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2008 | Buch

Managing Global Innovation

Uncovering the Secrets of Future Competitiveness

verfasst von: Prof. Dr. Roman Boutellier, Prof. Dr. Oliver Gassmann, Prof. Dr. Maximilian von Zedtwitz

Verlag: Springer Berlin Heidelberg

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Über dieses Buch

If R&D and innovation in the 1990s were about more internationalization, more corporate entrepreneurship, and more information-integration, then the 2000s have been about consolidating and expanding these trends further: more globalization including the technology mavericks of China and India, more open and inbound innovation integrating external technology providers, and more web- and Intern- enabling of innovation processes by involving R&D contributors regardless of their location. The corporate R&D powerhouses of the 1980s are now mostly history. Even where they survived, they had to yield to corporate efficiency efforts and business-wide integration programs. Still, it would be unfair to belittle them in retrospect as they have found new roles in corporate R&D and innovation n- works. In fact, the very successes of centralized R&D organizations of the 1970s and 1980s made possible the revolution of globalized innovation that we have been witnessing since the 1990s. The first two editions of Managing Global Innovation, published in 1999 and 2000, were testimonials of an increasingly internationalizing world of innovation and R&D. In this third edition of Managing Global Innovation, we have retained the basic structure of two conceptual parts (I and II) and three case study parts (III, IV, V). However, we have greatly revised all chapters, including the final “Imp- cations” chapter (part VI), and incorporated new chapters and cases that illuminate and describe the recent trends in the context of the beginnings of global innovation in the 1980s and 1990s.

Inhaltsverzeichnis

Frontmatter

Challenges and Trends

Frontmatter
I.1. Challenges of Organizing International Research & Development

Global R&D and innovation is mostly a matter of multinational companies (MNCs). With the exception of a few highly international SMEs (small and medium-sized enterprises) and so-called “born-global” start-ups, MNCs define the landscape of global innovation. Multinational companies determine the international division of labor with their production, R&D, marketing, and sourcing strategies; they transfer technologies and management skills, and they influence regional growth through foreign direct investments. Specifically:

In 2002, the 700 largest R&D spending firms of the world accounted for 46% of the worldwide total R&D expenditure, and 69% of worldwide business R&D expenditure (UNCTAD, 2005).

Some MNCs such as Ford, Toyota, DaimlerChrysler, Siemens, General Motors, or Pfizer spent more than US$ 5 billion on R&D in 2002 alone — each of them more than Brazil, Spain, Russia, or India. In fact, Ford (with US$ 6.8 billion in 2002) would be the tenth largest business R&D investor in a list including countries, ranked just behind Sweden (US$ 7.3 billion) but ahead of Italy (US$ 6.6 billion).

MNCs increased their foreign R&D from an average of 15% in 1995 to 18% in 1998 (Roberts, 2001); an UNCTAD survey found that in 2003, firms spent an average of 28% of their R&D budget abroad (UNCTAD, 2005).

At the country-level, foreign R&D is also growing: For instance, in the 1990s, German firms set up more overseas R&D sites than in the previous fifty years combines (Ambos, 2005), and Japanese overseas R&D increased more than tenfold from 0.3% of total Japanese R&D spending in 1986 to 4% in 2002 (UNCTAD, based on METI data).

I.2. Extent of R&D Internationalization

The top R&D spenders worldwide account for a high share of total R&D input in each of the triad nations, thus indicating the importance of (international) R&D activities carried out by multinational companies (illustrated in Table I.2.1). The significance of international R&D activities is even larger when indirect influence of these companies on small- and medium-sized enterprises is taken into account.

I.3. Foreign R&D in China

China has become a major destination for R&D related foreign direct investment. Since the second half of the 1990s, technology-intensive multinational companies (MNCs) have explored China as a location for their R&D activities. As a market of potentially 1.3 billion customers, market-related drivers used to be very strong.

I.4. Internal Drivers

The amount of R&D units outside the parent country has grown considerably during the last two decades. Local know-how and technology access, as well as proximity to customers and local markets have been the major drivers. Internationalization has taken place mainly by establishing greenfield R&D sites, expansion of R&D capabilities in local subsidiaries, or acquisitions of local companies or companies with local R&D sites.

