Technological Change and Innovation in Business - Article Example

Metanational Innovators: Vehicles of Technological Knowledge and Global Innovation Several organizations have international supply chains that rely heavily on the wise utilization of technology and innovation. Beginning with the sourcing of parts and raw materials from various parts of the globe, they then transfer their manufacturing to cost-efficient regions of the world. There is a marked increase in the number of organizations that have also started to move their support services and customer call centers to more cost effective countries. However, few of these organizations have authentic global technological and innovative processes (Wernerfelt, 1989; Wrenn, 1997). This article examines how organizations can help promote and leverage the use of technology and innovation. While it may be true that there is a proliferation of research and product development centers across the globe, these concentrate on optimizing technology which is readily accessible. Even those tagged as benchmarks of technological and innovative excellence, they are inclined to using the technologies that are domestically available within the region in which they operate (Hunt & Morgan, 1995). Its is not frequent to see that innovative activities synthesize distinctive knowledge around the world as potently as supply chains gather components from , raw materials, labor and services. In addition, the functional units which are accountable for innovation in majority of organizations are frequently poorly equipped to save on costs by availing knowledge from nonconventional, more cost-effective regions (Chesborough, 2003; Malecki, 1991). Despite this, there are exceptional organizations that have managed to establish innovative, integrated supply chain that are indeed global, permitting them to outperform their competitors through the prudent use of technological knowledge (Kotter & Heskett, 1992). They have been able to apply a process for innovating that goes beyond domestic clusters and national boundaries, becoming “metanational innovators”. This strategy of utilizing local technology, market intelligence, and capabilities has accorded them a potent contributor to competitive advantage: more, higher value innovation that is also more cost-efficient (Chesborough, 2003). The Strategic Benefits To get a clearer understanding of the benefits of metanational technology and innovation, one may evaluate the war between Motorola Inc. and Nokia Corp. in the cellular phone arena. Motorola was an acknowledged pioneer in the industry, establishing a strong foundation through breakthrough research from Bell Laboratories. By using US technological knowledge to address the needs of US users, the organization drafted a series of incremental enhancements, which are all anchored on the original analog technology. However, an insular innovation process precluded Motorola from anticipating the shift of the market toward digital mobile technology and the global system for mobile (GSM) communication, which evolved as the benchmark in Europe. The organization also missed the chance for making cell phones fashionable and more aesthetically attractive to stylish customers. And Motorola was sluggish to comprehend the novel means of using mobiles, thus they did not acknowledge that a more encompassing, disjointed customer base would spell the fall of ‘generic’ products (Doz, Santos, & Williamson, 2001; Malecki, 1991) On the contrary, the new entrant Nokia was an early metanational innovator. The extensively researched clients in Europe, where different customer segments first started to be brought forth, the organization set the trend for acknowledging that digital technology could significantly enhance the functionality of mobile phones, which lead to the birth of hand phones. After investigating Asian customers, Nokia used design skills from Italy and California to allow the mobile phone to evolve into a fashion accessory instead of a mere commodity. The organization also broadened its innovation process into China and India, where it has determined that mobile phones were prospective alternatives to fixed line network if researchers are able to lower down the cost of mobile telephony. The outcome is clear: Nokia became market leader while Motorola strived to survive (Doz, Santos, & Williamson, 2001). Across industries, similar examples on the use of technology and innovation transpire. The Boeing Co. which has previously utilized local technologies for the development of several aircraft models for the US model, and subsequently sold these globally, has been taken over by Airbus SAS, which used innovation in a distinct way. To engineer and design its aircrafts, Airbus has leveraged on diverse sources of expertise, such as wing aerodynamics from the United Kingdom, avionics from France, and flight control technology from the United States. All of these were meaningfully synthesized with knowledge of the various needs of carriers from other countries serving vast regional markets (Chesborough, 2003). Computer Associate International Inc. is an acknowledged leader in software and associated services, and has notably lost advantage over SAP AG which is a German organization. Apart from optimizing hardware and software technologies globally, SAP’s innovation process has maximized the use of market knowledge deduced from early offshore customers, including UK-based Imperial Chemical Industries Plc and US-based Deere & Co. Such use of technological knowledge