talent driven innovation advanced technologies and …...say the trend is “very important” 77 %...

Talent driven innovation

Advanced technologies and the

critical role of talent

Ben Dollar

Partner, Human Capital Consumer & Industrial

Products Leader | Deloitte

Advanced technologies

and manufacturing

competitiveness

3 Copyright © 2016 Deloitte Development LLC. All rights reserved.

Deloitte and the Council interviewed nearly three dozen CTOs and a dozen U.S. National

Laboratories / broader research facilities, in order to identify the most promising technologies

currently under development within the U.S. as well as determine perspectives on what

challenges are most critical to U.S. manufacturing competitiveness moving forward.

The Advanced Technologies Initiative

Deloitte and US Council on Competitiveness | Advanced Technology Initiative


Advanced Industries drive national prosperity…

The Linkages between Advanced

Technology and Innovation, Advanced

Industries, and National Prosperity

Executives interviewed expressed:

Innovation and advanced technologies

are critical to company-level

competitiveness

• enables differentiation by creating

premium products, processes, and

services that capture higher margins.

• are core components of many

companies’ overall future growth

strategy.

Advanced industries as defined by Brookings Institution are based on two criteria: R&D

spending per worker (80 percentile) and share of workers (21%) working in occupations

requiring high STEM knowledge.



And generates more jobs, output and wages.

Executives interviewed

expressed:

Advanced manufacturing

strengthens economies

and creates higher-

income jobs

• higher-skilled workforce

that earns higher wages,

• create a greater

proportion of jobs in the

entire value chain, and

• lead to a higher standard

of living for the nation

overall.



Advanced technologies will unlock new opportunities…

…and underpin

global

manufacturing

competitiveness

US: Predictive Analytics, IoT, & Advanced Materials are considered the most promising

China: Prioritizing ‘Predictive Analytics’ and other similar technologies to close gap with

the United States as well as create competitive advantage through HPC

Europe: Integrated European priorities are very much aligned with “Industry 4.0” –

creating an integrated and connected closed loop design & build process as key focus



Deep dive technology example

Source: IDC, Gartner, Deloitte, Texas Instruments, National Lab websites.



Top-notch technology firms

Strong, dedicated industrial clusters

First-rate research talent and

infrastructure

Global R&D trends and assessing America’s standing

The United States is a global leader…


The United States is a global leader in

research, technology, and innovation.

America is positioned well to realize the

promise of advanced technologies due to:

Source: Deloitte analysis based on OECD and UNESCO Institute for Statistics data.



Global R&D trends and assessing America’s standing

The gap is closing…especially with countries like China


The gap between the US and other

nations in terms of R&D

competitiveness is narrowing rapidly.

They attributed this primarily to the

growing competitiveness of emerging

nations, though:

• Aggressively attracting STEM talent

• Building domestic R&D capabilities

• Offering attractive R&D incentives to

foreign countries

Meanwhile slower economic growth,

especially in developed countries, has

curtailed R&D budgets, contributing to the

narrowing of the gap



The US currently leads in many advanced industries

Source: Researcher survey conducted by Battelle and R&D Magazine.



Human Capital Trend: Shape culture, drive strategyCulture

Global Human Capital Trends 2016 report

Senior leaders

must work with HR

to align culture to business goals

Culture helps

bind people

together and can

drive execution

and consistency

say the trend

is “very important”

or “important” 86%

believe “culture is a

potential competitive

advantage”

believe they understand

their culture well today

believe they have

the “right culture”

28%

19%

82%

Executives interviewed expressed…

Innovation and economic growth have a

compounding and symbiotic effect

A strong, innovative, and technology-savvy

manufacturing base leads to long-term

economic prosperity and growth. This

industrial base flourishes when a country

provides an integrated support structure,

thereby attracting more businesses, which,

in turn, creates more demand for high-

paying jobs, thereby attracting more top-

tier talent.


An innovation ecosystem is vital to competitiveness

An ecosystem links resources invested in the knowledge economy to increased

profits by creating new products, processes, and/or services


The competitiveness of a nation

ultimately depends upon the

success of its national innovation

ecosystem.



A byproduct of historical legacies and new market dynamics

An illustration of the current US innovation ecosystem



Regional innovation clusters not only act as magnets for top students, researchers,

scientists and VC funds, but also enable fruitful partnerships between research and

educational institutions and corporations, that can lead to revolutionary research

outcomes in key focus areas. Examples include:

Regional ecosystem clusters

FL

NM

DE

MD

T

X

OK

KS

NE

SD

NDMT

WY

COUT

ID

AZ

NV

WA

CA

OR

KY

ME

NY

PA

MI

VT

NH

MA

RICT

VAWV

OHINIL

NCTN

SC

ALMS

AR

LA

MO

IA

MN

WI

NJ

GA

DC

Biotech

Pharma

Energy

Automotive

Oil and Gas

Technology

Aerospace

?

Can the US sustain the

necessary elements to continue

to replicate and grow our

innovation ecosystem clusters

to advance our nation’s

competitiveness as a whole?



