The Competitiveness of Nations

in a Global Knowledge-Based Economy

Harry Hillman Chartrand

April 2002

The World Competitiveness Report 1992

 World Economic Forum & Institute for Management Development, Lausanne, 1992, pp. 4-7.


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In 1992, neglecting implementation remains the most common mistake made by most senior leaders.   The all powerful Prime Minister or CEO, sitting alone in his office and devising grand schemes, is still perceived as the principal forces affecting competitiveness.  Nothing could be more wrong!



The past 12 World Competitiveness Reports have consistently shown that excellence in the implementation process is a cornerstone to competitiveness.  Japan, Germany, Singapore and Switzerland have succeeded in world markets by mastering, quickly and accurately, the transformation of ideas and technologies into products.  These countries, in contrast to large innovative countries such as the United States, Britain and France, or to large raw material producers such as Canada and Brazil, have underlined the competitive edge they have gained by meticulous implementation.

The same principle applies to companies.  Most strategies do not fail because they are ill conceived but because they are badly implemented.  Competitive organizations have correctly mastered the implementation of strategies and the management processes the linked to it.  Emphasis on total quality, speed, mass customization, service, etc. are more than just passing fads.   They outline a new competitive philosophy: “doing things right is no less important than doing the right thing!”

[HHC - “For the Chinese, virtue means doing the right thing in the right measure at the right moment... ”  Franz von, M-L., On Divination and Synchronicity: The Psychology of Meaningful Chance,  Inner City Books, Toronto, 1980, p.84]


In 1992, the World Competitiveness Report again highlights the importance of focusing on implementation.   Without denying the crucial role played by technology or market driven competitiveness, the fact is that, in a period of difficult economic conditions, countries and enterprises which are process driven - that is, implement well - are in a superior position to those which do not use this approach.



The World Competitiveness Report also stresses the role of the so-called “softer side” of competitiveness, which is defined as follows. The easily measurable hard •facts underlying the competitive performance of a country—such as GDP, growth, balance of trade SOFT and inflation—must be taken in perspective with less easily measurable softer facts—such as motivation, education, attitudes and values.

The softer side of competitiveness reflects the shift towards a knowledge-based economy. In the industrialized world today, only 15% of the active population physically touches a product. The other 85% are adding value through the creation, the management and the transfer of information. As a result, the human dimension of competitiveness has become a key success factor in a modern economy.

This human dimension of competitiveness is characterized by the longer time lag needed to reverse trends.  For example, the first results of reforming the education system in many Western economies, especially at the secondary school level, will probably only be seen in a generation, that is 20 years.  Meanwhile, the economy will be starving from a lack of badly needed skills.  Consequently enterprises will have to invest heavily in their own education programmes.



The softer side of competitiveness revolves around the relationship between competitiveness and values.  It has been demonstrated in the past that having a set of collective values based on hard work, as found in Confucian or Calvinistic societies, is more conducive to competitiveness than following individual values as some other societies do.  In looking back over the years, it is evident that values tend to evolve as countries reach different stages of their economic and cultural development.  Four identifiable stages exist: Hard Work, Wealth, Social Participation and Self Achievement. They describe the key motivation of a society.  Korea, where the average working week is 54 hours, is still in the hard work phase.  Singapore is in the next stage - wealth; although people are still working hard, they pay more attention to increasing their revenues.  Japan is now entering the following phase, where participation in decision-making becomes predominant.  Finally, Europe and the United States have reached a stage of development where individual values, especially self achievement, have replaced collective values.  It is interesting to note the Europe was in phase 1 (Hard Work) at the beginning of the century, entered phase (Wealth) after the war, the phase 3 (Social Participation) the end of the 1960’s. However there is no return on the curve.  For example, it would be hard to convince Western employee that they should resume a 54 hour working week because today their enterprise compete with Korea...

            This chart [not included] shows how competitiveness is linked attitudes and values. For example, the current pressure in Japan to reform the political system and enforce more ethical behavior in business can be explained by that society’s slow evolution towards more individual values.  In 1992, World Competitiveness is more than ever a balancing act.  To succeed, it needs the combination of two rather different approaches: on the one hand, a superior performance in the implementation process to ensure that things are done right, on the other hand, a unique sensitivity to the expectations of a changing world, where individualism and imagination play a bigger role.  Consequently, the competitive leader of the 90’s will really have to make full use of both sides of his brain.


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