The Sector

Porter’s Diamond in Ethical Mining and Local Procurement

Applying Porter’s notion of NCA to understand how local industries which support national mining industries have, in some cases, evolved along his continuum of NCA from factor-driven NCA, to investment-driven NCA, to innovation-driven NCA, this analysis shall illustrate where the LPRM may support local industries through this evolution.

Potential countries of entry and subsequent modes of entry, shall be identified by assessing how uptake of the LPRM by specific mining eco-system actors my contribute to firm-level and country-level symbiotic efficiencies, attracting foreign direct investment (FDI), intent in further developing NCA and therefore moving counties through porter’s continuum.

Michael Porter’s theory of National Advantage, is a model that is designed to bring an understanding of “the competitive advantage nations or groups possess due to certain factors available to them, and to explain how governments can act as catalysts to improve a country’s position in a globally competitive economic environment.

Seeing the eco-system as a system of interdependent “reinforcing factors,” Porter designed the visual representation of this system in the “Diamond Model,” which is depicted here.13 Porter’s Diamond puts forth, that in the development of a national competitive advantage, “industries cannot be made up by singular firms,” but rather “clusters of firms and all participants, in the in the wider industry.” A term of the era, intent on capturing this concept is “eco-system.” However, Porter does stipulate that while typically, industrial national competitive advantage does require the illustrated above reinforcing systems, in the natural resources sector, “competitive advantage, based on only one or two determinants, is possible.”

Here, Porter ultimately describes where a national mining industry, with a factor-driven NCA, fits into the Diamond Model. He further presumes that in this case, NCA can be achieve with “dependent industries involving little sophisticated technology or skills.”16 Within the literature of international development, such a paradigm is resonating of the “resource curse.”

Sources available upon request.

#socialinnovation #corporatesocialresponsibility #ESG #mining #localcontent #corporategovernance #sustainability #wbs #toronto #bradfordturner

The Sector

Mining Local Procurement for National Competitive Advantage

Mining Shared Value (MSV) is an initiative of Engineers Without Borders Canada (a Canadian non-profit organization), focused on “helping the global mining sector and related stakeholders maximize local procurement of goods and services.” The flag-ship initiative of MSV is the Local Procurement Reporting Mechanism (LPRM); “a set of disclosures that seeks to standardize how the global mining industry and host countries measure and talk about local procurement.” MSV is intent to embark upon a process of internationalization.

The internationalization strategy of MSV, is essentially one-in-the-same to the organization’s initiative to “internationalize” the Local Procurement Reporting Mechanism (LPRM), and to see the tool adopted as a global standard reporting practice, across the international mining industry. The Sector Inc has conducted an analysis to identify the factors toward determining the countries, and modes of entry, i.e. the factors toward the uptake of the LPRM in said geographies, upon which the internationalization strategy of MSV shall be based.

Initially conceived of as a tool for economic development, according to MSV, “local procurement epitomizes the positive role that the private sector can play in development;” further providing that “in host economies, purchases of local goods and services can create local jobs, promote skills and technology transfers, strengthen domestic and international economic linkages, and aid in the formalization of the local economy.”

Acknowledging the LPRM’s original intended purpose, this analysis shall identify factors to uptake with a pivot to the original view: the LPRM as a tool, applied to developing National Competitive Advantage (NCA); as described by Michael Porter.

Porter outlined three stages of national competitive advantage:

At the Factor-Driven Stage, “competitive advantage is based exclusively on endowments of labor and natural resources” and “supports only relatively low wages” and attracts little foreign direct investment, nor fosters significant innovation.

At the Investment-Driven Stage, “efficiency in producing standard products and services becomes the dominant source of competitive advantage.” Porter explains that “economies at this stage concentrate on manufacturing” and “outsourced service exports,” they “achieve higher wages, but are susceptible to financial crises’ and external, sector-specific demand shocks.”

At the Innovation-Driven Stage, “country-level and firm-level work together to drive innovation,” wherein “the ability to produce innovative products and services at the global technology frontier, using the most advanced methods becomes the dominant source of competitive advantage.” At this stage, “the national business environment is characterized by strengths in all areas of the diamond together with the presence of deep clusters.”

Clusters become “critical motors, not only in generating productivity, but also encouraging innovation at the world frontier.” Institutions and incentives “supporting innovation are also well developed, increasing the efficiency of cluster interaction.”Companies “compete with unique strategies that are often global in scope, and invest strongly in advanced skills, the latest technology, and innovative capacity.”

The Sector Inc’s full analysis is available upon request…

#socialimpact #ESG #corporatesocialresponsibility #wbs #mba #internationaldevelopment #unitednations #mining #localcontent

The Sector

A Lack of Internal Digital Capabilities in Ontario’s Third Sector

According to a study by the Ontario Not-for-Profit Network, “most technical requirements of non-for-profit organizations in Ontario are outsourced.” The study presents evidence that this suggests a fundamental and systemic issue, impeding the participation of many organizations, in digital transformation, given what will be the requirement of the “centrality of technology to many organizations” (ONN, 2019). Outsourcing does little to build internal capacity or to create a culture of digitally skilled Third-Sector employees. The report from the ONN further purports that “government investment” in nonprofit collaboration addressing “the digital skills gap in the sector must start with strategic investment (ONN, 2019).

