As a child, upon meeting a friend of my parents, I would immediately ask what grade they were in. My dad explained that after your last year of high school, you stopped counting that way. People kept learning stuff, but they didn’t say they were in 17th grade, or 30th grade. After a certain point, the set of knowledge is not well-ordered. MBAs are not 19th graders, or 21st graders – they’re just, well, MBAs.This is the message that the folks over at INSEAD who compiled the Global Innovation Index have yet to learn. The recently released index purports to rank 125 ”countries/economies”. The ”countries/economies” are ranked in ”terms of their innovation capabilities and results.”Switzerland finishes 1st. Sweden comes in a close 2nd. Singapore gets the bronze. The U.S. came in 7th, behind Hong Kong, Finland and Denmark, and just ahead of Canada. The presumption that the rankings are somehow meaningful undermines a lot of good and interesting analysis that went into compiling the ranking, and which is contained in the body of the INSEAD report.
The report lacks the courage of its own caveats: the ”methodology adopted for the report…is extremely sensitive to modeling choices and missing data points,” it says of itself. In essence, it says that being in first place versus fifth place doesn’t mean very much – which is correct – but then proceeds to pretend that Mauritius’ 46th place finish in the ”output sub-index” means it is better at outputting innovation than Namibia (49).If you were forced to rank countries on innovation, say by a hostage-taking macroeconomist, this is not a bad way to do it. The INSEAD ranking includes some 80 indicators.Some are straightforward, like educational expenditure as a percentage of GDP, or net high-tech exports; others are more abstract–a single number measures political stability; others are wishful leaps, such as ”national feature films per million population,” which is meant to be a proxy for ”creative activities”. The existence of ”The Lincoln Lawyer” therefore means the U.S. is marginally more creative than it would be in a world where Matthew McConaughey had never pretended to be an unscrupulous attorney, when there is a strong case to be made that the opposite is true.
Singapore’s rise from 7th place to 3rd is described as a significant improvement, when the report’s own fine print says that this difference is essentially the margin of error.This is the sort of semantic gruel that passes for soup with consultants: ”research is increasingly context-driven, problem-focused, application-oriented, and interdisciplinary,” it says.Aristotle was pretty interdisciplinary, back in his day, and Isaac Newton worried a lot about applications. If you can tell me what ”context-driven” or ”problem-focused” actually means, and why there’s more of it now than in 1820, I’ll personally buy you a beer.At many junctures, the authors of the report repeat the same gambit: ”There is no good way to measure X, they say. Here is a measurement of X. Here are the conclusions we draw, in granular detail, from that measurement.”