I.5. External Drivers

In the previous chapter we have outlined trends and evolutionary patterns for international R&D organization based on internal distribution and allocation of R&D resources. As we will describe in Part II, the contracted term “R&D” beguiles us into disregarding the inherent differences between research and development. The necessities of science, compared with the needs of engineering and development, entail different managerial problems (see e.g. Leifer and Triscari, 1987). Differences between research and development in terms of location rationales and work culture effectuate different geographical distribution and concentration in different regional centers. In this chapter, we present a model of R&D internationalization that focuses on external sources of knowledge as well as the exploitation of home-based-generated but locally implemented forms of knowledge.

I.6. Establishing Overlaying Structures

Many managers struggle with obsolete R&D organizations when they establish global R&D processes. Traditional R&D organization have been designed with a ethnocentric paradigm in mind that proves to be insufficient for many new challenges: R&D managers must learn to manage an additional organizational level in order to ensure global R&D efficiency.

I.7. Organizing Virtual R&D Teams

The strong decentralization of R&D and the dispersion of centers-of-excellence in the 1980s and 1990s have led to increased transnational R&D processes. A central dilemma in the organization of dispersed projects is project efficiency versus the effective use of specialized knowledge in dispersed knowledge centers.

Emerging Patterns

Frontmatter
II.1. The Market as a Challenge for R&D

Market orientation is the single most important reason for increasing R&D effectiveness. On the other hand, aligning R&D activities completely with existing customer demands may have negative effects on the role R&D has to fulfill on a corporate level. In particular, there is rising concern about sustained long-term innovativeness when R&D is focused to early on customer demands.

II.2. Technology Listening Posts

Knowledge brokerage, from external sources to internal users, has always been a core activity of R&D organizations. However, as technologies become increasingly complex, and new technologies combine to form new markets, individual companies are restructuring R&D to improve their knowledge and technology transfer capability (see Table II.2.1 for a list of recent industry-transforming phenomena). In part, this is done through focusing on certain stages of the R&D process. Thus, knowledge creation and basic research is being partially re-legated to academic institutions and to highly specialized agents (e.g. university science parks and incubators). External knowledge sourcing and the attraction of bringing in outside-in innovations instead of reinventing the wheel are becoming the guiding principles. In part, this is done by assigning technology gathering and listening roles to designated research units, the so-called technology listening posts.

II.3. Managing the International R-to-D Interface

In technology-intensive firms, the two most prominent factors determining the business environment are technology and customers. For the role of R&D, the balance between the two can be tricky.

II.4. Transnational R&D Processes

The separation of the innovation process into a pre-project and a development phase increases transparency significantly and reduces costs in the main development phase. What can be planned is to be distinguished from what cannot be planned. A third and often insufficiently considered phase of the innovation process is the introduction of the product in the market. The old Schumpeterian three-way classification is still of good use in international R&D processes.

II.5. Information & Communication Technologies

ICT (information and communication technology)-enhanced R&D is more different from regular R&D than most people realize. Granted, R&D as we understand it already makes heavy use of telephone communication, email, videoconferencing, etc. But the deployment of ICT into R&D project and process management fundamentally changes how R&D engineers go about their work: what they do, how they do it, and with whom. The changes that the use of ICT has brought about have come slowly, but their impact has been significant.

II.6. Directors of International R&D Labs

When new R&D labs are being set up, one of the key decisions is the choice of the first R&D director. This first director will have to be able to start a new R&D organization from scratch, establish himself — and itself — in a potentially very alien environment, and ensure the proper integration of the new lab into the global R&D organization.

II.7. Managing Knowledge and Human Resources

Knowledge and people are irrevocably intertwined. The generation of knowledge, its communication to other people, and the cooperative effort to pull different pieces of knowledge together to create new products, are fundamental issues for organizing and managing global R&D.

Best-in-Class: The Pharmaceutical and Chemical Industry

Frontmatter
III.1. DuPont: Gaining the Benefits of Global Networks — from the Science Base to the Market Place

DuPont is one of the world’s leading chemical companies, and a major producer of oil, gasoline, natural gas and special materials. As a manufacturing and industrial marketing company based on technologies derived from the chemical, material, and biological sciences DuPont applies these to the development of high performance materials, specialty chemicals, pharmaceuticals and biotechnology-based products (Fig. III.1.1). In 1996 the company operated some 17 strategic business units from Agricultural Products, Automotive Products, and Conoco, to Nylon, „Dacron”, non-wovens, Specialty Chemicals and White Pigments with a portfolio of more than 2000 registered brands and trademarks (such as Teflon, Silverstone, Lycra, Stainmaster, Kevlar, Tyvek, Conoco, and Corian to name but a few). With 97,000 employees the company operated in every major market of the world. Sales in 1996 were US$ 43 billion; net income was more than US$ 3.6 billion. Market capitalization was in excess of US$ 60 billion and was expected to be US$ 80 billion by 2002 — the two hundredth anniversary of the founding of DuPont as a gunpowder and explosives company on the banks of the Brandywine Creek in Wilmington Delaware.

