C.5 Creating Worldwide Innovation and Learning Flashcards
(25 cards)
What are the types of innovation
- Central innovation
- Local innovation
- Transnational innovation
What are the two classic processes for innovation
- Center-for-global
2. Local-for-local
Center-for-global innovation
- New opportunity sensed in home country
- Centralized resources brought to bear
- Implemented globally
Local-for-local innovation
Subsidiary-based knowledge development, used primarily in local market
What are two emerging transnational processes for innovation
- Locally leveraged
2. Globally linked
Locally leveraged innovation
Unique capabilities of subsidiaries are shared on a worldwide basis.
e.g. Nokia: Indian ops became a source of global expertise in mobile phone retail
Globally linked innovation
Resources and capabilities or many ops pooled to jointly create and manage new activity
E.g. P&G: New laundry detergent used tech strengths from Europe, Japan, and U.S.
Disadvantages for center-for-global
Center-for-global:
- Risk of market insensitivity
- Imperialism
Disadvantages for local-for-local
- Risk of duplication
- Reinventing the wheel
Disadvantages for locally leveraged innovation
- Threatened by not-invented-here
Disadvantages for globally linked innovation
- High coordination costs
Methods to improve cross-border innovation activity
- Make central innovation effective
- Make local innovations efficient
- Make transnational processes feasible
How to make central innovations more effective
- Gain subsidiary input through creating multiple personal linkages
- Respond to different national needs: give subsidiary units resources to influence how central R&D money is spent
- Manage responsibility transfer by fostering cross-functional integration
Making local innovations more efficient
- Empower local management by dispersing org assets and delegating authority
- Link local managers to corporate decision-making processes e.g. by assigning expats
- Integrate subsidiary functions by encouraging multi-level and cross-functional integration
The challenge in making transnational innovation feasible
Combine all four cross-border innovation and learning processes in one org
What assumptions have blocked progress with transnational processes
- Assumption that subsidiaries are symmetrical
- Assumption that HQ-subsidiary relationship is based on an unambiguous pattern of dependence/independence
- Assumption that corporate management exercises decision-making and control uniformly
How to overcome simplifying assumptions
- From symmetry to differentiation
- From dependence/independence to interdependence
- From simple control to flexible coordination
Symmetry to differentiation
Demands for integration and responsiveness need to be addressed separately for each product, function, and geographic region
Dependence/Independence to Interdependence
Implementation of an integrated network and inter-unit integration mechanisms
Simple Control to Flexible Coordination
Complex coordination of the flow of goods, resources, and knowledge: formalization, centralization, and socialization process
Value creation from inter-unit collaboration
- Cost savings through transfer of best practices
- Better decision making
- Increased revenues through sharing of expertise and products across subsidiaries
- Innovation through combination of different ideas
- Enhanced capacity for collective action
Barriers to inter-unit collaboration
- Unwillingness to seek input and learn from others
- Inability to seek and find expertise
- Unwillingness to help
- Inability to work together and transfer knowledge
What is reverse innovation
Develop product in emerging markets and sell in developed markets
Why reverse innovation
Why:
- Many emerging markets are no longer small
- Have high growth rates
- Potential local new entrants can enter developed markets with low cost alt
