Globalization and innovation

1. Globalization and innovation

2. 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.

3. 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.

4. 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.

5. GLOBAL INNOVATION COMPLEXITY • Integrating multiple evolving technologies • Tapping globally dispersed technology sources • Serving globally distributed customers

6. Organizational Complexity Chief Executive Officer Planning Legal Chief Executive Officer Division 4 Division 1 Division 2 Division 3 Human Resources Marketing Manufacturing/Operations Finance Purchasing Purchasing Purchasing Purchasing Engineering Engineering Engineering Engineering Operations Operations Operations Operations Marketing Marketing Marketing Marketing Finance Finance Finance Finance Human Resources Human Resources Human Resources Human Resources

7. CEO Markets Consumer Pharma- ceutical Medical Devices Human Resources Group Operating Committee (Strategic Support) Finance Business Segment Structure Customer Support Corporate Functions Science & Technology Franchise Mgmt (Marketing Support) Environ- ment Additional Corporate Functions 190 Autonomous Business Units (Brand Focus)

8. ABB’s Geography-Based Internal Network CEO Projects Finance HR Corporate R&D Global Staffs Accounts Shell 4 Business Segments 3 Regions Financial Industrial Power Power Europe / Americas Asia Services & Building Transmission Generation Middle East / Systems Africa Business-Area Transformers 140 Countries Spain 40 Business Areas 1,000 Companies 5,000 Profit Centers Spanish Transformer Business Shell Espana ~ Finance Products/Functions R&D

9. 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.

10. 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

11. What role does culture play in the study of innovation? CROSS BORDER INNOVATION

12. Culture is Hidden ARTIFACTS Visible, tangible. NORMS, VALUES, ATTITUDES Less visible, but can be talked about. DEEPLY ROOTED ATTITUDES Usually not visible at all, often held subconsciously, rarely (if ever) questioned in everyday life. Image by R.A. Clevenger

13. The culture of McDonald’s Deeply Rooted Values change the way McDonald’s is used Artifact looks the same everywhere 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 $4.55 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) BUT 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. Cultural Institutions Educational, Social, Political, Legal, Economic, etc. Influences on Culture History, Language Religion, Climate, Physical Environment, etc. CultureShared Assumptions and Values, Systematic, Learned Individual Perceptions and Interpretations based on Values and Attitudes Individual Behavior Influences on, and of, Culture Situation B:f(P*S) Person

15. CULTURE ALSO AFFECTS OUR PREFERENCES…

16. Daily Coffee Consumption per Capita Source: Business 2.0. July 2002.

17. Did You Know? • In Turkey it’s rude to cross your arms while you are facing someone. • In the Arab world the left hand is considered unclean; don’t eat with it! • In India never pat someone’s head, it’s the seat of the soul. • The Chinese associate gifts such as straw sandals, clocks and handkerchiefs with funerals.

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

19. … OUR SYSTEMS AND NORMS

20. Days of Annual Vacation Source: AAA World

21. Nations That Have Not Converted to the Metric System United States Brunei Yemen Liberia Myanmar (Burma)

22. 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.

23. World Population

24. Light Emissions

25. World Patent Activity

26. Scientific Citations

27. 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.

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

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

31. SO HOW DO CULTURAL DIFFERENCES AFFECT INNOVATING?

32. 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

33. Does diversity result in synergy? • Diversity yields • Wide range of perspectives • Variety of potential solutions and opportunities • Potential for synergy

34. What are the implications for Managing Global Teams? http://www.ft.com/businesseducation/imd

35. High Homogeneous Teams Diverse Teams Managed Poorly ‘Equalizers’ Diverse Teams Managed Well Number of Teams ‘Destroyers’ ‘Creators’ Low Performance Low High Despite their potential, most diverse teams don’t perform as well as homogeneous teams do… But synergy doesn’t come often enough….

36. The MBI Model:Managing Cultural Diversity for Personal and Team Effectiveness High Performance • MAP • Understand • the • differences • Cultural Orientations Framework • BRIDGE • Communicate across the • differences • Prepare: • Motivation, Confidence • Decenter: • Perspective taking, Explain without blame • Recenter: • Common view, common norms • INTEGRATE • Manage • the • differences • Build Participation • Resolve Conflicts • Build on Ideas Value & Utilize The Differences Source: Lane, DiStefano & Maznevski. International Management Behavior. 4th ed.