III.2. Hoffmann-La Roche: Global Differentiation between Research and Development

Roche develops, manufactures and markets high-quality products and services in the field of health care. The activities of the group’s four divisions- pharmaceuticals, diagnostics, vitamins and fine chemicals, fragrances and flavors - focus on the prevention, diagnosis and treatment of disease and on the promotion of general well-being.

III.3. Schering: Synchronized Drug Development

In the early 90s, Schering

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divested two non-pharmaceutical divisions and bought a third division, its plant protection business, into an independent joint-venture firm with Hoechst AG/Germany.

III.4. Ciba: International Research Laboratories in Japan: Practical Validation of a Strategic Concept

At the beginning of the 1980s, the top management of Ciba-Geigy declared “We have looked into the future, and it lies in Japan and South-East Asia.” However, until then Ciba did not have a clue how to get at results of Japanese basic research. Though Japan’s universities have long been open, most scientific papers were published in Japanese and thus difficult to access by foreign readers. Japanese technology tended not to be up for sale as much as western expertise was. The Japanese were often reluctant to license out what they considered valuable as a long term asset.

III.5. Kao: Localizing R&D Resources

Kao’s corporate mission is to contribute to the wholehearted satisfaction and the enrichment of the lives of customers and employees throughout the world. We will accomplish this by drawing on our creative and innovative strengths to develop products of excellent value and outstanding performance. Fully committed to this mission, all members of Kao companies are working together as a single corporate force to win the loyalty and trust of their customers. Based on our corporate mission, Kao’s activities are as follows:

Ensure customers’ wholehearted satisfaction worldwide;

Create innovative products based on original ideas and technologies;

Sustain profitable growth and respond to the trust of stakeholders;

Leverage the abilities of individuals into a powerful corporate force;

Encourage close harmony with the environment and the community.

Kao now offers worldwide a wide range of products: Approximately 570 branded package-product items from the consumer product divisions, a wide range of chemicals from the chemical divisions for industrial and institutional uses, and high technology information storage products from the Kao Infosystems group. Kao specializes in consumer products, and chemicals and infosystems products.

Best-in-Class: The Electronics, Software, and Service Industry

Frontmatter
IV.1. Xerox: The Global Market and Technology Innovator

The Document Company, Xerox, is a leader in the global document market, providing document solutions that enhance business productivity.

IV.2. Canon: R&D-Driver for Continuous Growth and Diversification

Guided by the company’s „

Kyosei

“ philosophy, i.e. living and working together for the common good, Canon has been in operation since its foundation in 1937. In 1997 the company celebrated its 60

th

anniversary employing more than 75’000 people worldwide.

IV.3. Hewlett-Packard: Planet-Wide Patterns in the Company’s Technology Tapestry

In March of 1999, Hewlett-Packard announced the strategic realignment of the company into two independent companies. These have been named, Agilent Technologies and Hewlett-Packard. The then president and CEO, Lewis Platt, said “We are taking this action to sharpen the strategic focus of our businesses, improve their agility and increase their responsiveness to customers and partners. We are creating two distinct and strategically focused enterprises, one focused on the measurement businesses, the other on the computing and imaging businesses.”

IV.4. IBM: Using Global Networks for Virtual Development

The International Business Machines Corporation (IBM) is an internationally operating company which strives to lead in the creation, development and manufacture of the information industry’s most advanced systems, including computer systems, software, networking systems, storage devices, and microelectronics. IBM translates these advanced technologies into value for our customers through a professional solutions and services business worldwide.

IV.5. SAP: Global Intellectual Property Management in the Software Industry Sector

SAP was founded in 1972 by five former IBM systems engineers. SAP is the world’s leading provider of business software solutions. Today, more than 36,200 customers in over 120 countries run more than 96,400 installations of SAP® software — from distinct solutions addressing the needs of small and midsize enterprises to suite solutions for global organizations. Powered by the SAP NetWeaver® platform to drive innovation and enable business change, mySAP™ Business Suite solutions are helping enterprises around the world improve customer relationships, enhance partner collaboration and create efficiencies across their supply chains and business operations.

