Jul 24

The Global Innovation Machine: How P&G, GE, Google, IBM, Sony, 3M, Toyota Run Their Global Innovation Management

Which are the most innovative companies in the world? The Innovation Survey by Boston Consulting Group attempts to provide an answer. Ten companies are named the leading innovators: Apple, Google, Toyota, GE, Microsoft, Procter & Gamble, 3M, Walt Disney, IBM and Sony. What can we learn from these innovation leaders in respect of their global innovation management?

Procter & Gamble has a real global presence. It exploits the advantages of its global presence to the fullest extent. Its Japanese competitor Kao has made this painful experience several times. Kao had successfully launched its Quickle Wiper dusting mob in the Japanese market already in 1994.  In the following years Kao introduced it in other Asian countries. However, in many parts of the world Kao has no active business in the household segment. This turns out to be a major strategic disadvantage. Because the global competition keenly observed Quickle Wiper´s success. Starting in 1999 Procter & Gamble launches a similar product under the new brand name Swiffer in the USA, in Europe, and in many other countries. In those territories in which Quickle Wiper is not available Swiffer is being celebrated as the great innovation, and it is hugely successful.

Global innovators steer their innovations via global innovation centres. But they increasingly distribute them over the whole globe. There are several important reasons favour this organizational set-up: the respective regions “feel” a greater importance; the employees working in the regions can be offered more interesting career opportunities; the innovation centres of individual product divisions can be placed in those countries where the local divisions of the company have specific strengths, or where they have to compete against particularly strong competition; centres can be located where there is lots of talent, which furthermore often costs less. General Electric´s Health Division these days has its magnet resonance tomography machines, which normally cost millions of dollars, developed in its innovation centre in Shanghai at a target price of half a million dollar, with the option to later export these machines to other countries. Even Google is decentralizing its innovation activities away from its central innovation centre  in Mountain View, and it already has 25 F&E centres worldwide.

A fundamental recommended action to improve global innovation is: “Lift treasures via global communication”. It is amazing to see how often undiscovered treasures are ”dozing away” in the companies. Oftentimes the knowledge of successful company innovations in other corners of the world is underdeveloped with the ensuing risk that the wheel is going to be re-invented. Top innovators such as IBM, 3M, P&G, GE and Toyota have become aware of this potential waste, and they are fostering the worldwide exchange of information and knowledge. Their global communication occurs either online or offline, on a permanent basis or event-driven.

IBM´s  “Innovation Jam” is a good example of an event-driven online communication. Worldwide, IBM employees, family members and customers are invited to a moderated online brain-storming session. 140 000 persons participated last year, and 37 000 innovation ideas were generated.

Despite the growing weight of the online communication, the classic face-to-face co-operation retains a high importance.  While incremental innovations to a certain degree can be managed by means of virtual innovation teams, radical innovations require the permanent co-location of the team members. That is why all 400 engineers of the IBM-Sony-Toshiba design team which developed the “Cell Chip” for e.g. the Sony Playstation 3, were pulled together in one location, i.e. IBM´s Design Ccntre in Austin, USA.

Idea generation encompasses the adoption and the adaption of existing ideas, and the creation of original new ideas. In many corporations the “Non Invented Here” syndrom gets in the way of adopting or adapting available ideas.  The leading innovators turn “Non Invented Here” on its head and make it a badge of honour.

Global innovation machines give a global dimension to their search for existing ideas. Already at the end of 1997, 3M had 28 active projects with Russian research institutions. Key for this initiative was the insight that after the collapse of the Soviet Union a third of all researchers with a Ph.D. degree worldwide lived in the territories of the former Soviet Union. P&G has picked up on the idea of an external idea and solution sourcing, and has executed it with an up to then unseen consequence.  For this it has given birth to the Connect + Develop (C+D) Organisation. Offline and externally, every member of P&G´s 75-men Connect+Develop team is establishing personal global networks via which P&G can then easily receive external ideas and solutions.

Additionally, P&G is in contact with hundred thousands of registered researchers and inventors through external online services such as Your Encore, NineSigma and InnoCentive in order to obtain solutions to well defined technical problems.  Mr. Clean AutoDry and Pringle Prints are examples of product innovations that P&G gained through Connect + Develop.

A global product design is another key success factor for a global innovation management. Empirical studies have proven that an international product development approach, which from the start incorporates the needs of all countries, beats a local product development approach. This is explained by the fact that the demands on the innovation project and the performance expectations of the innovation team automatically rise if a company benchmarks itself against the world-best competitors, and not only against the best local competitors. The new Camry which Toyota introduced globally at the beginning of 2006 exemplifies a globally designed and implemented world car. Indicative is Toyota´s motto for its world car: “Global best, local best”.

Innovators with a strong global innovation management synchronize their innovation processes globally. Instead of a product launch in only a few countries (see Kao), and in lieu of a gradual roll-out of a new product across the globe, innovators with a top global inovation management launch an innovation into the whole global market within a short time window. The global co-ordination in Toyota´s case occurred electronically, and this was complemented by regular international face-to-face meetings. During the whole global innovation process representatives of the affected countries and functions were continuously providing their input, starting from the development of the car vision and extending up to the design reviews, the finalization of the technical master drawings and the joint pilot production in the Motomachi factory in Toyota City. Procter & Gamble, too, today rolls out its innovations much faster than formerly, i.e. in 18 months instead of three years.

Global organization, however, must never mean forgetting the local side. Global enterprises must try hard to involve all business units and employees in their global innovation management. This above all implies involving the local subsidiaries in the early process phases of idea and insights generation, and in the permanent review of the used insights and the newly developed products during the whole innovation process.

Noteworthy in the above discussion of the global innovation machine and of global innovation management is the absence of Apple. This no.1 innovator according to the BCG Innovation Survey, which outshines all others based on its superior product design and superior product usability, until now seems to be rather a hesitant supporter of a growing globalisation of innovation management. Apple is still very centrally organized with a strong US focus, and it is still relatively slow in rolling out its innovations worldwide. This could particularly be observed in the context of the global introduction of the “software” innovation iTunes Store, whose global roll-out is by far not yet completed. And equally, although to a somewhat lesser extent, in the context of the launch of the iPod and of the iPhone. It is pretty safe to speculate that Apple will increasingly exploit the potential of global innovation management in the future.

Dr. Rolf-Christian Wentz