T&T's experiencing some growing pains. The days of boom and brimming coffers have passed. In its wake are government deficits, a scramble to stimulate oil production in the energy sector and a construction sector waiting to construct. In this reality, the country's long-professed pursuit of diversification hasn't yet borne fruit, it's unable to capitalise on high oil prices-with oil production at around 100,000 barrels a day and its failed deep water bid round-because of conflict in the Middle East and manufacturers are challenged by the China threat. According to Harvard Business School professor, Michael Porter, T&T needs to move beyond its inherited prosperity-in which the Government is the central actor in the economy-to created prosperity resulting from productivity in producing goods and services. To this end, the Government's intent on restructuring the economy to support innovation.
But is T&T innovative when it comes to business? "The answer is yes and no," said Miguel Carrillo, executive director and professor of strategy at the Arthur Lok Jack Graduate School of Business. Relative to the Caribbean, T&T is innovative when it comes to energy.
But when you widen the scope, he explained, to include North America or Brazil, T&T is not that innovative in the application of our technologies or the availability of great consumer experiences.
And that has to do with mindset, he explained. For while T&T has an entrepreneurial mindset, it's really about the propensity of the T&T population to take risk, stated Carrillo. "We are quite a risk-averse country. We feel uncomfortable with uncertainty and we like clarity. You can see the size and frequency and the amount of magazines and newspapers in the country and know that it is amazing the amount of information we generate for such a small population. The other is that life is sweet in Trinidad. The GDP per capita for T&T among developing countries in the Americas is the second highest after Chile. We are ahead of most of Latin America. So apparently, there is no need for innovation. Most persons think there is no need to have their own business, they just need a job. There has not been a real crisis, to bring innovation. "Need is not the mother of invention, it is desperation. I think this country needs to understand that, at some point in time, the economic structure might not hold for future generations. So we are living in a silent crisis, but we still have the opportunity to create a better future. If I have to pick one reason it is because we do not have users, shoppers and consumers that demand great products and services, we settle for less.
"For example, in hotels and resorts, and supermarkets, the service is well below other countries, such as Colombia, Ecuador and the USA. But it is not the fault of the supply side, it's the fault of the demand side. We really have not learnt to be sophisticated. So we have to demand innovation," he explained.
While Carrillo's assessment is grim, he observed that T&T is innovative in consumer products, food and beverages and financial services. The problem, he said, is that it is not systemic or predictable. "It comes and goes. There is no stream of innovation to sustain new growth, which basically means that 25 per cent of current sales comes from products from two years ago and 10 per cent comes from new products or services. It's about making innovation a process and we really do not know how to innovate," he said. He pointed out that innovation is the intent of companies, it is not at the top of the agenda.
"That is the challenge; the intent of innovation and the actual realisation. There is also the problem of the lack of an ecosystem for innovation. We lack venture capitalists, and having institutions that will actually supply enough space for experimentation of new business models. If we want to keep growing, we have to go outside. Latin America is a great potential market for Trinidadians. Colombia is a great place to make business, and is this mindset is actually pervasive across the business community. It's a mindset barrier, which we have to fix." And Carrillo explains there are gains to be got when the country's innovative; it becomes more competitive.
He observed that competitiveness is about increasing the level of productivity. "For one level of input you increase dramatically your level of output, and it is likely you will increase your productivity and therefore your prosperity and that is with innovation. It's not that it is one path, it's the only path. You cannot increase your productivity dramatically without innovation. It's very simple," he said. According to the Global Entrepreneurship Monitor (GEM), T&T has a high level of entrepreneurial activity. "The problem is not entrepreneurship; it is relevant entrepreneurship and innovative entrepreneurship. According to the GEM, we are one of the least innovative in the world, one of the bottom three. The opportunities we pursue are irrelevant," said Carrillo.
Toward Innovation
"The restructuring of the economy has to create both domestic and export oriented companies that garner their competitiveness from innovation that is generally driven from the exploitation of knowledge. At present, the advanced and specialised skills that drive this kind of competitiveness is scarce in T&T.
"Hence we have a two-fold problem. We have to help the current businesses reconstruct themselves such that they can become globally competitive. It is common knowledge that many of our current exporting firms cannot make it in the wider global market," said Senator Mary King. The onus is now on the country's businessmen, in particular its manufacturing sector, to take the lead to make this country's products and thereby its businesses more competitive. T&T is now ranked 84 on the Global Competitiveness Index (GCI). This index considers the country's competitiveness against 139 countries.
The 84th position is an improvement from the 2008-2009 index, which saw T&T at 86 out of 133 countries.
The five most problematic areas of doing business were identified as: crime and theft, poor work ethic in the labour force, corruption, inefficient government bureaucracy, and inadequate financing. Senator King said the causes of and the solutions to these problems will be addressed by the Government's Innovation and Competitive Council. "However, we have to look further into the future, to the time when there will be no more petroleum and though the future is uncertain pick some sectors, technologies, in which we can build new companies to produce new products and services. "Hence we have to put in place the innovation system that will produce these skills, SMEs, with adequate financing and infrastructural support. We can also use IT as an enabling set of technologies to implement what is now called conceptual innovation (eg the current social networks as products, mobile communications applications). These are tasks for the economic development board," she said. "The Vision 2020 of the past regime was produced by many of our talented people and, as a vision, it is subsumed in our strategic management system, the Innovation Diamond." The Ken Gordon-chaired board was appointed last week. Both the Government's Innovation and Competitive Council and its Economic Development Board will work in tandem with the ministry. "The council's focus is on the present while the Economic Development Board is building the future economy."