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abandoning its regional structures. Segments and business areas
now took global responsibility with country managers reporting
directly into the group. Additionally, ABB is moving away from
its engineering heritage towards a more knowledge- and service-
orientated culture. This has placed a much greater emphasis on
40 TAKING IDEAS TO MARKET
developing technology and managing global leadership and human
capital.
KEY LEARNING POINTS
» The old globalization of 1970s and 1980s was about selling
in as many markets as possible. By contrast, the new global-
ization of the 1990s seeks to create a web of value through
the optimal configuration of local and global markets, people,
products, and processes.
» Very few completely global products, such as the Big Mac,
exist but many products are based around a core, global platform
that is tailored for each local market.
» Products with relatively high development costs are particularly
susceptible to globalization, as are those with global customers.
» Creating global products generally requires trade-offs between
global scale economies and exactly meeting locally specific
needs.
» Successful global product strategy also requires a global
approach to people and organization that includes matrix
structures to co-ordinate product development and facilitation,
and cultural awareness to support multinational teams.
The State of the Art
What is state of the art for innovation right now? This chapter navigates
through the maze of current issues to highlight the key emerging
themes by:
» providing a contextual understanding of the evolutionary position of
firms;
» discussing the key drivers of change;
» identifying how organizations are responding to the challenges they
encounter; and
» questioning what is next.
01.08.06
42 TAKING IDEAS TO MARKET
CONTEXT
State of the art in taking ideas to market depends on where an individual,
a company, or even an industrial sector is in the overall context of the
evolution of innovation capability. As detailed in Chapter 3, following
an increasing build-up during the first three-quarters of the twentieth
century, it is only in the past 20 years that there have been significant,
or even revolutionary, changes in how ideas are being taken to market.
Some companies have adapted the latest thinking coming out of the
academic establishment, learnt from other sectors in the business
community, and are now even beginning to operate at what can be
considered to be the leading edge. Some are integrating approaches
such as stage-gate processes and multi-functional teams, as it has
become apparent to them that others have gained from their adoption.
By contrast, other firms are only now just beginning to take the first
step and start to grasp the basics, aligning their desire to exploit new
technologies with the concept of a coherent strategy, flexible process,
and dedicated resource. Ironically, some organizations that, by the
nature of the technological changes that they are seeking to exploit,
feel they are at the cutting edge are, in reality, just getting off the
starting blocks.
State of the art is something that is clearly contextual and therefore
something that, for some, may well be process-driven but, for others,
canbemoreamatterof strategy. However, giventhecritical andmutual
dependency between process, strategy, and organization in the ability
to deliver new products and services, perhaps the most fundamental
changes that are occurring across sectors are in the organization. As
process and strategy have arguably evolved at a higher rate, it is now the
ways in which companies are structuring themselves, their suppliers,
and their partners that is the main issue. State of the art today can
be seen to be largely linked to the core organizational aspects of
innovation and it is attention here that is enabling firms to improve
their innovation performance, generate better ideas, and create value
from their delivery. The Bauhaus movement famously declared that
form follows function. Each of the changes in this chapter is about
organizational form following an ever-greater pursuit of innovation.
Between 1965 and 1979 the number of workers involved in employee
suggestion schemes in the German Democratic Republic rose from
THE STATE OF THE ART 43
600,000 to 1.7 million. An interest in innovation and product devel-
opment is not the sole preserve of capitalism. Paradoxically, modern
companies exhibit a number of features that are Soviet-like in appear-
ance. Think of central planning, capital rationing, and the muted
link between individuals value contribution and their remunera-
tion.
Socialist East German goods and services would have flooded the
world market if worker suggestion schemes had been sufficient to
create innovation. But as surely as economic decay and a desire for
freedom hastened the collapse of socialism, so too will market forces
continue to create changes in Western companies.
DRIVERS OF CHANGE
The greatest drivers of this change, today as in the past half-century,
are technology, competition, and shifts in attitude. Largely as a result
of technology and social change, material prosperity in developed
countries has risen more in the past 50 years than in the previous
10,000. Successive waves of disruptive technology have begun to beat
on the commercial shoreline with ever-greater intensity and rapidity.
Digital technologies like the Internet, mobile telephony, and related
wireless services change commercial realities at breakneck speed. For
example, in just 60 years the price of a long distance telephone call
from the US went from almost $100 per minute to less than 10 cents.
Biotechnology, wireless, and nano-technology are sunrise industries.
Whether or not they create long-term value for their shareholders,
these industries will, in a short space of time, create entirely new
propositions, possibilities, and economic realities. These technological
waves will impact many sectors, and the challenge for many companies
is to respond quickly enough to survive and thrive.
It is not, however, just technology, but also competition that has
grown exponentially. Globalization, the rise of a shareholder value
orientation, and the general surplus and prosperity of the devel-
oped world have all sharpened the competitive edge. Competition
today comes from increasingly unexpected directions with, some-
times, massive impact. This forces companies to respond by producing
more, better, faster, and cheaper, and this imperative places a premium
on innovation.
44 TAKING IDEAS TO MARKET
Changes in attitude are also affecting modern companies. Trust and
respect are in short supply and individualistic cultures that celebrate
leadership will have to adapt to the mass death of deference. The
very workers whose intellectual capital is the life-blood of the firm are
precisely the ones who are least likely to respect hierarchy, incongruent
values statements, and power distance. The dot.com phenomenon was
an interesting example of people voting with their feet. Of course, it s
not surprising that where the capital markets gave money away, bright
young things followed.
HOW ORGANIZATIONS ARE RESPONDING
Learning to respond to breakneck change whilst courting ruthlessly
discriminating customers and employees is the challenge of the opening
years of the twenty-first century. Companies at the leading edge are
beginning to organize their structures, people, and processes in new
and different ways in order to accomplish this.
At a structural level there has been intense interest in business
incubators and corporate venturing units. Incubators at CGNU (a
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