International Competitiveness and Innovation Topic 05...

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Transcript of International Competitiveness and Innovation Topic 05...

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

International Competitiveness and Innovation

Topic 05: Knowledge and Technology Sourcing

Page 2: International Competitiveness and Innovation Topic 05 ...secure.com.sg/courses/ICI/Grab/Lecture_Slides/L05_Sourcing.pdf · Topic 05: Knowledge and Technology Sourcing International

International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

S04

S05

S06

S07

Topic 01: Introduction Topic 02: What is Innovation and Why does it Matter?

Topic 03: Managing Capabilities in the Firm Topic 04: Design and Selection Technology Strategies

Topic 05: Knowledge and Technology Sourcing Topic 06: Managing Collaborations and Alliances

Topic 07: The Role of IPR in Protecting Innovations Topic 08: Open Innovation

Topic 09: Sectoral Patterns of Innovations Topic 10: Nations and Innovation Capacity

Topic 11: Public Policy for Promoting Innovation and Competitiveness Topic 12: Globalization of Research and Technology

Topic 13: MNCs and their Global Research and Development Operations Topic 14: International Transfer of Knowledge and Technology

S01 Topic 01: Introduction Topic 02: What is Innovation and Why does it Matter?

Topic 03: Managing Capabilities in the Firm Topic 04: Design and Selection Technology Strategies

Topic 05: Knowledge and Technology Sourcing Topic 06: Managing Collaborations and Alliances

Topic 07: The Role of IPR in Protecting Innovations Topic 08: Open Innovation

Topic 09: Sectoral Patterns of Innovations Topic 10: Nations and Innovation Capacity

Topic 11: Public Policy for Promoting Innovation and Competitiveness Topic 12: Globalization of Research and Technology

Topic 13: MNCs and their Global Research and Development Operations Topic 14: International Transfer of Knowledge and Technology

seminar sessions outline

S02

agenda

S03

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

agenda

Part 1 .….….….….….….….….….…..changing face of R&D ………..……………………………………………trends …………….…………….knowledge base / boundaries ……………………….….…………………time horizons …………………………………………….R&D structure

Part 2 ……..org structure and research and development ………..………………………………research networks …………….…….traditional R&D versus network R&D …………………………………research network nodes …………………………………………….R&D structure

Part 1 .….….….….….….….….….…..changing face of R&D ………..……………………………………………trends …………….…………….knowledge base / boundaries ……………………….….…………………time horizons …………………………………………….R&D structure

Part 2 ……..org structure and research and development ………..………………………………research networks …………….…….traditional R&D versus network R&D …………………………………research network nodes …………………………………………….R&D structure

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

part 1: trends | knowledge base / boundaries | time horizons

KNOWLEDGE

Trend towards Seeking External Sources of Knowledge

Firms increasingly acknowledge that it is difficult to create and exploit technological capabilities on their own.

Thus there is a widespread trend towards acquiring and utilizing external sources of knowledge and technology.

An increasing proportion of innovations are produced through combinations of capabilities located in other firms and institutions.

Across many sectors, a company’s competitiveness now depends on effective access to, and use of, sources of technological knowledge and capabilities beyond its boundaries.

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

part 1: trends | knowledge base / boundaries | time horizons

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Knowledge Base as Asset There is a growing recognition that an organization's knowledge base is a valuable company asset and that enlarging that knowledge base and improving its use can contribute to the competitiveness of the firm.

Traditional Approach Focus on managing and measuring knowledge use within the firm

Emerging Approach Explore how companies can access know-how and experience from outside the organization and effectively import and absorb it

Critical Need To develop the capability for learning both how and what to learn through external sources (Powell, 1998).

part 1: trends | knowledge base / boundaries | time horizons

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

What is “Knowledge”? Many firms have problems with the concept of a knowledge.

Definition by Goal (i.e. strategic knowledge is what helps us with…) •  maintaining future competitiveness

•  maintaining existing core competencies •  maintaining existing capabilities of the firm. Ultimately, the choice between in-house and external R&T is about these three things.

part 1: trends | knowledge base / boundaries | time horizons

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Downside of External Sources

Care must be taken when emphasizing the •  benefits to firms of such trends towards R&D and technical outsourcing •  implications of such a shift in terms of in-house R&T effort.

Risks include •  firms over-reaching themselves in their desire to decentralize and

outsource R&D (i.e. problems managing and controlling external sources) •  firms weakening their core technological competencies

Indeed, it seems that current literature tends to give a rather positive image of external research links, even though there are good reasons against co-operation.

