Ten Rules for Managing Global Innovation
Publication Year: 2012
Journal: Harvard Business Review
The paper focuses on the challenge of companies with dispersed, global operations that struggle to exploit the companies’ ideas and capabilities for global innovation projects. Although the challenges may be familiar, the solutions are not; what works for an innovation project conducted in a single location doesn’t necessarily work for one dispersed across many sites around the world. That’s partly because many important enablers of innovation happen naturally in colocation. Single location projects draw on large reservoirs of shared tacit knowledge and trust, and when issues arise, senior management is on hand to make decisions and provide direction and support. Team members share the same language, culture, and norms, enabling flexibility and iterative learning as the project unfolds. When a project spans multiple locations, many of those natural benefits are lost. Part of the challenge of dispersed innovation thus becomes how to replicate the positive aspects of colocation while harnessing the unique benefits of a global initiative. To explore this challenge, the authors performed a field research at 47 companies around the world and conducted a survey that was completed by 186 companies, with a combined innovation spend of more than $78 billion. They draw on that work to present a set of guidelines for successfully managing global innovation projects:
- Start small. To be effective, dispersed teams have to develop a new set of collaboration competencies and establish a collaborative mind-set. This can best be done by running small, dispersed projects involving just two or three sites before a project launch.
- Provide a stable organizational context. Managers need to anticipate the possible toxic side effects of reorganization on global innovation and shelter teams as much as possible from disruptions.
- Assign oversight and support responsibility to a senior manager. Project teams often struggle to handle problems constructively over a distance, and so senior managers have to take on a formal role as arbiter, risk manager, support provider, and ultimate decision maker.
- Use rigorous project management and seasoned project leaders. A global innovation project requires a strong project management team to drive the project on a day-to-day basis and strong team leaders supported by robust tools and processes.
- Appoint a lead site. The sites can’t carry equal weight, even if their experience and expertise are equivalent; one has to be designated the lead. That site takes responsibility for delivering the project on time and on budget.
- Invest time defining the innovation. Requirements need to be thoroughly understood so that everyone working on the project has the same understanding of the goals and their individual contributions to them.
- Allocate resources on the basis of capability, not availability. To exploit the advantage of having distinctive and differentiated knowledge and capabilities from around the world, effective staffing of a global project requires the selection and integration of the best possible knowledge and capabilities.
- Build enough knowledge overlap for collaboration. This doesn’t mean replicating the other sites’ knowledge, but understanding enough of what they do to anticipate potential interdependencies.
- Limit the number of subcontractors and partners. Managing relationships with external parties takes time and energy, so additional complexity and management burden should be limited by keeping the number of subcontractors or partners to a minimum.
- Don’t rely solely on technology communication. Projects should include generous travel budgets for face-to-face site visits, team meetings, and temporary transfers for key team members.
This paper is relevant to the adaptive cycle described by Holling (2001). This cycle consists of four phases which can, over time, often be identified in all kinds of systems, including global organizations. The trajectory shows how systems adapt to periods of crisis. During the time where organizations exploit resources with increased efficiency, they eventually become overconnected and rigid in its control, making them vulnerable due to decreased resilience. As a result of a crisis, a period of instability follows which requires rapid reorganization. It is during this stage where low connectedness allows for unexpected combinations of previously isolated or constrained innovations that can offer new business opportunities. It is a fertile environment for experiments, of which many will fail, but others survive and succeed. Wilson and Doz present in this paper ten rules for managing global innovation. When considering the relation to the adaptive cycle, the set of guidelines is especially relevant to the phase in which is room for experiments that lead to new innovations. The adaptive cycle shows that innovating is essential for surviving as an organization in a constantly changing system. In order to be distinctive, and hereby increasing their sustainability, organizations that have the resources can use global teams that bring together differentiated knowledge and capabilities from around the world to create unique innovations. The presented guidelines explain how these dispersed teams should be managed in such a way that the chance of a success of the innovation project is maximized. Management of organizations is also strongly related to the adaptive cycle, as different types of leaders are preferred in the various phases in order to either exploit the current ecosystem, or encourage innovation. The authors mention valid concerns firms struggle with when exploiting their innovation potential of their global networks. One reason is because they manage global projects like traditional, single-location ones. The paper however, remains quite general and does not explore for example how different types of companies should manage different types of innovations and team compositions, neither does it discuss the maturity of the companies and their ecosystems.