Imaging : Global Innovation Network

1. imagine Your Inno-IP magazine August 2010
efficiency in the business strategy the
Global Innovation Network
.
companies are trying to disintegrate their
R&D functions worldwide, which has
prompted the formulation of global
The emergence of global innovation network is a new innovation networks.
approach adopted at the organizational level to
manage the company wide research and development
 The availability of high-quality work force,
programs. The traditional model of innovation
presence of pro-active IP enforcement laws,
comprising of an ad-hoc structure and centralized
best combination of cost & quality in certain
R&D wing is gradually being replaced by a network of
geographic locations have prompted the
extranet partners and offshore sites which could be
global service/product giants to outsource
collectively termed as a global Innovation network.
their R&D activities or establish off-shore
development centers in such locations.
The reasons for such a transformation in the R&D
strategy could be attributed to
 The companies have identified that the
 The huge investments that the companies are
process of R&D outsourcing & off-shoring
forced to make to be innovative
can be used to reduce the time-to-market and
 The complexity embodied in the process of provide for value maximization.
innovation
 A sharp increase in the demand for  The companies in order to be innovative
products/services that could cater the needs have adopted the strategy of letting the idea
of local population flow out of the place of origination and being
 The rapid growth & substantial availability of handled in various geographic locations, so
expertise in certain developing countries i.e. that there could be versatility in the manner
China, India… in which the ideas would be materialized.
The key trends and attitudes that symbolize the  The process of idea outsourcing & off-
formulation of a global innovation network are shoring has also streamlined the process of
idea transformation, has also brought down
 The customer demand for customized & the cost involved in the innovation process,
innovative products has increased and has succeeded in making the process of
exponentially over the past few years, innovation an inexpensive, flexible and value
prompting the service providers to adopt adding expedition.
newer policies of innovation, in spite of such
an adoption being a costly affair. To sustain The companies in response to the above
the ever-changing market demand trends the mentioned trends, attitudes have started drifting
organizations are being forced to adopt a away from the standard R&D practices which
strategy that is customer-centric and efficient involved setting up and collaboration with an in-
than the existing one. To bring about house R&D department to a distribution of
1|Page

2. R&D activities across multiple partners & through the bout of the innovation tunnel and
geographic locations. Apart from the fact that an reduce their investment levels once the idea has
ad-hoc R&D structure might not be able to passed through the funnel.
sustain the process of innovation for long, the
global harmonization of business practices, A key characteristic of global innovation network
breakdown of traditional customer categories and is that it has reduced the monopoly of the R&D
convergence of previously separate industries department in utilizing the intellectual capacity
have prompted the companies to adopt an R&D .The global innovation network has brought
strategy that is more systematic, efficient, flexible about a new phenomenon termed as ‘open
& diversified. innovation’ wherein the ideas are allowed flow
out of their point of emergence ,to wherever they
The evolving industries are concentrating on can be most effectively utilized and handled. The
increasing the levels of innovation to adopt new result of open innovation is some ideas might
business models that could sustain the demand flow back to the place of origination to be scaled
for customized products/services and efficiency. up & marketed, some may turn into joint
But the matured industries wherein the business ventures and some may get licensed. However
practices have hit a plateau are concentrating on the phenomenon of open innovation ensures
improving the existing business models/practices that the ideas reach the market quickly &
so as to minimize costs, bring about greater efficiently. Open innovation also nurtures the
levels of efficiency, reduce the manufacturing possibility of industry –institution partnership
time & cost, Reducing the time to market etc. wherein the universities could be roped in to
The strategy adopted by a German automobile carry out research works resulting in the
giant in order to minimize the manufacturing emergence of a business model which is cost-
cost and time was to manufacture two different effective and efficient.
models of automobiles through a single assembly
serves as a benchmark to characterize the The global innovation networks have brought
approach of matured industries towards along with them certain challenges that include
innovation.  Possibility of intellectual property theft
by the technology partners
The emergence of global innovation network can  Loss of control over the outsourced
be attributed to the migration from technology R&D activities
push to consumer pull, wherein the service  With the network spanning across
providers are concentrating more on continents , effective communication
manufacturing customized products, being might also be a challenge
customer-centric to avoid R&D wastage, catering
 Lack of coordination across the network
to the needs of customers rather than going in
search of customers to whom they could sell  Deciding on how risks & rewards would
their product/service. The phenomenon of be shared with the partners is also a
global innovation network has restrained the challenge
companies from adopting over-research, over-  The unrealistic estimation of IP value by
prototyping, designing something that is far the universities incase of them being a
beyond the need of the consumer. The partner in innovation
phenomenon of globalization of R&D approach  The ‘not invented here (In-house)’
has led to the bout of the innovation funnel phenomenon needs to be countered.
being widened and the spout being narrowed. As mail : contact@innomantra.com
a result of such a scenario the companies are
required to invest more on the ideas while they ©2010 Innomantra consulting,
are in an initial stage to ensure that they get
2|Page