has allowed SAP to optimize products to manage factors such as language, currency and accounting norms. This has addressed the need for cross-cultural synthesis of data and permitted this information to be availed and analyzed with relative ease throughout an organization (Chesborough, 2003). Within the fastfood industry, the early obstacles encountered by McDonald’s Corp. may be accounted for by the organization’s parochial innovation process, which is profoundly anchored in the United States even as the company’s operations is extensively spread internationally. This is contrasted with the case of Starbucks Corp. which has successfully synthesized diverse packets of knowledge, encompassing Italian technology for expresso coffee roasting; the European concept of the café; and the distinctive US expertise in retail chains, fast food service procedures, logistics and staff training and incentives. They have thus allowed the evolution of serving cups of coffee in the US (Doz, Santos, & Williamson, 2001). For organizations such as Nokia, Airbus, SAP and Starbucks, metanational innovation means much more than just a way of managing a novel product or service. It has also permitted organizations to develop exceptional business models, strategies, and capabilities that their competitors have found difficult to imitate. Thus, it may be said that for some organizations, metanational innovation has become a resolute means of yielding competitive advantage (Doz, Santos, & Williamson, 2001). Naturally, it is probable for some organizations to become effective at constraining innovation within their own countries or even by concentrating on a single cluster of technological knowledge. For instance, Intel Corp. has been successful at winning a prominent share in the international market for standard semiconductors – initially in memory chips followed by microprocessors. They have primarily relied on the technological knowledge available from the Silicon Valley. Its strategy of domestic innovation and then distributing the finished products through an efficient supply chain has been obviously beneficial. First, organization and coordination of the innovation process has made things more straightforward – when the necessary knowledge is accessible primarily among people who have a common language and comprehension of the domestic context. This encompasses everything from implied roles and responsibilities to traditional development cycles (Chesborough, 2003). But even Intel has started the use of more knowledge from offshore. For instance, some of its water-lithography technology, has been sourced from Japan, while a critical source of innovation is now yielded from Israel. And Intel has been gaining more market share. In fact, its global venturing fund has investments in over 20 countries, allowing it to avail of novel technologies globally. In this aspect, Intel is close to emulating global innovators such as STMicroelectronics (Doz, Santos, & Williamson, 2001). Optimizing the Potential of Diversity Innovation is conventionally borne out from integrating existing technologies and expertise in novel ways. New online banking products have been brought forth, for instance, from the collaboration of distinctive streams of knowledge about financial tools, tax codes, information technology, communication technologies, and electronic security systems. But the synthesis of innovation in such new ways does not automatically lead to effective organizational innovations. Organizations also ought to have a profound understanding of the market. The supersonic Concorde, for instance, was an exceptional technological achievement; however, it was also a commercial failure that exhibited an embarrassing lack of insight on client needs and the dynamics of the global market. Therefore, organizations may substantially enhance their innovation flow by optimizing the best combinations of technological knowledge and market expertise. Moreover, this process may be significantly improved by sourcing such knowledge extensively and from offshore if necessary – and not just constraining sourcing domestically. A simple parallelism may be put forth: similar to a hi-fi system whose general performance is determined by the quality of its loud speakers (which is usually recognized as its weakest component), the likelihood of effective innovation will be limited by the weakest knowledge source. Put simply, the likelihood of a successful innovation brought forth by a group of individuals who possess a common knowledge cluster is less probable than that source from the interaction of diverse and distinct clusters (Murtha, Lenway, & Hart, 2001). Availing adequate and diverse technological knowledge is a critical challenge, and this competency becomes much more crucial as a market matures and as the organization strives to develop market differentiators to gain competitive advantage. The changing market for personal digital assistants (PDAs), for instance, has compelled palOne Inc. and its competitors to use markedly diverse knowledge types encompassing wireless communications and phone ergonomics. Along a similar vein, as organizations try to offer comprehensive solutions for instead of stand-alone markets and services, they need to possess a clearer understanding of evolving customer needs (Murtha, Lenway, & Hart, 2001). The Relationship between Geography and Technological Knowledge The relationship between geography and the diversity of technological knowledge is crucial, but is not always apparent. For instance, in