We are constantly being told that the 21st century is the age of global innovation. But what does that mean? We talk to an author whose new book explains all.
Despite sounding uncannily like one of those buzzword-generator slogans, when it comes to bringing new products to market 'global innovation management' is both a real and emerging phenomenon. And we should take note, because it's a phrase we're going to hear a lot over the next few years.
Next-generation business strategy won't be focused on building an empire clustered around a central hub. It will focus more on integrating networks of information and knowledge garnered from around the world. At least this is how we should be doing it, argues Yves Doz, one half of an authorship duo responsible for 'Managing Global Innovation', a book that puts the concept into context and analyses the processes required to put a global innovation framework into action.
Since trade began there have been export markets, and we have always imported materials, components and ideas from far afield. So why does global innovation feel so particularly like a 21st-century management issue? Doz thinks that it stems from the need for a more equitable and sustainable form of globalisation. "It has become increasingly clear," he says, "that the exploitative form of globalisation in which rich countries succeed at the expense of the poor, is no longer acceptable." He says that instead of being done "by the rich, for the rich", global innovation should benefit affluent and poor nations alike.
Increasing technological complexity and convergence play a role in this, but it is today's demographic challenges – vast ageing populations in developed countries, along with even larger numbers of highly educated young people in emerging ones – that Doz believes are leading to "the dispersion of the knowledge needed for innovation". This leads to a situation where skills and expertise can be found anywhere, which in turn makes a globally integrated approach to innovation of critical importance. "Our arguments are applicable across all sectors and industries, and are just as relevant to firms in emerging as well as developed economies."
Science and engineering has always been at the vanguard of global innovation. But this isn't necessarily due to any inherent need for a more trans-boundary approach in these communities, he says. It is more the result of the use of universal technical languages that make collaboration across time-zones and cultures easier. To make innovation work, you need to be able to access the best knowledge, and this often means employing people in all corners of the world. Doz cites GE's global development of wind turbines as an example.
"Design and integration was done in upstate New York. Microprocessor design to control the pitch of the blades took place in Shanghai. Bangalore was responsible for mathematical models to maximise materials efficiency, while a team in Munich designed a system to deliver optimal blade pitch to produce maximum electricity." A centralised approach would be unlikely to deliver such a project, as the pieces of the engineering puzzle were scattered geographically.
Standing out in a crowd
Doz and his co-author, Keeley Wilson, are aware that these days airport lounge bookshops are awash with new books on innovation. But Doz is convinced that 'Managing Global Innovation' has something to add. "As well as offering a genuinely new perspective on innovation, our book also provides practical tools and frameworks to help firms implement global innovation practice.
"I have quite a few decades of experience researching and consulting on various aspects of innovation. Well over a decade ago, I outlined the beginnings of the argument for a more global approach. Rather than choosing our topic, we followed the path down which our research led us."
Doz says that much has been written about innovation when knowledge is co-located or drawn from a single cluster. This is the basis for the influential theory of 'transnational innovation', which includes developing economies with the idea of 'reverse innovation'. But global innovation is different, says Doz, because it starts and ends with dispersed locations.
I put it to Doz that global innovation is not going to work for everyone. He disagrees. "The pressure to have a robust innovation pipeline is universal. Regardless of sector, size or country of origin, the ability to access and integrate knowledge from multiple sources will drive innovative capability and competitive advantage. There are a few industries, such as defence, where government restrictions may limit opportunities. But this doesn't mean a more global approach wouldn't create value."
According to Doz, companies that have a culture of reciprocity and diversity will find it easier to innovate globally than those that do not. But, with work and determination, "it's possible for any firm to build the processes, structures and capabilities to manage global innovation".
But aren't there enough global debating societies out there, box-ticking and cheese-paring in innumerable meetings that result in lowest-common-denominator designs? "That's a very good question and one which will resonate with many companies when their intention was collaborative innovation. Finding the balance between too much process killing innovation and too little, resulting in an inability to make decisions, is critical. Throughout the book, we stress the importance of building the hard processes and soft capabilities to manage global innovation projects. We have used our research examples to illustrate various aspects of global innovation."
Having said that, the authors are able to engage with the Tata Communications approach that has adopted a globally dispersed organisational structure to position itself to access the best knowledge around the world. "We also look at some of the world's best-known companies such as GE, HP, Intel and Novartis. All have recognised that the knowledge landscape has changed, and continues to change, leading them to building global innovation capabilities to remain competitive."
'Managing Global Innovation', Yves L Doz and Keeley Wilson, is published by Harvard Business Review Press, £25