Table Of ContentManaging Global Innovation
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WilliamA.Fischer,Professor,IMD
Roman Boutellier
Oliver Gassmann
Maximilian von Zedtwitz
Managing Global Innovation
Uncovering the Secrets
of Future Competitiveness
Third edition
123
Prof.Dr.RomanBoutellier
• ProfessorofInnovationandTechnologyManagement,ETHZürich,Switzerland
• FormerCEOandManagingDirectorofSIG,Schaffhausen,Switzerland
• [email protected]
Prof.Dr.OliverGassmann
• ProfessorofTechnologyManagementandDirectoroftheInstituteofTechnologyManagement,
UniversityofSt.Gallen,Switzerland
• FormerHeadofR&DTechnologyManagement,SchindlerElevators,Switzerland
• [email protected]
Prof.Dr.MaximilianvonZedtwitz
• ProfessorofTechnologyandInnovationManagement,TsinghuaUniversity,Beijing,P.R.China
• President,AsiaCompeteInt’lLtd.,HongKongSAR,P.R.China
• SeniorAdvisor,ArthurD.Little(China)Ltd.
• [email protected]
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Preface to the Third Edition
If R&D and innovation in the 1990s were about more internationalization, more
corporate entrepreneurship, and more information-integration, then the 2000s have
been about consolidating and expanding these trends further: more globalization
including the technology mavericks of China and India, more open and inbound
innovation integrating external technology providers, and more web- and Internet-
enabling of innovation processes by involving R&D contributors regardless of
their location. The corporate R&D powerhouses of the 1980s are now mostly
history. Even where they survived, they had to yield to corporate efficiency efforts
and business-wide integration programs. Still, it would be unfair to belittle them in
retrospect as they have found new roles in corporate R&D and innovation net-
works. In fact, the very successes of centralized R&D organizations of the 1970s
and 1980s made possible the revolution of globalized innovation that we have
been witnessing since the 1990s.
The first two editions of Managing Global Innovation, published in 1999 and
2000, were testimonials of an increasingly internationalizing world of innovation
and R&D. In this third edition of Managing Global Innovation, we have retained
the basic structure of two conceptual parts (I and II) and three case study parts (III,
IV, V). However, we have greatly revised all chapters, including the final “Impli-
cations” chapter (part VI), and incorporated new chapters and cases that illuminate
and describe the recent trends in the context of the beginnings of global innovation
in the 1980s and 1990s. In particular, we expanded on the notion of external driv-
ers of R&D internationalization, and we added chapters and cases on R&D in
China and India. We’ve also added more on the management and organization of
global R&D, such as technology listening posts and leading R&D units.
In the three case study parts we added several new cases written specifically for
this book: Siemens, BMW, Fujitsu, Huawei, SAP, and Swiss Re. BMW and Fu-
jitsu are classical examples of global R&D organizations. Siemens and Huawei are
illustrations of innovation in China, with Huawei being a true example of a com-
pany from an emerging country (China). Swiss Re illustrates global innovation in
services, another up-and-coming field of the 2000s. SwissRe and SAP also ad-
dress the increasingly important field of intellectual property management in
R&D. The present SAP case replaces our earlier SAP case on project and program
management. All other cases were slightly updated but retained mostly intact as
per their date of writing. They remain interesting cases in their own right and their
appropriate setting within global R&D. Only one case study – Nestlé – had to be
vi Preface
eliminated as the company had moved forward.
This revised third edition is based on several hundred more research interviews
with R&D managers and directors around the globe. It incorporates our own com-
bined experiences of more than sixty years as R&D managers, chief executives of
technology companies, or directors of international researchers and scientists. But,
first of all, this book lives off the wealth of knowledge presented by the case study
authors, all of them accomplished innovation leaders with their respective compa-
nies. Our sincere gratitude and professional acknowledgement goes out to them.
Secondly, we are indebted to our colleagues and research associates who have
assisted in putting everything together and making sure it has become this present-
able whole that it is now. In addition to those already acknowledged in the first
two editions, we would like to extend special thanks to Sharmila Egger, Marcus
Keupp, Markus Skriver, and Moritz Vischer, and last but not least Andreas Bied-
ermann, who was crucial in putting all the pieces together.
We hope you will find reading this book as much a source of inspiration and
fun as it has been to us while writing it.
November 2007
Zurich, Switzerland Roman Boutellier, ETH Zurich
St. Gallen, Switzerland Oliver Gassmann, HSG St. Gallen
Beijing, P.R. China Maximilian von Zedtwitz, Tsinghua University
Preface to the Second Edition
Globalization has changed the face of R&D. Local knowledge clusters are not
only tapped by multinationals but increasingly by small and medium-sized com-
panies as well. Global R&D networks speed up the evolution of technology and
ask for new management concepts. Modern communication technologies create
the global village, but customers become more fastidious and request their own
specific products, well localized, well tuned into their present business. Integrated
technology is required to cope with these needs. The danger of over-engineering
has never been as great as today. The question is frequently not whether some new
features are technically feasible but whether customers are willing to accept and
pay for it.
The first edition of Managing Global Innovation was sold out after few months,
clearly indicating the search for solutions to these challenges. This second edition
has been revised for clarity and actuality. We have taken care to work in recent
research findings as well as updating the case studies where appropriate.
This book is based on the growing importance of industrial global innovation
and the lack of concepts to manage it. For this book we conducted 320 interviews
in 40 technology-based, highly internationalized companies, including additional
interviews in 1998 and 1999 for the second edition. Our interview partners were
R&D managers and research directors from companies in Europe, USA and Japan.
