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Institute releases Twelfth Working Paper

Toronto – To achieve our full economic potential in Ontario and Canada, we need strong management talent to drive innovation and develop world-beating strategies.  While new evidence indicates that we are among the world’s leaders in our management talent; it also shows that our managers could do better.

This is one of the key conclusions of the Working Paper Management matters, released today by the Institute for Competitiveness & Prosperity.  In its research, the Institute has found a persistent prosperity gap with our US counterparts as measured by differences in Gross Domestic Product (GDP) per capita.  While Canada and Ontario are among the world’s leaders in prosperity, we continue to trail US results – and this gap has held steady during this current economic turmoil. 

“We have found that our poor productivity performance, our businesses’ under investment in technology, and our inferior performance in innovation are factors that explain this gap,” said Roger Martin, Dean of the University of Toronto’s Joseph L. Rotman School of Management and Chairman of the Institute for Competitiveness & Prosperity.  “We think lack of strong management also explains our inability to achieve our economic potential.  More effective managers can drive innovation in their organizations and be important partners with scientists and engineers in bringing new discoveries to market.”     

The Working Paper draws on research to show that management occupations are important contributors to prosperity in Canada’s city-regions – as important as scientific talent.  It also shows that the development of new management techniques, such as just-in-time logistics and lean manufacturing, can lead to economy-wide growth in productivity and prosperity.  “Management breakthroughs can be as important to our prosperity as new scientific discoveries,” said Martin.

The Working Paper presents the results of the first-ever study of the capabilities of Canada’s and Ontario’s management in the manufacturing sector versus other leading economies in the world.  According to Martin, “we find that our manufacturing management is among the best in the world, ranking in the top tier of the various measures. Nevertheless, the research points to improvement opportunities, especially in performance management and people management.”

The research also indicates the importance of education to strong management.  In Canada and other countries, companies with university-educated managers tended to perform better.  “This is a challenge for Canada,” said Martin, “as only a third of our managers are university educated, while just over a half of US managers are.  Better educated managers are important to our prosperity growth.”

The study also pointed to the importance of global aspirations for strong management – and vice versa.  Throughout the world, multinational firms are better managed than firms that operate only inside their borders.  “In effect, strong management and global growth are mutually supportive in a virtuous circle,” said Martin.

The results are especially heartening when we examine the performance of our global leaders – those Canadian firms that have established a top five leadership position in their market segments around the world. These global leaders have better management capabilities than other multinationals operating in Canada and US firms overall.  “Canadian firms can and do compete globally and those that achieve global leadership are among the best managed companies in the world.”

One note of caution from the research is that already the top companies in China and India are better managed than half our Canadian firms.

The Working Paper calls on public policy to ensure that developing strong management is an important element of research and innovation strategies – recognizing that there is more to the success of these policies than a focus on research in the hard sciences.  Included in this is the need for greater emphasis on business education and research at the post secondary level.  It also reiterates the importance of an environment that ensures our economy is open to international competition.

As well, the Working Paper calls on business leaders to focus efforts in raising the quality of their management through effective recruiting and ongoing training.  In addition, it urges them to aspire for global leadership in their markets.

About the Institute
The Institute for Competitiveness & Prosperity is an independent not-for-profit organization established in 2001 to serve as the research arm of Ontario’s Task Force on Competitiveness, Productivity and Economic Progress. The Institute is supported by the Ontario Ministry of Economic Development. Working papers published by the Institute are primarily intended to inform the work of the Task Force. In addition, they are designed to raise public awareness and stimulate debate on a range of issues related to competitiveness and prosperity.

The complete report can be downloaded directly from:
http://www.competeprosper.ca/download.php?file=WP12.pdf

For more information contact James Milway, Executive Director of the Institute for Competitiveness & Prosperity at 416.920.1921 ext. 222

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