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Is Your
InnovationProcessGlobal?Jose Santos
Yves DozPeter Williamson
Present by:
Jen Spernak & Sean Meadows
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Authors Jose Santos
Management of the multinationalenterprise, management of globalintegration and global innovation
Yves Doz Strategy and organization of
multinational companies
Peter Williamson
Business strategy, mergers and
acquisitions, and international expansionto numerous companies, governmentsand international organizationsthroughout the Asia-Pacific, Europe, andNorth America
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Overview Are innovation processes global? Manufacturing is globalCost
Support Services are global
Cost
Is cost reduction the only reason to goglobal? New competitive advantage; metanational
innovation
Implementation of a process for innovating thattranscends local clusters and nationalboundaries
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Theory
Utilizing localized pockets of technology,market intelligence, & capabilities yields
more, higher-value innovation at a lowercost
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Theory Applied:Communication
MOTOROLA NOKIA
Pioneer Newcomer
US Centric Global
Insular Innovation Process Metanational Innovation Process
Market loss: UnfashionablePhones
Market gain: Phones asAccessory
Failed Market Research New Markets
One Size Fit All Product Customized Products
WINNER
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Theory Applied: AcrossIndustries
INDUSTRY COMPANY A COMPANY B
Transportation Boeing Airbus
Software CAI 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
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Power of Diversity Accessing sufficient diversity of knowledge is
key challenge
Best Combinations of technical know how andmarket expertise
Go global; local sources are not enough
Rules of the game have changed
Me too Products are a result of fishing in the
same knowledge pond; Undesirable Complete solutions is the goal; not stand alone
product/services
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Geographic Knowledge
The link between geography and knowledgediversity 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 onlydesirable but essential Computer Industry shift from Boston to Silicon Valley
Dispersion of knowledge base is the logical resultof globalization of the supply chain Outsourcing of manufacturing creates new sources
of knowledge
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Reducing Costs Globalization of supply chains typically result in reducingoverall operational costs by accessing new raw materialsources, 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 stillmay be less expensive to utilize the distant knowledge base.
Often the firm cant relocate the entire innovation processto realize the benefit of lower costs
Instead often move the lower cost knowledge andintegrate into complimentary knowledge elsewhere Through use of improved internet capabilities Relocating key personnel from the home innovation process
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Prospect, Assess, Mobilize To realize the benefits of metanational
innovation, a firm must do these three things
Prospect: Find relevant pockets of knowledgefrom around the world
Assess: Decide on the optimal footprint for aparticular innovation
Mobilize: Use cost-effective mechanisms tomove distant knowledge without degrading it
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Finding valuable new pockets of innovations is likeprospecting for gold!
Need to know what to look for, where to look for it and howto 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 systematicand focused way leading to new innovations to theirproduct development and design.
Prospecting
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Company must determine an optimal footprintfor their innovation processes to limit costsincurred when incorporating new knowledgeinto that process.
Like 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 toadditional complexity and costs
How to overcome the contrasting relationship?
Assessing
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6 Step Approach1. Determine which locations might be absolutely
necessary to obtain the knowledge required
2. The more radical the desired innovation thelarger the necessary footprint is likely to be
3. A companys overall strategy will be affected bythe size of its footprint
4. History is important
5. Using the knowledge accumulated within an
existing operation is usually easier than adding anew site
6. The right footprint may evolve as the innovationprocess unfolds
Assessing
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Real benefits of global innovation occur when bits of knowledge from differentsources interact over time in a virtual melting pot from which new products ortechnologies can emerge
Mobilizing
To succeed metanational
innovation needs a mix ofmobilization strategies
Must distinguish between
the type (simple vs.
complex) and the nature
(technical vs. market) of
the information involved
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Lesson Learned Valuable
innovation is not
local Supply Chain,
Service, &Innovation allbenefit from
globalization Diversity leads to
higher valueinnovation at alower cost
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Implications for Managers Increased
innovation at a
lower cost cana be acompetitiveadvantage
View diversityas anopportunity,not a problem