Mowery (1984, p. 52) has highlighted the British reliance on the external contracting of R&D and ‘market’ mechanisms as a key factor hampering innovation and expert performance amongst British firms before 1950. This is a stern warning for us in Singapore, who also outsource R&D.

part 1: trends | knowledge base / boundaries | time horizons

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Checking the Assumptions

It is important to note that …

an increase in external outsourcing of research and technical activity

does not guarantee an equal decline of in-house R&D activity.

Thus, Mowery (1983, p. 369), has noted that

‘rather than functioning as substitutes,

the independent and in-house research laboratories were

complements during this period,

exhibiting a division of labor

in the performance of tasks.

part 1: trends | knowledge base / boundaries | time horizons

external

internal

external internal

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

External Complimenting Internal R&T A new era in R&T competencies and collaboration is emerging.

Companies seek a more balanced and holistic approach to R&T.

Fundamental factors for this shift centers on changes in the: •  the nature of R&D and technical work

•  new collaborative & institutional arrangements of innovation

•  the emergence of an ‘R&T market’ (in an information economy, we must be able to trade easily in knowledge)

•  the macro innovation environment, associated with industry and technology life cycles.

part 1: trends | knowledge base / boundaries | time horizons

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Effects of Timescale

A key, but largely unexplored issue for firms is

•  how the time horizon affects technology and knowledge sourcing relationships

•  how this issue is linked to the long term technological and strategic trajectory of the firm.

There will be significant differences in technology sourcing requirements and conditions according to timescale.

In particular, knowledge and technologies are sought by the firm to augment its current technology base and providing additional ‘external capabilities’ which will hopefully align with future market requirements.

part 1: trends | knowledge base / boundaries | time horizons

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Technological Sourcing and Time Horizons

part 1: trends | knowledge base / boundaries | time horizons

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

agenda

Part 1 .….….….….….….….….….…..changing face of R&D ………..……………………………………………trends …………….…………….knowledge base / boundaries ……………………….….…………………time horizons …………………………………………….R&D structure

Part 2 ……..org structure and research and development ………..………………………………research networks …………….…….traditional R&D versus network R&D …………………………………research network nodes …………………………………………….R&D structure

Part 1 .….….….….….….….….….…..changing face of R&D ………..……………………………………………trends …………….…………….knowledge base / boundaries ……………………….….…………………time horizons …………………………………………….R&D structure

Part 2 ……..org structure and research and development ………..………………………………research networks …………….…….traditional R&D versus network R&D …………………………………research network nodes …………………………………………….R&D structure

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

part 2: networks | comparison to trad | forms | structures

DEMAND R&D

The development of research networks

•  Maturity of Info-Communication technologies and outsourcing/partnering contracts and SLA’s and management skills

•  Increasing market demands (speed, complexity-convergence, long-tail mass customization)

•  Expense and knowledge/skill intensity of research (in each convergent platform) given the reduced role of governments

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Increase supply-chain-specific aspects of tech evolution

Increase firm-specific aspects of tech evolution

Increase speed to market and reduce manufacturing and R&D costs (and sunk investments in fast-moving world)

Embed new areas of knowledge into org

Increased risks, but share between more parties

Reduce risks and uncertainty

Gain synergies outside of your core competence in tech, marketing, distribution, etc

Increase control over rate an direction of technological change

R&D Network In-house R&D

traditional versus network R&D

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

main forms of research networks

University-industry partnerships •  Growing in importance •  Depends on size of firm, industry, and partners •  Issues w/commercialization of basic research •  Spin-offs

Research Consortia (multi-firm) •  Extremely political and strategic

Public Sector Research Laboratories •  Good for standards setting or

deep blue skies research

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

main forms of research networks (continued)

•  Contract Research Organizations

•  Joint Ventures

•  Equity and Share investments

•  Supply Chain and Customer Relationships

•  Outsourcing

•  Licensing

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Which is right for my firm?

part 2: networks | comparison to trad | forms | structures

Universities

Research Consortia

Outsourcing

Licensing

Suppliers/ Customers

Contract Research

Alliances and Joint Ventures

PSR Labs

Mergers & Acquisitions

Equity in New Start-Ups

Technology Transfer

Others

You seek a good “mix” amongst them all

R&D

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Traditional research and development structure