Finland, the expensive cost of installing and sustaining fixed telephone lines in remote places (and which comes in combination with the country’s severe winters and low population density) has compelled progress in radio telephony. Culture and politics in Germany have similarly permitted the birth of a strong “green movement”, which has allowed the formation of a distinct market and technological knowhow in recycling and renewable energy. Moreover, in Japan, the expensive cost of land has compelled organizations to become acknowledged experts in just-in-time production systems for keeping inventory to reasonable levels (Murtha, Lenway, & Hart, 2001). Globalizing the innovation process is a significant way of availing this great diversity of knowledge. Frequently, globalization is not only ideal but necessary. Decades ago when the center of critical knowledge in the computer industry started to change from the Route 128 corridor in Boston to Silicon Valley, a handful of Eastcoast organizations – including Wang Laboratories, Digital Equipment and Data General among others – failed to make the required modifications and experienced the grave outcomes. To this day, the necessity of optimizing geographically distant knowledge is transpiring on an international scale (Chesborough, 2003; Luttwak, 1999). For instance, the pharmaceutical industry may be worth mentioning. Organizations such as Novartis AG and GlaxoSmithKline Plc now acknowledge that the knowledge they need not be constrained within conventional chemistry and therapeutics. On the contrary, it encompasses biotechnology, genetics, the utilization of computers and robots in drug discovery. A substantial part of such technological knowledge has been sourced from diverse sources, distant from its main laboratories in Basel, Bristol, or New Jersey. In contrast, it is frequently situated in California, Tel Aviv, Cuba or Singapore. As an outcome, these pharmaceutical organizations have learned that the innovation process ceases to be just a simple option – it has evolved into a necessity (Doz, Santos, & Williamson, 2001). It is also worth noting that the increasingly widespread dissemination of knowledge which is now happening in numerous industries is partially an outcome of the globalization of supply chains. Particularly, as organizations increase their utilization of contract manufacturing, the sources of novel knowledge derived from enhancements in production processes have also become extensively spread. For instance, around 60% of all notebook computers are produced in Taiwan, making the nation a valid and reliable source of knowledge about the design, engineering and production of these products (Chesborough, 2003). Along a similar vein, multinational organizations displace knowledge to new regions through their affiliates; an outcome is the development of new sets of competencies in those sites. When Hewlett-Packard Corp. has established its headquarters in the Silicon Valley and moved its process engineering skills in Singapore to produce calculators, it has caused a series of logical consequences. First, the engineers there started to modify the designs of calculators, slowly establishing competencies that were then implemented with keyboards and ultimately to the design of ink jet printers. A novel pocket of competencies was thus brought forth in the other side of the globe (Murtha, Lenway & Hart, 2001). Organizations ought to be reminded of the fact that technological milestones does have a tinge of serendipity to it. At certain times, there are crucial advances that will transpire outside sites which have the most sources. For instance, at the onset of 1997, researchers have surprised the world with a cloned lamb called Dolly. The site of that development is Scotland, which is hardly the most obvious place where such advancement could transpire (Chesborough, 2003). Several organizations are acknowledging that the knowledge required to devise new innovations is neither constrained to in-house development or nearby. While metanational innovation has lagged behind the initiatives of organizations to globalize their supply chains, the competitive advantages yielded have been equally appealing. By optimizing the diversity of knowledge dispersed throughout the world, metanational innovators have been able to generate more innovation at more cost effective rates. References Chesbrough, H. (2003). The era of open innovation. MIT Sloan Management Review, 44-35-41. Doz, Y., Santos, J. & Williamson, P. (2001). From global to metanational: How companies win in the knowledge economy. Boston: Harvard Business School Press. Hunt, S. & Morgan, R. (1995). The comparative advantage theory of competition. Journal of Marketing, 59, 1-15. Kotter, J. & Heskett, J.. (1992). Corporate culture and performance. The Free Macmillan, Inc. Luttwak, E. (1999). Turbocapitalism: Winners and losers in the global economy. New York: Harper Collins. Malecki, E. (1991). Technology and economic development: The dynamics of local, regional and national change. New York: Longman Scientific and Technical. Murtha, T., Lenway, S. & Hart, J. (2001). Managing new industry creation: Global management formation and entrepreneurship in high technology. Stanford, California: Stanford University Press. Wernerfelt, B. (1989). From critical resources to corporate strategy. Journal of General Management, 14, 4-12. Wrenn, B. (1997). The market orientation construct: measurement and scaling issues. Journal of Marketing Theory and Practice, 5(3), 31-54. Read More