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
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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
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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.
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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.
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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
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Deep dive technology example
Source: IDC, Gartner, Deloitte, Texas Instruments, National Lab websites.
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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…
Executives interviewed expressed:
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.
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Global R&D trends and assessing America’s standing
The gap is closing…especially with countries like China
Executives interviewed expressed:
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
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The US currently leads in many advanced industries
Source: Researcher survey conducted by Battelle and R&D Magazine.
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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.
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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
Executives interviewed expressed:
The competitiveness of a nation
ultimately depends upon the
success of its national innovation
ecosystem.
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A byproduct of historical legacies and new market dynamics
An illustration of the current US innovation ecosystem
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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?
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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
is “very important”
or “important” 71%
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
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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
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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.
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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
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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
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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
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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.
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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
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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
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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
is “very important”
or “important” 77%
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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