How firms innovate needs to change. The increasing diversity and dispersion of knowledge, the growth of new markets, and the emergence of new competitors require a global and integrated approach to innovation. Many executives and managers know that the way their firms currently organize and carry out innovation has a limited shelf life. But our research has shown that, despite recognizing the challenge and being aware that their companies are ill-equipped to meet it, very few have strategies in place to transform their firms into global innovators.
The below action plan is based on the three dimensions of change. This plan doesn’t represent an exhaustive list of what a company needs to do during the process of building the structures and capabilities for globally integrated innovation, but it does provide executives and managers with practical guidance on some of the most critical activities they can initiate in the coming weeks and months.
Optimizing the Innovation Footprint
1. Identifying Knowledge Requirements
Understanding what knowledge is needed for innovation and where it is located is a key building block, because an optimized footprint should provide access to critical complex knowledge. Follow these steps to identify those requirements:
- Establish a working group of people from a wide range of different functions, businesses, and geographies to identify where the knowledge for innovation is located. The greater the diversity of people involved in this process, the richer the resulting knowledge map.
- Think in terms of not only the geographic location of knowledge, but also whether there are distinct holders of the knowledge (such as other companies, research institutes, public-sector entities, and so on).
- Classify the knowledge to distinguish explicit, embedded, and complex knowledge. Establish alternative approaches to bricks-and-mortar sites such as attracting and foraying to access the explicit and embedded knowledge.
Undertake a knowledge and competency audit of every site in order to identify duplication and redundancy and create the knowledge maps that will indicate the optimal innovation footprint. Achieving an optimal footprint involves understanding not only where your company should be located but how big the network should be:
- Carry out a knowledge audit of the current innovation network by identifying the knowledge, skills, and capabilities at each site. Don’t overlook the sites’ relationships with external entities and partners as potentially valuable knowledge.
- Based on the gaps between knowledge requirements and the current network, identify the locations of the sources of this missing knowledge: investigate the potential in harbinger locations, rapid cycle learning environments, favorable regulatory regimes, and partners.
3. Building Communication Networks
Without common and effective communication tools and mechanisms, dispersed teams will be unable to share knowledge and work as an integrated whole. So we suggest taking the following steps:
- Frequently, acquisitions and devolved purchasing decisions have left a legacy of incompatible systems. Undertake an audit of existing processes, tools, and systems across the network and identify areas where harmonization and commonality are lacking.
- Commission a review of all knowledge databases within the global innovation organization, looking at how often they are used and by whom. Investigate how the most valuable and useful information from them can be captured in universal workflow systems.
Managers with the skills to work in multiple different contexts are a rare but incredibly valuable asset. They act as bridges for the transfer of important complex knowledge and, as our survey showed, they perform well in dispersed teams and have a greater ability to absorb, interpret, and utilize new knowledge. Developing this type of cosmopolitan manager is vital for successful global innovation and requires the following:
- Run an internal campaign to identify and attract bicultural people whose natural skills can be leveraged for integrating dispersed knowledge.
- Set up a program of onsite assignments and visits between sites to expose as many innovation staff as possible to different environments, locations, and contexts. Executives and managers who are used to jet-setting may forget that many innovation staff have never left their home country in a professional capacity. This program will also aid communication by building informal networks.
Building a culture of receptivity and trust is much more difficult to achieve than some of the other action points, as these elements come together over time and through practice:
- Ensure that senior managers visibly back and commit to culture changes.
- Launch a range of small projects and initiatives that deliver quantifiable benefits to staff and businesses to drive change in perceptions and behavior.
- Build an environment of transparency and open dialogue to explore assumptions and common ground and build trust between different parts of the firm. Some trust will come from site visits, assignments, small dispersed projects, and dispersed problem-solving initiatives.
6. Managing Global Projects
Global innovation projects ultimately leverage the optimized footprint and enhanced communication capabilities to deliver innovative products, services, or business models. Building a competence in global projects takes time, so it’s important to begin the process soon by building the structures and introducing the processes and mechanisms needed:
- Begin to build the trust and competencies needed for large, complex, global projects with small dispersed projects.
- Begin the process of building a strong global project management organization made up of talented, experienced people from different cultures and different functions. This assignment should be aspirational, providing valuable experience and exposure by working closely with senior managers involved in project decision making.
7. Collaborative Innovation with Partners
Collaborating with partners is already becoming a common feature of innovation and, in many instances, is the only way of accessing the required knowledge. Adopting a structured approach to collaboration not only supports the innovation process but reduces the risks inherent in working with partners:
- Encourage different parts of the innovation organization to engage in dialogues with a wide range of partners to identify opportunities. It’s important to put a process in place to capture these conversations and bring them together, because each could provide a fragment of a potential innovation.
- Use the gaps highlighted in the knowledge maps (created as part of optimizing the footprint) to identify and select potential partners that can provide the requisite knowledge and capabilities and bring diversity to collaborations.
- To support partner selection, introduce a process to vet potential partners along the seven dimensions of capabilities, cospecialization, contribution, commitment, credibility, compatibility, and strategy.
Moving toward a new model of global innovation may be challenging, but that doesn’t make it any less urgent. The competitive landscape is rapidly changing, so what made companies successful innovators in the past won’t continue to do so in the future. Companies that don’t embrace this change and the opportunities it affords will find the twenty-first century a difficult place in which to compete. Those that do will find the globally integrated approach a rewarding, effective way to innovate.
Related: Staying Ahead When Innovation Itself Is Changing. 
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Reprinted by permission of Harvard Business Review Press. Excerpted from Managing Global Innovation: Frameworks for Integrating Capabilities around the World . Copyright 2012 Yves Doz and Keeley Wilson. All rights reserved.
Yves Doz is the Solvay Chaired Professor of Technological Innovation at INSEAD. He is the co-author, with Jose Santos and Peter Williamson, of From Global to Metanational: How Companies Win in the Knowledge Economy. Keeley Wilson is a senior research fellow at INSEAD.
[Image: Flickr user Curtis Gregory Perry ]