IV.6. Unisys: Localization of Software Development

Unisys serves organizations in 100 countries. Their 50,000 clients around the world include financial services, banking, airlines and transportation companies, government agencies, communications providers, and other commercial market leaders. Unisys is one of a select group of companies with the broad portfolio of services, technologies, and third-party alliances needed to deliver the benefits of information management — helping clients use their information assets to enhance their competitiveness and responsiveness to customers. Their expertise in information management is founded on the strengths of our three global businesses:

Consulting, outsourcing, solutions, and systems integration;

Industry-leading technologies; and

Comprehensive services and products supporting distributed computing environments.

Based on years of research and development, Unisys offers a range of powerful hardware and software technologies, including desktop, client/server, and enterprise server systems that run all the popular, open business software applications. Unisys and its predecessor companies have over a century of technology leadership, and Unisys is one of the largest holders of patents in the information technology industry.

IV.7. Huawei: Globalizing through Innovation

Huawei Technologies is a private high-tech firm based in Shenzhen, China focusing on the provision of next generation telecommunications networks. By the end of 2006, Huawei served 31 of the world’s top 50 operators, along with over one billion users worldwide. Since 1999 Huawei experienced a CAGR (compound annual growth rate) of 30% in sales, and 110% in international sales alone. With over 61,000 employees, of whom 48% are dedicated to R&D (although this percentage seems to include product development as well), Huawei generated contract sales of US$ 11.0 billion in 2006, of which US$ 7.48 billion from international markets.

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IV.8. Fujitsu: Solutions for the Ubiquitous Networking World

Providing enabling technologies for global networking and innovation, Fujitsu is one of the catalysts for global innovation, an excellent example for global research and development.

IV.9. Swiss Re: Global Intellectual Property Management in the Financial Services Industry

The Swiss Reinsurance Company (Swiss Re) is one of the leading reinsurance organizations, and the world’s largest life reinsurer. Swiss Re was founded in 1863 in Zurich. Today, the company has more than 70 offices in 30 countries worldwide. Swiss Re has maintained the highest official security rating, “AAA”, for decades. The reinsurance business is about insuring primary insurance companies, and therefore a business-to-business activity. The insurance business is based on managing the volatility of risks, i.e. to decrease probability of ruin, decrease tax burdens and cost of capital, and to secure returns to shareholders. Traditional reinsurance products therefore cover the entire spectrum of underwriting risk in the life and non-life areas. Examples of such products include accident, property, third party, car, and travel insurance. In addition, Swiss Re offers insurance-based solutions for enterprise financing and support services for risk management (Swiss Re 2004b). To absorb risk volatility without endangering itself as a reinsurance company, Swiss Re has to be big, diversified and — most importantly — has to understand the insured risks. These three aspects drive globalization. Swiss Re runs three divisions: Property & Casualty, Life & Health, and Financial Services, offering a wide variety of products and services to help manage capital and risk. The business group Property & Casualty offers “non-life” reinsurance products as they are termed, Life & Health contains products related to human life, and Financial Services is responsible for investments, credit and art. There is also a Corporate Center that hosts an IT group, a finance group and the Group Intellectual Property Department.

Best-in-Class: The Electrical and Machinery Industry

Frontmatter
V.1. ABB: Management of Technology: Think Global, Act Local

ABB is a global US$ 34 billion electrical engineering Group serving customers in electric power generation, transmission and distribution, industrial and building systems, and rail transportation.

V.2. Daimler: Global Knowledge Sourcing and Research

Between 1997 and 2007, Daimler-Benz went through several major mergers and demergers. In 1997, before the merger with Chrysler, Daimler-Benz turned over more than US$ 69 billion (DM124 billion) and employed a work force of more than 300,000 world-wide. There were 23 business units in four divisions: Passenger Cars, Commercial Vehicles, Aerospace, Services, as well as in the directly managed industrial business units (rail systems, microelectronics, diesel engines and others). Eight years later, in 2005, DaimlerChrysler AG turned US$ 176.7 billion and employed a work force of more than 380,000 world-wide. After the divestment of its Aerospace business, DaimlerChrysler had four divison again: Mercedes Car Group, Chrysler Group, Commercial Vehicles and Financial Services. In 2007, Chrysler was sold to Cerberus, in a move that raised share prices for the new Chrysler and Daimler.

V.3. Schindler: Institutionalizing Technology Management and R&D Core Competencies

Every day, elevators, escalators and railway cars made by Schindler transport 700 million people worldwide. In 1998, Schindler received orders of CHF6.6 billion, providing work for 38,500 employees.