Human Capital Trend: The gig economyDistraction or disruption?

expect to increase

contingent workers

in next 3-5 years

expect to increase the use of robotics

and cognitive technologies42%

The corporate

workforce is changing:

Increasing use of

contingent freelance

workers and growing the

role of robotics and

smart machines

51%

One-third of

US workers are

freelancers —

and growing

The top three

challenges cited

include

Legal or regulatory

uncertainty

20%

Corporate culture

unreceptive to

part-time and

contingent staff

18%

Lack of

understanding

among leadership

18%

say the trend



Executives interviewed expressed…

Regional innovation clusters not only act as magnets for top

students, researchers, scientists and VC funds, but also

enable fruitful partnerships between research and

educational institutions and corporations, that can lead to

revolutionary research outcomes in key focus areas.

All these factors and variables are correlated with actions

taken by both government and corporate firms. Thus, the

onus of creating a highly developed innovation ecosystem

should be borne by both business and government.

Opportunities and

challenges faced by US

businesses


Opportunities and challenges faced by US businessesA host of promising global opportunities will help spur growth

US multinationals

see substantial

opportunities to

bringing

advanced

technologies to

new markets as a

result of:

6Xincrease in

middle class

consumption

Global urban

population

grows to

6.3Bby 2050



Asia-Pacific will drive both demand and competition

Opportunities: US is positioned in growth markets

1766

2030

1403

2015

In next 15

years, a 25%

increase

Source: 2015 Global

aerospace and defense

industry outlook, Deloitte

Source: Deloitte analysis based on data from IHS

Automotive.

Source: Deloitte analysis based on data from American Chemistry Council.

In 2015, US to

reach 17 million

China ($1,831 B),

US ($801 B), and

Japan ($291 B) are

the top three

nations

Source: Deloitte analysis based on data from IHS.



Source: 2014 Skills Gap Study, Deloitte and The Manufacturing Institute.

Challenges: Talent shortage is a major hurdle to the

sustainability and growth of US companies



Other advanced nations such as Japan, Germany and South Korea face far more

severe demographic challenges than that in the US

Challenges: Aging populations represent challenges

By 2030, India and the US are

well positioned to take advantage

of their younger population

segments

Other nations, like Japan,

Germany and South Korea, will

have higher proportion of aged

population (65+ years) than that in

the US



Asian students outperform American students in international assessment, while

China and India lead in the number of STEM graduates

Challenges: Waning interest in STEM fields in US

Executives interviewed

expressed

Source: Deloitte analysis based on data from OECD, National Bureau of Statistics of China and

University Grants Commission, India.

US is gradually losing

ability to hire and retain

STEM talent

Government is boosting

STEM education, but

more is needed



Higher demand for skilled workers in advanced manufacturing industries, and

decline in apprenticeship programs, are aggravating US skills gap

Challenges: Decline in apprenticeship programs

Focus has shifted to acute

demand for high-skilled workers

Too few skills-based training

programs are a cause for concern

While other countries, such as

Germany, have increased

apprenticeship programs and

designed programs that better

prepare their students to enter the

manufacturing workforce

Source: US Department of labor, Federal Institute for Vocational Training (Germany) and

Federal Statistical Office, Germany.



Current immigration policies make it difficult to recruit and retain top global talent

Challenges: Impact of stringent immigration = US

brain drain

Source: Department of Homeland Security, Wall Street Journal.

Tremendous

pent-up demand

for temporary

work visas

Abnormally long

waiting period for

green cards

International

students’ work

visa woes results

in brain drain



US companies are concerned about the high costs and complexity of regulatory

compliance, and need to be more predictable and competitive

Challenges: Unfavorable regulatory environment

Source: National Association of Manufacturers.

Source: World Economic Forum.

NAM estimate federal regulations cost/worker: (2012)

$9,991

$19,564

Manufacturing Ave

All Businesses

Make corporate tax rates more competitive

Reduce regulatory and tax credit uncertainties

(like permanent R&D tax credit)

Complex, outdated, and overly burdensome

regulatory mechanisms need to be update

Stringent immigration policies creating a brain

drain in the United states


of companies are

“ready” for people

analytics, up 1/3

from last year

32%of companies report

replacing core HR

systems over next

two years

40%

say the trend



People

analytics brings

together HR

and business

data

Challenge will

be to transform

insights into

business value

are now using HR data to predict and

improve workforce performance51%

feel they are conducting multi-year

workforce planning48%

Human Capital Trend: People analyticsGaining speed

Executives interviewed…

Are confident that the US has the ability to endure and

prosper. Recognizing the great economic power of

advanced industries is meant to sharpen the sense of

urgency, America has already benefitted significantly from

the growth of advanced industries.

The US requires a long-term strategy that, when aligned

with short-term priorities, can foster the innovation

ecosystem and further encourage the flow of required

investments, growth in innovation capacity, the

development of STEM talent, and the creation of high-

value jobs.

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talent driven innovation advanced technologies and …...say the trend is “very important” 77 %...

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