GLOBALIZATION AND INNOVATION

Globalization

Traditional definition of globalization? Movement of resources across national boundaries: money,

people, goods, services, ideas Globalization as complexity: The complexity inherent in doing business in a global economy

comes from: Multiplicity – many things happening at once Interdependence – all things being connected Ambiguity – less knowledge about all aspects Flux – rapid and consistent change

Implications for managing: rather than tactical solutions to problems, need people who can engage in collaboration, discovery, architecting and systems thinking.

Global Innovation

A process for innovating that transcends local clusters and national boundaries.

Sourcing and integrating knowledge from dispersed geographic locations, companies can generate more innovations of higher value and lower cost.

E.g. from China, Inc.

COMPLEXITY AND INNOVATION

Global Innovation Complexity Organizational Complexity Global Management Complexity Intra-organization Complexity

Importance of knowing the where and why of complexity, remaining flexible, and collecting

a toolbox of appropriate choices.

GLOBAL INNOVATION COMPLEXITY

Integrating multiple evolving technologiesTapping globally dispersed technology

sourcesServing globally distributed customers

ChiefExecutive

Officer

Manufacturing/Operations

Marketing Finance Human Resources

ChiefExecutive

Officer

Division1

Division2

Division3

Division4

Purchasing

Engineering

Operations

Marketing

HumanResources

Purchasing Purchasing Purchasing

Engineering Engineering Engineering

Operations Operations Operations

Marketing Marketing Marketing

HumanResources

HumanResources

HumanResources

Planning Legal

Finance Finance Finance Finance

Organizational Complexity

Consumer Pharma-ceutical

MedicalDevices

FranchiseMgmt

(MarketingSupport)

Group OperatingCommittee(StrategicSupport)

 CEO

HumanResources

Finance

Environ-ment

190 Autonomous Business Units (Brand Focus)

Corp

ora

te F

un

cti

on

s

Markets

Bu

sin

ess S

eg

men

t Stru

ctu

re

Science &Technology

AdditionalCorporateFunctions

CustomerSupport

ABB’s Geography-Based Internal Network

CEO

Projects Finance HR Corporate R&D Global Staffs Accounts

Financial Industrial Power Power Europe / Americas Asia Services & Building Transmission Generation Middle East / Systems Africa Business-Area Transformers 140 Countries

4 Business Segments 3 Regions

40 Business Areas

1,000 Companies

5,000 Profit Centers

Finance Products/Functions R&D

Spanish TransformerBusiness

Spain

ShellEspana~

Shell

Management Complexity

Innovation is a strategic mandate leading to value-added outcomes

Innovating is about the actions, behaviors and management practices that create innovations.

Managers in a global business world come with their own culturally derived values, attitudes and norms; and they function within organizational and societal values, attitudes and norms.

Greater diversity = greater variation in beliefs about what, how, where and why.

Global Partnering – Interorganizational complexity Manage tensions (cross cultural and cross

organizational) Build networks (finding the right partners

and acting like the right partner) Achieve Outcomes

CROSS BORDER INNOVATIONWhat role does culture play in the study of innovation?

Culture is Hidden

Image by R.A. Clevenger

ARTIFACTS Visible, tangible.

NORMS, VALUES,ATTITUDES

Less visible, but can be talked about.

DEEPLY ROOTED ATTITUDESUsually not visible at all, often

held subconsciously, rarely (if ever) questioned in everyday life.

3-13

The culture of McDonald’s

Localized menus reflect norms, values, attitudes

Philippines McSpaghetti

Germany McBeer

Switzerland Vegi Mac

Malaysia Sugar Cane Juice

Netherlands Cappuccino Donuts

Greece Shrimp, Veggie Burgers, & Spring Rolls (sold during Lent)

Artifact looks the same everywhereDeeply Rooted Values change the way McDonald’s is used

Deeply rooted values change the way McDonald’s looks in France where a McDonald's breakfast meal in Villeurbanne, France includes fresh baguettes and jam spreads with coffee for $4.55BUT WHY?

Naturally, the U.S. is its no. 1 market, but guess who is no. 2? You got it: France. … McDonald's is such a success in the land of Michelin three-star restaurants because it has adapted to French eating habits and tastes. There are now 1,200 franchises in France; the company opened 30 restaurants per year in the past five years alone.

http://www.npr.org/blogs/thesalt/2012/01/24/145698222/why-mcdonalds-in-france-doesnt-feel-like-fast-food

14

Influences on CultureHistory, LanguageReligion, Climate,Physical Environment, etc.