V.4. Hitachi: Management Practices for Innovation in Global Industrial Research

Global collaborative research is now the well-recognized, common and definite necessity among high-technology industries world-wide, because of the following reasons. First of all, the rapidly changing advanced technologies require all participants to be constantly prepared to be competitive at the front-end of such new technologies. High-technology industries must always face the serious issue of continuous huge investment in R&D in the very competitive technology area, in order to survive and especially in order to extend and strengthen their business in the future. This is, however, becoming quite harsh for many industrial companies, who are experiencing great pressure after the breakdown of the bubble economy. In the case of Hitachi, approximately US$ 4.1 billion (consolidated figure; assuming US$ 1 = 124 Yen,) were invested in R&D during the fiscal year 1996 while the sales were US$ 68.7 billion. R&D was about 6% of consolidated sales of Hitachi Limited. However, in this period, profit percentage was much less than the R&D percentage. In 2005 and 2006, around 4.5% of consolidated sales were invested in R&D within the Hitachi Group. In the future, since competition will be more severe and advancement in technologies will become faster, it is possible that investment in R&D will become more important for the survival of industrial companies, even though their profit rate may remain small like today.

V.5. Leica Microscopy: International Transfer of R&D Activities

Leica was formed by the joint venture of Wild-Leitz and Cambridge Instruments in 1990. Together, they have a history of some 180 years. Today three independent companies share the Leica brand: Leica Camera AG, Solms, Germany; Leica Microsystems GmbH, Wetzlar, Germany and Leica Geosystems AG, Heerbrugg, Switzerland.

V.6. MTU: Partner in International High-Tech-Cooperations

Jet engines are an example of high technology products with extreme safety standards to the benefit of the airline customers. The resulting high development costs and the technical and financial risk lead to international corporations for the development and production of jet engines. As a consequence this worksharing has not only been limited to real engine projects but it has also been applied to the predevelopment phase of advanced future turbo fans. As an example for such an approach in the following contribution the international „Advanced Ducted Prop Fan“ cooperation between Pratt&Whitney, MTU München, Fiat Aviazione and Hamilton Standard is described with respect to motivation, organization of the program and the everyday work.

V.7. BMW Group: Strategic Framework for Global Innovation to Enhance the Efficiency of Global R&D

The performance measures of most of today’s cars have started to converge and nowadays design and brand are often the only real differentiators. However, innovative technology can still make a difference. The BMW Group therefore has a strong focus on design and brand but has ever since given much attention to R&D in order to keep its advantage and remain in the pinnacle position in the automotive industry’s stiff competition for innovation. International R&D has been an issue for quite a while since innovation does not only happen in the labs of the car manufacturers. It emerges from various sources and those sources increasingly spread globally. The challenge of this situation lies in the seamless integration and the coordination of all those efforts with only one thing in mind: to build the ultimate driving machine.

V.8. Siemens: Flying with the Dragon - Innovation in China

At the beginning of this century, China has started to fascinate everyone: everyday people and industrial corporations alike. With continuous annual growth of its GDP of more than 8% since 1978, China is changing rapidly and the world as a result is changing along with China. From 1984 to 2005, utilized Foreign Direct Investment increased at an average rate of more than 20% per year. By 2004, China had become the world’s 3

rd

largest exporting nation after the United States and Germany (Zheng, 2006).

Implications

Frontmatter
VI.1. Implications for Organizing Global R&D

Research and development, and as a result technology, have improved the quality of human life tremendously over the last six decades. For the first time in the history of humanity it appears technically feasible to eliminate poverty and diseases for large masses of the population. But are we happier than earlier generations? No, it seems that human aspiration adjusts to opportunities. We know more, produce more externalities and become more sensitive to the indirect consequences of organizational activity. Today’s R&D has to take into account not only customers and economical issues, but ecology and society as well. DuPont’s „Better things for better living through chemistry“ tries to catch this spirit. Kao’s „Safety for society and users“ incorporates the critical customer into its vision.

Fig. VI.1.1.

Today’s R&D has an overall responsibility.

But what are the challenges for global R&D organization that result from considering economical, ecological, and societal issues (Fig. VI.1.1).

Backmatter
Metadaten
Titel
Managing Global Innovation
verfasst von
Prof. Dr. Roman Boutellier
Prof. Dr. Oliver Gassmann
Prof. Dr. Maximilian von Zedtwitz
Copyright-Jahr
2008
Verlag
Springer Berlin Heidelberg
Electronic ISBN
978-3-540-68952-2
Print ISBN
978-3-540-25441-6
DOI
https://doi.org/10.1007/978-3-540-68952-2