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 / Summer 2006 / Issue 43(originally published by Booz & Company)


The Well-Designed Global R&D Network

The hard levers are both technical and organizational. On the technical side, they include common product and component architectures as communication platforms that give global teams a shared language to foster collaboration. On the organizational side, globally aligned processes, roles, and structures are seen as important; also viewed as vital were cross-location steering committees to manage pipelines and portfolios, and information systems that enable 24/7 flows of knowledge, ideas, and designs.

The soft levers are geared toward evoking and sustaining a healthy innovation culture and attracting and developing talent. Our respondents generally agreed that successful innovation depends on team members who can work effectively in culturally diverse environments. Yet only the technology innovators report that they view an international background as a prerequisite for a senior management role. Accordingly, only the technology innovators put significant effort into developing employees’ cross-cultural leadership skills.

The levers of choice in this regard are financial and career incentives to encourage staff to work in different geographies. In fact, few factors operate as powerfully as incentives to influence and reshape organizational culture and work practices. However, it appears that organizations need to do much more to align their incentives with their innovation strategies. Although most respondents viewed accessing new knowledge as central to innovation success, few had deployed incentives to support it. Not surprisingly, then, low-value-added sites, such as those that do nothing but local-market customization, often struggle to retain talented staff. (This challenge is especially acute in markets like China and India.) One solution is to move these sites “up the innovation food chain” by assigning them more complex responsibilities. A site need not have full development capabilities to be an interesting place to work; it could, for example, be designated a center of excellence for a particular process or technology.

Global innovation networks are an integral piece of the emerging international economic system, but creating networks that deliver real value requires thorough, painstaking consideration. All too often, managers pursue ill-defined economic and political value when creating and expanding their innovation networks, or fail to provide the shared processes and common language the networks need to excel.

A truly lean global innovation network that operates with seamless efficiency across borders and cultures is a rare, beautiful thing. The most powerful levers — cost-effective node location, well-designed product development platforms, an innovation-friendly global culture, and a well-aligned set of incentives — are available to all companies. But companies so rarely put all of them together that creating such an effective network is undeniably a towering achievement, and a notable example of innovation in itself.

Author Profiles:

Thomas Goldbrunner ([email protected]) is a principal with Booz Allen Hamilton in Munich who specializes in helping clients improve their innovation management and product development capabilities, primarily in the automotive and high-tech industries.
Yves Doz ([email protected]) is the Timken Professor of Global Technology and Innovation at INSEAD in Fontainebleau, France. He is the coauthor, with José Santos and Peter Williamson, of From Global to Metanational: How Companies Win in the Knowledge Economy (Harvard Business School Press, 2001).

Keeley Wilson ([email protected]) is a research fellow at the international business school INSEAD. She is coauthor, with Yves Doz and Peter Williamson, of Managing Global Innovation (Palgrave, forthcoming 2007).
Also contributing to this article was Booz Allen Hamilton Vice President Steven Veldhoen, who leads the INSEAD–Booz Allen research on global innovation.
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