CultureShared Assumptions and Values,Systematic,Learned

Individual Perceptions and Interpretations based onValues andAttitudes

Individual Behavior

Cultural Institutions Educational,Social,Political, Legal,Economic,etc.

Influences on, and of, Culture

B:f(P*S)

Person

Situation

CULTURE ALSO AFFECTS OUR PREFERENCES…

3-16

Daily Coffee Consumption per Capita

0 0.5 1 1.5 2 2.5

Finland

Austria

France

Italy

U.S.

U.K.

Source: Business 2.0. July 2002.

3-17

Did You Know?

s In Turkey it’s rude to cross your arms while you are facing someone.

s In the Arab world the left hand is considered unclean; don’t eat with it!

s In India never pat someone’s head, it’s the seat of the soul.

s The Chinese associate gifts such as straw sandals, clocks and handkerchiefs with funerals.

3-18

Favorite Campbell Soups Around the World

Hong Kong - Watercress & Duck Gizzard

United States - Chicken Noodle, Cream of Mushroom

Britain - Tomato

Japan - Corn

South America - Cream of Asparagus

Australia- Cream of Pumpkin

… OUR SYSTEMS AND NORMS

3-20

Days of Annual Vacation

0 5 10 15 20 25 30 35 40 45

Italy

France

Germany

Brazil

United Kingdom

Canada

Korea

Japan

U.S.

Source: AAA World

3-21

Nations That Have Not Converted to the Metric System

United States

Liberia

Yemen

Myanmar

(Burma)

Brunei

Is everyone an equal player?

Friedman claims the World is Flat Technology has leveled the playing field across

nations Richard Florida, author of The Flight of the

Creative Class claims the World is Spiky. The most populated areas of the world are also

the least economically and innovatively active.

World Population

Light Emissions

World Patent Activity

Scientific Citations

Global Innovation Index

Generates a ranking of countries based on innovation.

Source: The World Business/INSEAD Global Innovation Index (GII).

The Global Innovation Index (GII) was conceived at INSEAD as a formal model to help illuminate the degree to which individual nations and regions are currently responding to the challenge of innovation.

The framework groups the eight pillars of innovation into two categories: Inputs and Outputs.

Global Innovation IndexOverall Rankings

 

1 United States 5.80

2 Germany 4.89

3 United Kingdom 4.81

4 Japan 4.48

5 France 4.32

6 Switzerland 4.16

7 Singapore 4.10

8 Canada 4.06

9 Netherlands 3.99

10 Hong Kong SAR 3.97

World Competitiveness Report

The IMD World Competitiveness Yearbook, published since 1989, ranking and analysing how a nation's environment sustains the competitiveness of enterprises.

http://www.worldcompetitiveness.com/OnLine/App/Index.htm

SO HOW DO CULTURAL DIFFERENCES AFFECT INNOVATING?

Understanding Diversity

• Provide frameworks for using diversity to get higher performance

• Increase awareness of ourselves and others, and the impact of our similarities and differences

• Test the applicability of the ideas to situations from your experience

Does diversity result in synergy?

• Diversity yields–Wide range of perspectives–Variety of potential solutions

and opportunities–Potential for synergy

http://www.ft.com/businesseducation/imd

What are the implicationsfor Managing Global Teams?

Performance

Homogeneous Teams

Numberof Teams

Diverse TeamsManaged Well

Diverse Teams Managed Poorly

Despite their potential, most diverse teams don’t perform as well as homogeneous teams do…

LowLow

High

High

‘Destroyers’

‘Equalizers’

‘Creators’

But synergy doesn’t come often enough….

The MBI Model:Managing Cultural Diversity for Personal and Team Effectiveness

BRIDGECommunicate

across the differences

• Prepare: Motivation, Confidence

• Decenter: Perspective taking,

Explain without blame• Recenter:

Common view, common norms

INTEGRATEManage

the differences

• Build Participation

• Resolve Conflicts• Build on Ideas

HighPerformance

Value & Utilize

TheDifferences

MAPUnderstan

dthe

differences

• Cultural Orientations Framework

Source: Lane, DiStefano & Maznevski. International Management Behavior. 4th ed.