In March 1990, a groundbreaking article by Michael E. Porter, a Harvard Business School professor, was published in the Harvard Business Review. Titled, “Competitive Advantage of Nations,” the article cited findings from a multi-year study into the results of the world’s largest trading countries, collectively accounting for 50 percent of all world exports in that era. Results highlighted the importance of innovation in promoting and maintaining what Porter called our national competitiveness, or our relative ability to develop and maintain economic strength on a world stage.

Often in business, headlines and simple messages gather momentum while the rich detail of the message is lost. During the two intervening decades, innovation and national competitiveness have become tightly linked in the American business press, undoubtedly leaving many Americans to believe that our country’s economic future is determined not by their work but instead by a small number of high tech companies, R&D experts and product development specialists.

However, what Porter’s research actually demonstrated and what he reported was this.

Porter said, “The only meaningful concept of competitiveness at the national level is productivity,” which allows a nation to produce a high and rising standard of living for its citizens. “Productivity is the value of the output produced by a unit of labor or capital,” and depends on both the quality and features of products and the efficiency with which they are produced. “A nation’s standard of living depends on the capacity of its companies to achieve high levels of productivity—and to increase productivity over time,” according to Porter.

The capacity to increase productivity over time: that’s where innovation comes in. Not innovation for its own sake, but innovation that increases the quality and features of products and services as well as the efficiency with which they are produced.

Everyone who is working to maintain or improve productivity and quality across industries is helping to maintain and improve national competitiveness, not just those in selected industries and roles. Through our efforts, and our failures, to maintain and enhance quality and efficiency in the production of our products and services, we all contribute to our national competitiveness, through ways in which we can never really know the full impact. Individual efforts matter.

We largely perform our work within organizations, large and small. Even if we work independently, we labor within and depend upon a network of suppliers and customers to complete our tasks. Unless we live and work off the grid in a state of complete self sufficiency, we reply upon the coordinated efforts of the accounting department, sales, production, the phone company, the internet provider, the transportation system, the architect, the grocery chain and so on.

As Porter made clear, national competitiveness depends on maintaining and improving productivity, product quality and service quality. These goals in turn depend upon individual efforts supported by effective organizational design, especially organizational design that considers linkages with both suppliers and customers.

Organizational design is critical to the effectiveness of individual efforts. The effectiveness of organizational systems determines whether, like voting, the impact of our work is multiplied, enhanced or cancelled out. Managers are critical actors in this equation, responsible for leading individual efforts, establishing and improving organizations and fostering alignment between the two.

This series will explore critical concepts high performing managers know about organizational design. Understood and applied, these ideas lead to a more effective organizational design that:
• Delivers improved service and product quality
• Lowers operating costs
• Enhances innovation
• Improves customer satisfaction
• Improves other mission-related outcomes, such as ecological sustainability
• Expands market share
• Increases profitability
• Enhances possibilities for both survivability and growth
• Sets the stage for industry leadership
• Better contributes to national competitiveness

Which of these improvements is of greatest importance to you? Which do you think will be of greatest importance to our nation in the years to come?