The biggest bang for your buck!

INNOVATION CAPACITIES AND CAPABILITIES GOES TO THOSE LOCATIONS OFFERING THE BIGGEST BANG FOR YOUR BUCK!

A recent survey of multinational research and development (R&D) found that 22 per cent of all new research and development centres to be developed between 2006 and 2009 will be located in China and 19 per cent in India. The figures for the US, Western Europe, and Japan are 19 per cent, 13 per cent and 5 per cent.

It is clear that multinational firms are increasingly locating their innovation activities not in the traditional ‘innovation economies’ of North America, Western Europe, and Japan but in the emerging economies.

SO HOW ARE WE GOING TO RESPOND?

R&D and the propensity to innovate has been ‘internationalised’. Innovation is no longer the preserve of a few nations or hermetically sealed large R&D driven companies, and the innovation process is no longer ‘linear’. There are many new players, and an expanded range of mechanisms and platforms for value creation and captured. Open innovation, free revealing, user-driven innovation, creative networks and ‘imagination programmes’ are examples of initiatives that characterise the innovation strategies of many companies (in various combinations depending on the specificities of the sector and the company in question)

Innovation has become an inter-disciplinary, cross-sectoral and trans-border endeavour. Technological (especially computational) advances are allowing a whole new range of business models to be explored and implemented. For example, BT’s evolving business is based on an understanding of cultural and social change, cognitive behaviour and the developing wants, demands and requirements of an expanding user domain. BT is using technology as an instrument to deliver innovative and market-capturing services; and Philips has moved from a rather secretive R&D process to one based on open innovation.

Globally integrated companies are increasingly replacing the classic multinational corporation, and talent from anywhere is placed anywhere deemed the best location for the delivery of the business model. The City of London has attracted some of the best financial talent from across the globe and partly as a consequent is has been responsible for many financial engineering innovations.

Supply chains have become virtually borderless. Boeing’s 787 is an example of this process; assembled from parts made around the world and sub-assembled beyond the States, Boeing has become a manufacturing outsourcer, and a service manager of perhaps the sector’s best global supply chain. Boeing remains a high value-added knowledge driven company designing and servicing innovative ways to travel. The company makes less and less; it co-develops with consumers (e.g. airlines) and supply partners (See FINANCIAL TIMES [Monday July 9th 2007] A clever way to build a Boeing). Increasingly it is not individual companies that compete, but trans-border supply chains of integrated companies positioned in global markets.

IN THE FACE OF SUCH MASSIVE ‘UNBUNDLING’ WHITHER A NATIONAL INNOVATION STRATEGY (LET ALONE A REGIONAL STRATEGY)?

What has allowed all this to happen is global trade liberalisation, the communication / IT revolution enabling massive amounts of data to communicated (at virtually zero cost), processed and managed virtually anywhere in the world, the global march of education and the creation of a global labour market. Indeed, step-change improvements in education, communications and computers over the last decade or so have meant that access to and engagement in the innovation process has become more widespread than ever before.
But not necessarily easier; competition has increased, as has the knowledge-content of many new products and services. Winners are often those that can marshal knowledge effectively, and, with tailored marketing campaigns, reach the consumers with the new product / service combination - quickly. Often collaboration is required; rarely does one firm possess all skills, innovation assets and channels to market required. Hence, the risen of open innovation, sector consortium collaborations, and industrial platforms collaborations.

And hence initiatives such as the Oxford to Cambridge Arc (O2C) encouraging collaboration amongst the members of the innovation community is the Arc, and between the Arc and its peer group across the globe; the 15 or so super-innovation regions which will drive the global economy in the future.

FOR MORE SEE – THE STATE OF THE INNOVATION ECONOMY. Miles and Daniels, September 2007 to be found on this web-site!