Chapter 10
Global Innovation
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Global innovation
Forces at work:
 Increasing costs
 Shortening product life cycles
 Increasing importance of TIME-to-MARKET for competitive advantages
 Increasing importance of customers participation in technology
 development
 Increasing importance of networking, partnerships and alliances
in technology development
 Increasing importance of multi-disciplinary integrative technologies
 Emergence of new centres of technological excellence: India, China
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The world of R and D
Source: Barry Jarulesky and Kevin Dehoff, Beyond Borders: The Global Innovation 1000, Strategy and Business, Booz and Co, 2008
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R&D capabilities
Country
R and D Expenditures Number of Researchers
(% of GDP)
2000 2005/2009 2000 2005/2009
India
0.77% 0.80%** 112971 149892*
China
0.90% 1.44%*** 692698 1411000***
Japan
3.04% 3.44%*** 648411 712062***
USA
2.74% 2.71%*** 1264372 1392000**
European Union 1.80% 1.85%*** 1102045 1459151***
High Technology Exports
( million US$)
2000
2009
1569
10143
40837
348295
127376
99210
196698 141519
385186 515167
Source: World Bank World Development Indicators (2011).For the period 2007/2009 data with * are for 2005, ** for 2006, ***for 2007
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Patents Applications
2000
8503
51906
419543
295895
165513
2009
28940**
314513
348592
456154
130278
Increasing Importance of Emerging World
Source: Unctad, 2005
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Globalisation of R and D and Performances
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Source: Deloitte: Innovation in Emerging Markets
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Source: Deloitte: Innovation in Emerging Markets
Managing global innovation
• Knowledge creation
• Knowledge sharing / transfer
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Knowlege Creation
Internationalisation of Research And Development
in multinational corporations
Central
Lab
Central
Lab
Central
Lab
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Central
Lab
Knowledge creation
Some of The Well Established Traditional
R & D Management Principles
• “Critical Mass Requirements”:
50 to 100 minimum size for a multi-disciplinary laboratory
• Linkages with sources of scientific knowledge:
Proximity to universities
• Face to face communications:
Personal contacts
• Pooled R & D
more efficient than sequential
• Growing need for closer interaction with customers
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Knowlege Creation
International R & D Networks
ADVANTAGES
DISADVANTAGES
• Close to markets
• Loss of critical mass
• Close to production
• Close to raw materials
• Close to universities
• Small size
• Flexibility
• Integrating acquisitions
• Difficult to communicate
• Risk of duplications
• Difficult to integrate
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Knowlege Creation
A Typology of Research Units
Research laboratories
In charge of long projects, dealing with new technologies or scientific discoveries that are not necessarily
related to a particular product. These laboratories are global by nature, and most often, but not always, are
located near the corporate centre.
Development laboratories
In charge of projects which has the objective to lead to a product or process innovation.
Supporting/adaptive units
Provide product or process adaptation according to local contexts.
Scanning units
Monitor technological development and contribute to the knowledge platform of the company.
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Knowledge dispersion profile for ST in Hard Disk Drive electronics
Joint design center with
Seagate:
Scotts Valley, CA
Engineering and design
skills in digital servo
controllers:
(JV) SSD - Dublin, Ir.
Engineering and
design skills in fast
microprocessors:
Bristol, U.K.
Process technology R&D in
BICMOS (mixed) and
CMOS (digital);
Manufacturing (Front End):
Grenoble, France
Microprocessor
development:
(JV) Siemens, Germany
Lead Customers R&D and
Engineering: Seagate, Western
Digital (California,Colorado, ...)
Competence on R/W
technology:
(JV) EXAR, CA
Engineering and Design Capability /
Close understanding of customer
application / Design Center: S. Jose CA
Design of ‘packaging’, testing
and final assembly (Back End)
capability: Malaysia, Singapore
Customers’ manufacturing:
Singapore, and other Far East loc
Source: Doz, Santos, Williamson
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Process technology
R&D in Bipolar and
BCD; Design
competence on analog
and mixed chips:
Castelletto and Agrate,
(near Milano), Italy
Coordination and
strategic capability:
Geneva, Switzerland
Knowlege Creation
Knowledge Complexity is a combination of Tacitness and Embeddedness (Context-Dependant)
Existential Knowledge
Complex
“Feel and Live”
“Study and Live”
Endemic Knowledge
Experiential Knowledge
“Experience & Practice”
Simple
Source: Santos
“See
& Study”
Explicit
Knowledge
“Creep into the Mind” (Tacit and Context Dependent)
• Learning by doing and discovering
•
•
•
JIT and TQC in Japan,
Cultural assumptions (Fashion, Music, Arts)
Joint teams approach
“See through the Eyes” (Codified and Context Dependent)
• Learning by seeing
• Long term secondments
• Apprenticeship
“Jump into the Shoes”( Tacit and General)
• Learning by studying
•
•
•
Practices and skills
Cases studies
Short term secondments
“Take a Picture” ( Codified and General)
• Learning by reading
•
•
Technical blueprints
Patents
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Source J. Santos
Knowlege Creation
Tapping on the Global Diversity of Competencies
C&D
High
Diversity of
Knowledge
Sources
Low
D&D
Co-Location and Diversity
Dispersion and Diversity
The tower of Babel
Knowledge creation and sharing
in one place with the participation
of managers detached from
dispersed business units.
The secondment practice.