Managing Director

R&D Dept Production Dept Marketing Dept

Considerations regarding R&D structure •  Functional groups need to be differentiated for task

specialization & building deep expertise & to recognize real differences between groups

•  Integration required to coordinate vision, strategy, brand, priorities, and meet customer needs

•  Idea generation requires boundary spanning

•  Organization must be speedy

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Centralized versus decentralized R&D

Corporate Headquarters

Petrochemical Division

Heavy Chemicals Division

Agrochemicals Division

Pharmaceuticals Division

Corporate R&D R&D PROD. MARKG.

part 2: networks | comparison to trad | forms | structures

Don’t forget the “localization” component! Politics

R&D

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

discussion threads

Why would a company choose to centralisze R&D? •  Economies of scale in facilities and equipment •  Recruiting and critical mass easier •  Secrecy •  Lower cost of coordination/control •  Better coordination with internal units

Why would a company choose to decentralize? •  More inputs into research •  Localized research •  Closer to customers •  Interaction with foreign entities (gov’t and unis) •  Enhancing firm’s image

What are imprisoned resources & bounded innovation?

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Centralized versus decentralized R&D by fad Generation 1 Gen 2 Gen 3

Time Post 1945 Late 1960s Late 1980s

Example Bell labs Du Pont ICI

Style •  Tech push w/centralized R&D •  No explicit link to biz strategy •  R&D dept decides future tech

•  Biz pull w/decentralized R&D •  Project focus overseen by biz managers •  Focus on int. tech transfer

•  Synthesis of tech & biz strategy •  Concerns about core competencies

Climate •  Seek breakthrough innovation •  Focus on internally generated

knowledge

•  Focus on R&D costs •  Customer-vendor relationship between

R&D & biz

•  Need to develop internal synergies & avoid duplication

•  Tech & Biz strategies integrated biz wide

Org •  Divisional status for R&D •  Campus like environment

•  R&D decentralized to business •  Decentralized R&D supported by hybrid mission for corp. research inc. integration across biz, fundamental long-term research and foresight and external networks

Funding •  From the center •  Fund what you can afford

•  Based on biz needs •  Varies /tech maturity and competitive impact

Resource •  At discretion of techies •  Little upward visibility

•  Businesses fund corp. research •  Other R&D funded by biz, cust, suppliers

•  Balancing of priorities and risk/reward

Targeting Biz and tech goals sequential •  Biz & R&D objectives by project •  All R&D has defined biz and tech objectives

Priorities By tech group •  Biz criteria •  Combined R&D/biz insights, cost/benefit

Measure Results not clearly defined •  Formal peer review •  Against biz objectives and tech expectations

Evaluate Ritualistic and Perfunctory •  Communication with biz •  Combines R&D and biz criteria

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Centralized versus decentralized R&D by fad

Bounded innovation

Imprisoned resources

Under investment in core competencies

Potential for misallocation of resources

Improves incremental innovation but fundamental research skimped – commercial pressure stifles innovation

Short term focus Isolated from biz and customer needs

Dilemmas of decentralization continue

May fail to pickup weak signals of opportunities & threats

Bias towards tech rather than product and process

WEAKNESS

Integration with needs of the biz

Emphasis on long-term

Integrates biz and tech strategies in single framework

Strong interaction between R&D and other biz functions

Capacity to generate fundamental S&T breakthroughs

STRENGTH Gen 3 Gen 2 Generation 1

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

Centralized versus decentralized R&D another perspective

Era 1: Expansion was sales-focused (70s) •  No real technology shoring

Era 2: Expansion was about localization (80s) •  Focus is on outward learning from center to periphery •  Dominance of a single center with satellites

Era 3: Expansion was true globalized R&D (90s) •  New paradigm of transnational innovation – polycentric structure of

innovation •  Multiple centers of excellence and learning (across the globe) •  Intense market and technology interaction •  Cross-functional learning from diff segments of value chain •  Inward and outward learning •  Reverse and interactive tech transfer •  Greater reliance on research networks (own self do v sharing burden)

Era 4: now •  Increasing issues with coordination •  Revised trend for centralization and pairing down organization to a few

key centers (but where are the “attractors” & how do you decide?) •  NOT about costs! It is about value!

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

How to promote innovation in new products or processes

•  Intrapreneurship

•  Skunkworks

•  Matrix Organizations

•  New Venture Departments

•  Virtual Organizations

part 2: networks | comparison to trad | forms | structures

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International Competitiveness and Innovation Topic 05: Knowledge and Technology Sourcing

questions…

Questions?