Imagine Canada’s 2006 Report on The Sector, writes that “particularly when considering how we structure our internal teams and work with partner organizations, is an important piece and a step in the right direction.” But “it’s not enough: what is needed is recognition within the sector that investing in digital skills training is an investment in ourselves and the future of the sector.” As Imagine Canada’s Bruce MacDonald noted last year, “Effective administration enables fundraising, infrastructure and staffing that are essential to fulfilling a charity’s mission. Real impact requires real investment” (Imagine Canada, 2006). Overall, this body of literature revealed that Ontario’s Third Sector is experiencing a broad spectrum of technology challenges that require a response.

The Sector Inc’s overall approach of this research project was to test the dissertation’s hypothesis against the findings gleaned from the empirical research, triangulated with the evidence in the reviewed literature.

From preliminary discussions with experts and a review of the literature, it’s apparent that consensus exists that:

1. In divesting itself from service delivery as it’s core business and investing in it’s own “transformation,” The Government of Ontario has created a fragmented, strained, “Third Sector” of service-delivery organizations, who’s operational inability to participate in digital transformation, now hinder the effectiveness of the very transformation, which government is undertaking.

2. The digital transformation of government, to improve its capacity to enable Third Sector organizations effectiveness, will not improve outcomes, without Third Sector organizations undergoing digital transformation as well.

3. The Big Four do not see government transformation outside of digital transformation, as one of their core business areas; they do not see government transformation without digital transformation at all.

Simply put, this approach asks the question: what would the critical success factors to successful consulting engagements be?

#socialinnovation #digitaltransformation #government #ops #wbs #toronto #impactinvesting #consulting #nonprofit #corporatesocialresponsibility

The Sector

The Sector’s Digital Skills Gap

The abundance of third-sector authored literature, conveys that anecdotally and empirically, there is a digital skills gap in the Third Sector. The Non-profit Technology Enterprise Network report, 2017 Nonprofit Technology Staffing and Investments Report showed that while the majority of surveyed nonprofits in Ontario feel they have the tools they need, they” are less confident about having enough skilled staff or training to effectively use their technology for their work.” (NTEN, 2017).

The study found that while most organizations i.e. 52%, self-identified as having a stable tech infrastructure and mature policies, over 25% of those surveyed indicated they were “functioning” i.e. just meeting basic needs or “struggling.” Given the rapid changes that technology has brought about in most other sectors, from “automated checkouts in retail”

to “open data sets in government,” it is apparent why an abundance of third-sector organizations indicate that they are behind the digital curve (NTEN, 2017).

While the Non-profit Technology Enterprise Network is headquartered in the United States and the survey sample presents a limited percentage of Ontario-based respondents, the study’s findings hold true for the Third Sector of Ontario. Good Works State of the Web Nation report (the very first online benchmark report for the Ontario nonprofit sector), found that “60% of Ontario respondents say web is not valued by organizational leadership,” and that most “indicated challenges in using and integrating different web tools, such as social media, search engine optimization, and data collection (Good Works, 2019).”

#digitaltransformation #socialimpact #socialinnovation #government #wbs #sustainability #SDG

The Sector

Third Sector Can’t Afford to Buy and Firm’s Can’t Afford to Provide

Data from Statistics Canada’s 2006 “Report on the Volunteer & Charitable Sector,” shows that of the organizations which fall within the standard distribution of the annual revenue of Ontario’s volunteer and charitable organizations (i.e. the Third Sector), 54% have annual revenues under $100,000; 35% between $100,000 to $1,000,000 and 11% over $1,000,000.

The organizations which fall under the “small” and “medium” classifications above, represent the Third Sector. Within the non-profit sector in Ontario, there are approximately 70,000 of these organizations.

These organizations are non-profit organizations and generally seek to spend 80% of revenue on programming and 20% on administration and fundraising. While at times the procurement of management consulting services could fall within programmatic spend, it is most likely found in the administration sections of the operating budgets making only 20% of the total revenue figures stated available for the purchase of management consulting services.

A review of 100 consulting services contracts revealed the ranges of deal-size for contracts awarded to The Big Four are:

1. Small: $50,000 to $149,999 36%

2. Medium: $150,000 to $2,999,999 46%

3. Large: $3,000,000 and up 18%

The average range of an engagement overall was $2,100,000, making these services for the most part, well out the range of purchase for the Third Sector.

From the evidence, it becomes clear that finding economic efficiencies in social services, which will yield a return on the investment already made in the digital transformation of Government, is a natural evolution of the relations between Government and the Third Sector. And as stated, the assumption is made that the lead agent of this change is a “digital transformation and that this will require involvement of consultants. As there is a limited provincial budget, the consultant fees will have to be found via a reallocation of funding.

#MBA #socialinnovation #consulting #digital #government #wbs #bradfordturner #impactinvesting #nonprofit #toronto #thirdsector #impact #policy #socialfinance