The virtual team
Knowledge creation, sharing in
several placeswith the ability for
the company to create the conditions
for effective sharing of tacit knowledge.
C&C
D&C
Dispersion and Congruent
The Diaspora Team
Virtual co-location
Knowledge creation, sharing in several
places but with expatriate managers
coming from the same “intellectual” mold.
Classic role of expatriate managers
Co-Location and Congruent
“Centre of Excellences”
Classic Co-location Teams.
Knowledge creation, sharing
in one place and possibly
transferred later.
Same
Location
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Distant
Source: J Santos
Knowledge Transfer
HIGH
Move information
about the technology
to where the market
knowledge is
Move information
by rotating people
and by
temporary
co-location
COMPLEXITY of
MARKET
KNOWLEDGE
Move information
about the market
to where the
technological
knowledge is
Exchange information
( Digital etc..)
LOW
LOW
COMPLEXITY of TECHNOLOGICAL
KNOWLEDGE
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HIGH
Source: Doz
Knowlege Transfer
Sources of "Stickiness" in Knowledge Transfer
• Causal Ambiguity makes it difficult to have a precise modelling of
the cause and effects relationships. Causal ambiguity exists when tacit
knowledge is at the core of the functioning of the practice.
• Lack of Absorbent Capacity by the recipient unit who is not
capable of interpreting the knowledge transfer and to apply it. Here
again, tacitness may constitute a barrier to knowledge transfer when the
recipient unit has not the inside resources to “crack” the implicit, nonverbal elements of the practices.
• Arduous Relationships that exist when tacit knowledge requires
multiple interactions between individuals, particularly when geographical
and cultural distance are present.
Source : G. Szulanski
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Facilitating Knowledge Transfer in Global Firms
 Business units and team leaders trained and experienced in D& D practices:
 Open, multicultural alert, intuitive communicators
 Socialisation before team work implying “non productive” social interfaces
 Transitional encounters (conferences, seminar, workshops..)
with loose agenda to allow for tacit knowledge to be shared.
 Make teams aware of contexts through visits, education
 Strong, accessible, open, user-friendly knowledge management platforms
(Electronic libraries, case studies, chat rooms,..)
 Deadlines for project completion
 Yellow pages (who is who for what?)
Source : G. Szulanski
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Organisational architecture for a global R&D network
Structure
Systems
• Small central staff
•Specialised local centres
•Profit centres? Optimal size (20300)
People
• Planning involving operations
• Intense communciation
• Systematic diffusion
• Documentation
• Information system network
• Meetings, conferencing
• “Free budget”
Values
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• Role of project managers
•Temporary assignments
•Training
•Language policy
•Intense travelling
• Learning culture
• Shared values
• Network culture
Organisational architecture for a global R&D network
Corporate headquarters
BASIC
Main central research laboratory
Divisional headquarters
Divisional R & D units
APPLIED
DEVELOPMENT
R & D unit
Specialised R & D units
(Closely integrated in the
whole corporate research
system, e.g. toxicology
unit)
Technical
development
support
laboratory
Location of R & D in a large corporation: A model
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R & D units attached
to manufacturing plants
Intellectual Property Infringement
Do you know those brands????
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Intellectual Property Infringement
Intellectual Property
Infringement and example
Patents
Reverse engineering
Straight copy
Ex: Drugs, chemicals, mechanical and electronics
products, auto parts
Trademarks
Straight copy
Imitation (with minor change)
Ex: all branded products
Copyrights
Rights of creators
Ex: Texts, software, video, movies training packages
Industrial Design
Original concept and design
Ex: Fashion, auto parts, electronics, appliances
Trade Secrets
Employees poaching, espionage for:
List of clients, marketing and strategic plans, financial
information, industrial and management processes
Genetic codes
Copy , employees poaching,
Ex: Bio engineering
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Types of international product forgery
PRODUCT
Don’t change product
Modify product
Don’t change
trademark
PIRACY
COUNTERFEITING
TRADEMARK
Modify
trademark
REVERSE
ENGINEERING
IMITATION
Source: Jack Kaikati
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European Statistics on Counterfeit Goods
Seized by Customs
Source: European Commission Report, 2010
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According to the International Federation of Pharmaceutical Manufacturers Associations (IFPMA),
7% of all drugs being sold around the world are already counterfeits.
The value of this trade is more than 50 billion DEM.
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Software Piracy
Source: BSA ,2002, Trends in Software Piracy
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IPR Protection Approaches
• Restrict disclosure of IP to selected employees
Employees
• Require key employees to sign individual secrecy agreements
• Establish a strict catalogue of level of confidentiality
• Keep IP in secure location
• Educate employees on the rationale and the consequences of infringement
• Regular interviews of employees
• Prepare a handbook giving the list of items to be protected what to do in case of
leakage suspicion; give recommendation about best practices.
Suppliers
• Non disclosure agreements
• Establish rules about what can be disclosed and what cannot be
• Education about benefits/risks in IP protection/enfrigment
Distributors/
Users
• Formal agreements not to use/ resale copies/ pirated products
• Education about benefits/risks in IP protection/enfringment
Joint Venture
Partners
Legal
• Be specific in the Joint Venture Contact
• Use “black box “ approach when technically feasible
• Screen partners' employees
• Lobby governments
• Use diplomatic channels to support actions
• Engage in legal action as soon as possible, even if the legal context is unfavourable
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