-defined pillars. Even the minor / major changes occurring on different reports will always be part of the initiation phase where definition will happen.