They spent a lot of time with us to discuss their viewpoints on this topic. We com-
plemented this valuable body of insight with the latest findings in academic re-
search and management science.
Managing Global Innovation is divided into six parts: In part I we analyze the
international dispersion and drivers of R&D locations, as well as concepts and
trends of global R&D organization. Using a top-down approach, we break down
the challenges of global innovation to requirements of transnational R&D project
organization. In part II we focus on five cross-functional fields in global innova-
tion: Increased awareness of external customers, interfaces between research and
development, multi-stakeholder perspectives in transnational R&D processes,
modern information and communication technologies as enablers of such proc-
esses, and human resource management.
In parts III, IV, and V we present 18 in-depth case studies of successful practice
companies in the three different types of industries: Science-driven (pharmaceuti-
cals/chemicals/food), high-tech-driven (electronics/software), and dominant-
design-driven (electrical/machinery). In alphabetical order, these companies are
viii Preface
ABB, Canon, Ciba, Daimler, DuPont, Hewlett-Packard, Hitachi, F.Hoffmann-La
Roche, IBM, Kao, Leica Microscopy, MTU, Nestlé, SAP, Schering, Schindler,
Unisys, and Xerox.
We have chosen a case-study approach since the complexity of global R&D
management is great and experience so limited. In our research, the case study
companies have been identified as leading their industries in global R&D man-
agement. Most of these case studies were written by senior corporate R&D offi-
cers, based on a uniform concept we provided and their determination to share.
The case studies represent a wealth of knowledge and experience: They show a
vast range of organizational forms, from completely centralized to globally dis-
persed, from technology-driven to fully customer-oriented. We have tried to show
some patterns and some consistencies, well aware of the need to keep the balance
with a contingency approach. Some basic rules should help managers in their
strategic and day-to-day decisions, others are aimed at the broad range of organ-
izational forms and management of R&D on a global scale.
Many people participated in making this book. We are grateful to our col-
leagues who have given us invaluable assistance in preparing this book. Particu-
larly helpful in reviewing and proof-reading have been Sabine Böttcher, Gregory
Huber, Carmen Kobe, Ursula Koners, Sara Leu, and Stefan Schweickardt. But
most of all we would like to thank the case study authors who spent valuable time
to share their experiences with our international R&D community. They have
given us the cases needed to sort out a few dilemmas and, as we hope, a few gen-
eral rules and hints that may be of some help to all R&D managers trying to cope
with globalization in the 21st century.
January 2000
St. Gallen, Switzerland Roman Boutellier
St. Gallen, Switzerland Oliver Gassmann
Cambridge, Massachusetts Maximilian von Zedtwitz
Contents
Preface to the Third Edition..........................................................................v
Preface to the Second Edition....................................................................vii
I. Challenges and Trends
1. Challenges of Organizing International Research & Development..............3
2. Extent of R&D Internationalization............................................................41
3. Foreign R&D in China................................................................................61
4. Internal Drivers...........................................................................................77
5. External Drivers..........................................................................................97
6. Establishing Overlaying Structures...........................................................113
7. Organizing Virtual R&D Teams...............................................................127
II. Emerging Patterns
1. The Market as a Challenge for R&D........................................................149
2. Technology Listening Posts......................................................................171
3. Managing the International R-to-D Interface............................................183
4. Transnational R&D Processes..................................................................209
5. Information & Communication Technologies..........................................233
6. Directors of International R&D Labs........................................................253
7. Managing Knowledge and Human Resources..........................................273
III. Best-in-Class: The Pharmaceutical and Chemical Industry
1. DuPont: Gaining the Benefits of Global Networks – from the
Science Base to the Market Place..............................293
2. Roche: Global Differentiation between Research and Deve-
lopment......................................................................307
3. Schering: Synchronized Drug Development..............................321
4. Ciba: International Research Laboratories in Japan: Prac-
tical Validation of a Strategic Concept......................331
5. Kao: Localizing R&D Resources........................................347
x Contents
IV. Best-in-Class: The Electronics, Software, and Service Industry
1. Xerox: The Global Market and Technology Innovator..........361
2. Canon: R&D –Driver for Continuous Growth and Diversi-
fication.......................................................................379
3. Hewlett-Packard: Planet-Wide Patterns in the Company’s Technology
Tapestry......................................................................397
4. IBM: Using Global Networks for Virtual Development.....445
5. SAP: Global Intellectual Property Management in the
Software Industry Sector............................................459
6. Unisys: Localization of Software Development......................487
7. Huawei: Globalizing through Innovation.................................507
8. Fujitsu: Solutions for the Ubiquitous Networking World.......523
9. Swiss Re: Global Intellectual Property Management in the
Financial Services Industry........................................535
V. Best-in-Class: The Electrical and Machinery Industry
1. ABB: Management of Technology: Think Global, Act
Local..........................................................................559
2. Daimler: Global Knowledge Sourcing and Research................573
3. Schindler: Institutionalizing Technology Management and
R&D Core Competencies...........................................603
4. Hitachi: Management Practices for Innovation in Global
Industrial Research.....................................................623
5. Leica Microscopy: International Transfer of R&D Activities..................647
6. MTU: Partner in International High-Tech-Cooperations......663
7. BMW Group: Strategic Framework for Global Innovation to En-
hance the Efficiency of Global R&D.........................677
8. Siemens: Flying with the Dragon - Innovation in China...........695
VI. Implications
VI.1 Implications for Organizing Global R&D.................................................711
Bibliography.............................................................................................753
Index.........................................................................................................785
Index of Companies..................................................................................791
Editors.......................................................................................................797
Case Study Contributors...........................................................................799
