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Managing the New Trajectory of Global Innovation
Navi RadjouExecutive DirectorCentre for India & Global BusinessJudge Business School, University of Cambridge
2 http://www.india.jbs.cam.ac.uk/
3 Source\: http://www.economist.com/specialreports/displaystory.cfm?story_id=14483896
Vittorio ColaoCEO, Vodafone
“There are lot of operational ideas froma cash-constrained, entrepreneurialenvironment (like Africa, India) that you can immediately bring back to thedeveloped world”
4 Source: http://online.wsj.com/article/SB125447549436158991.html
Mr. Immelt said he expected health-care products developed in India to be exportedto the rest of the world. "Some of these models and products have applicability in Europe and the U.S.," he said
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Theme
In the emerging multipolar (R&D) world, winners will be corporations and nations that
can drive polycentric andglobally-networked
innovation
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Agenda
• How the emergence of a multipolar (R&D) world is driving polycentric and networked innovation
• How MNCs are driving polycentric and networked innovation out of emerging markets: the case of India
• Public policy implications
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Agenda
• How the emergence of a multipolar (R&D) world is driving polycentric and networked innovation
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BRIC Nations’ Huge Domestic Markets Are A Big Draw For MNCs
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Why MNCs are attracted to BRIC?
1. Huge market potential
2. Vast reservoir of high-quality talent
3. Access to new technologies (as well as market insights and business models)
4. Cost reduction opportunities
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Follow the money
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But the BRIC markets won’t emerge ex nihilo
“GE’s top management finally realized there is a big gap between the growth potential of India and our own ability to actually seize that potential.
We realized we had a chance to actually SHAPE the Indian (healthcare) market by localizing more R&Dand manufacturing work”
V Raja, President and CEO,
GE Healthcare, South Asia
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MNCs are moving more R&D work to India & China to first shape and then serve local markets
“Top-ranking destination countries by number of research and development projects”
Source: IBM-Project Location International (IBM-PLI) Global Investment Locations Database (GILD)
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West- Mid west
South
Northeast
Canada
Brazil
S. Africa Australia
Singapore
India
Taiwan
JapanS.
Korea
ChinaIsrael
Italy
Ireland UK
Sweden
Germany
PolandNetherlands
France Switzerland
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223 52
116
163
27152
3521
109
86
122026
7
6
63
98 27148
12
12
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The result? Multipolar R&D World and Polycentric Innovation
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MNCs’ R&D activities in BRIC markets are becoming more “strategic”
Commercialopportunities
in local markets
HIGH
LOW HIGH
MNCs’R&D ops in BRIC
(1985-2000)
MNCs’R&D ops in BRIC(2005+)
Local capabilities(R&D, partner ecosystem)
LOW
MNCs’R&D ops in BRIC
(2000-2005)
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Cisco’s R&D hub in India has a GLOBAL remit
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MNCs are striving to integrate their Global Innovation Networks to drive global synergies
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Traditionally, global innovation networking happened through one-way knowledge flows...
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...which need to be replaced with rich, fluid, multidirectional knowledge flows
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New trajectories of global innovation
Developedmarkets
EmergingMarkets
Inspired by Developed in Commercialized in
TIME
SCOPE &AUTHORITY
20
The “Trickle-Up” Innovation Phenomenon
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New trajectories of global innovation
Developedmarkets
EmergingMarkets
Inspired by Developed in Commercialized in
TIME
SCOPE &AUTHORITY
22
But the trillion-dollar question is: WHO is charge of global innovation networking?
• Western HQ?
• Emerging market units?
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Agenda
• How MNCs are driving polycentric and networked innovation out of emerging markets: the case of India
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India Will Boast Highest Growth Rate of BRICs
0
1
2
3
4
5
6
7
8
2005-10 2015-20 2025-30 2035-40 2045-50
5-Y
ear
Per
iod
Ave
rage
Per
cent
Per
A
nnum
BrazilChinaIndiaRussia
BRICs = Brazil, Russia, India, ChinaSource: Goldman Sachs, “Dreaming with the BRICs”
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Upper-Middle$10,000+ PPP(1)
Middle$5,000-10,000 PPP
Emerging$2,500-5,000 PPP
Poor Under $2,500 PPP
2005 2020
Changing Class Structure
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36
30
37 3839 3944 44
USA China Russia UK
24
30
35
40
45
50
Med
ian
age
in y
ears
24
India
312000 2025
Demographic Dividend
Source: Exhibitions India Pvt. Ltd.
