Is Your Innovation Process Global?

Jose Santos Yves Doz Peter Williamson

Present by: Jen Spernak & Sean Meadows

Authors

Jose Santos

Management of the multinational enterprise, management of global integration and global innovation
Strategy and organization of multinational companies Business strategy, mergers and acquisitions, and international expansion to numerous companies, governments and international organizations throughout the Asia-Pacific, Europe, and North America

Yves Doz

Peter Williamson

Overview

Are innovation processes global?

Manufacturing is global Cost Support Services are global Cost

Is cost reduction the only reason to go global?

New competitive advantage; metanational innovation Implementation of a process for innovating that transcends local clusters and national boundaries

Theory
Utilizing

localized pockets of technology, market intelligence, & capabilities yields more, higher-value innovation at a lower cost

Theory Applied: Communication

MOTOROLA Pioneer US Centric

WINNER

NOKIA Newcomer Global

Insular Innovation Process

Market loss: Unfashionable Phones Failed Market Research One Size Fit All Product

Metanational Innovation Process

Market gain: Phones as Accessory New Markets Customized Products

Theory Applied: Across Industries

INDUSTRY Transportation Software COMPANY A Boeing CAI COMPANY B Airbus SAP

Food

Starbucks

McDonalds

Metanational Innovation: Allowed firms to develop valuable business models, strategies, and capabilities that rivals could not emulate Decisive Source of Competitive Advantage

Power of Diversity

Accessing sufficient diversity of knowledge is key challenge

Best Combinations of technical know how and market expertise Go global; local sources are not enough Me too Products are a result of fishing in the same knowledge pond; Undesirable Complete solutions is the goal; not stand alone product/services

Rules of the game have changed

Geographic Knowledge

The link between geography and knowledge diversity is important but not always evident

Finland - Radio Telephony Germany - Strong Green Expertise Japan - Experts in JIT inventory

Globalization of the innovation process is not only desirable but essential

Computer Industry shift from Boston to Silicon Valley

Dispersion of knowledge base is the logical result of globalization of the supply chain

Outsourcing of manufacturing creates new sources of knowledge

Reducing Costs

Globalization of supply chains typically result in reducing overall operational costs by accessing new raw material sources, components or services from around the world.

Same benefit evident through metanational innovation process, but only a secondary benefit Even if the home knowledge base is similar to overseas, it still may be less expensive to utilize the distant knowledge base.

Often the firm cant relocate the entire innovation process to realize the benefit of lower costs Instead often move the lower cost knowledge and integrate into complimentary knowledge elsewhere

Through use of improved internet capabilities Relocating key personnel from the home innovation process

Prospect, Assess, Mobilize

To realize the benefits of metanational innovation, a firm must do these three things

Prospect: Find relevant pockets of knowledge from around the world Assess: Decide on the optimal footprint for a particular innovation Mobilize: Use cost-effective mechanisms to move distant knowledge without degrading it

Prospecting

Finding valuable new pockets of innovations is like prospecting for gold! Need to know what to look for, where to look for it and how to tap into it as a resource Shiseido Co Ltd.

Plans to enter the fragrance market Where: Paris, France & Gien, France How: Immerse the company into the French environment and learn by doing The knowledge of what will gradually be learned through the identification of the where and how.

Shiseido prospected for new knowledge in a very systematic and focused way leading to new innovations to their product development and design.

Assessing
Company

must determine an optimal footprint for their innovation processes to limit costs incurred when incorporating new knowledge into that process. optimizing a global supply chain
Adding a new source may reduce costs or improve the quality of required components to the process A greater number of locations may lead to additional complexity and costs

Like

How

to overcome the contrasting relationship?

Assessing
6
1. 2. 3. 4. 5.

Step Approach
Determine which locations might be absolutely necessary to obtain the knowledge required The more radical the desired innovation the larger the necessary footprint is likely to be A companys overall strategy will be affected by the size of its footprint History is important Using the knowledge accumulated within an existing operation is usually easier than adding a new site The right footprint may evolve as the innovation process unfolds

6.

Mobilizing

Real benefits of global innovation occur when bits of knowledge from different sources interact over time in a virtual melting pot from which new products or technologies can emerge

To succeed metanational innovation needs a mix of mobilization strategies Must distinguish between the type (simple vs. complex) and the nature (technical vs. market) of the information involved

Lesson Learned

Valuable innovation is not local Supply Chain, Service, & Innovation all benefit from globalization Diversity leads to higher value innovation at a lower cost

Implications for Managers

Increased

innovation at a lower cost can a be a competitive advantage View diversity as an opportunity, not a problem