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Diversity
• Geographical
• Cultural
• Social
• Economic
• Biological
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Scarcity
• Natural resources
• Capital
• Land
• Skilled labour
• Infrastructure
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Success criteria for made-in-India innovations:
1. Simple (hassle-free, intuitive use)
2. Low-cost
3. High-value
4. High-volume
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Indian firms are driving innovations that deliver more value for less cost
Source: Scott Eells for The New York Times
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Amazing innovations are led by Indian social entrepreneurs at base of the economic pyramid
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Amazing innovations are led by Indian social entrepreneurs at base of the economic pyramid
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Coming soon to a city near you: Scar-city!
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GE’s global innovation trajectory
Developedmarkets
India
Inspired by Developed in Commercialized in
TIME
SCOPE &AUTHORITY
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John Deere’s Passage to India
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John Deere’s global innovation trajectory
Developedmarkets
India
Inspired by Developed in Commercialized in
TIME
SCOPE &AUTHORITY
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Global Innovation Networks In Action: IBM
“A new corporate entity based on collaborative innovation, integrated
production, and outsourcing to specialists is emerging in response
to globalization and new technology. Such ‘globally
integrated enterprises’ will end up reshaping geopolitics, trade,
and education.”
Samuel J. Palmisano, CEO, IBM
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Global Innovation Networks In Action: IBM
Dr Guruduth BanavarDirector
IBM India Research Lab
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IBM’s multiple global innovation trajectories
Developedmarkets
India
Inspired by Developed in Commercialized in
TIME
SCOPE &AUTHORITY
42
Cisco’s R&D hub in India has a GLOBAL remit
43
Cisco’s global innovation trajectory
Developedmarkets
India
Inspired by Developed in Commercialized in
TIME
SCOPE &AUTHORITY
44
Agenda
• Public policy implications
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Global Innovation Networking (e.g., Trickle-Up Innovation) Could Actually Help US Citizens
“Telemedicine solutions can savethe US healthcare system
$4 billion/year just from reducing patient transportation”
Source: Center for IT Leadership
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In the emerging Global Innovation Networks…
Inventor Transformer
Broker
Financier
Financier
Transformer
Broker
Inventor
Broker
Broker
Role Specialization
Inventor
Converts input from Inventors intomarket-relevant and usable productsor services.
T
Funds activities of Inventors andTransformers.
Finds andconnects Inventors,Transformers, andFinanciers andfacilitates their global interactions.
Creates a new idea or a new product, service, or business model
Transformer
Financier
Broker
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…You Don’t Need To Invent (in the US) To Compete Globally
1. Knowledge is NOT power
2. Smart firms (countries) will trade ideas with competitors , enabling global “brain circulation”
3. Patents are NOT an indicator of innovationMarket (and societal) value is the BEST indicator of innovation
Finding and sharing knowledge is power
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Policy Makers Should Strive To Strengthen US Capability As Global Broker and Transformer
http://www.bayeconfor.org/media/files/pdf/InnovationDrivenEconomicDevelopmentModel-final.pdf
“The role of the economic development practitioners should
be to broker innovation networks, connecting inventors, financiers, and transformers to
produce results”
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The White House should use its Social Innovation Fund to broker “trickle-up innovation” at grassroots level
Sonal ShahDirector
White House Officeof Social Innovation
and Civic Participation
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Summary
• In the emerging multipolar world, innovation is becoming polycentric…
• …But the onus is on MNCs to tightly integrate their globally-distributed innovation networks
• India presents itself as a both a lucrative innovation market --and a fertile source of innovative solutions that can be replicated worldwide
• US policy makers should encourage polycentric and networked innovation by bolstering US capabilities to broker and transform global inventions
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