Innovative Culture and Innovative Competences - PepsiCo

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU6

Agile Innovation: A FOOTPRINT BALANCING DISTANCE AND IMMERSION

Keeley Wilson Yves L. Doz

F or most companies, innovation is a critical activity upon which current and future prosperity hinge. From Ford’s assembly line to Intel’s processors to Easyjet’s low-cost airline, innovation in pro- cesses, products, and business models has long been the engine driv-

ing differentiation and competitive advantage. Yet vital innovation capabilities at many companies are now under threat because firms’ innovation footprints are simply not purposeful. To meet the demands of globalization, companies need to be able to continually and rapidly access, absorb, and integrate knowledge for innovation from around the world at the lowest possible cost, in terms of capital investment, headcount, and management co-ordination. Although companies have long recognized the competitive benefits that accrue from adopting flex- ible supply chain management and manufacturing systems, few have begun to implement strategies designed to deliver the equivalent flexibility and efficien- cies to their global innovation activities.1

The aim of this article is to propose a model for “agile innovation” in which companies achieve the optimal efficiency and effectiveness from their global innovation activities. Instead of defining an innovation footprint in terms of locations at which an organization has “bricks-and-mortar” sites, an agile innovation model differentiates between the need for a permanent presence in a given location and the ability to access knowledge from that location at a distance, without costly investments on the ground. Understanding that not all knowledge needs to be accessed in situ and adopting a systematic process to define how knowledge in any given location should be accessed, absorbed, and integrated will give companies the ability to manage their global innovation footprint more dynamically, resulting in much greater flexibility in deploying

The authors are grateful to Steven Veldhoen, at Booz & Company, for being an intellectual sparring partner.

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 7

their innovation resources more widely and rapidly as well as retrenching from less-useful locations more readily. As global competition increases, an agile inno- vation model will become increasingly paramount to success.

The reality in most industries is that while there are increasing oppor- tunities for the development of innovative products, services, and solutions, at the same time innovation is actually becoming more difficult and much riskier. That isn’t to say that companies haven’t had to overcome significant shifts in their operating environments in the past—even a cursory glance at the historical record shows that successful companies have had to adapt to wars, the energy crisis, and the advent of disruptive technologies.2 The challenges facing compa- nies today differ in nature, in that a confluence of external shifts (as outlined in Figure 1) have begun to lead to greater knowledge diffusion and diversity which call for a change in firms’ approach to innovation.

Large new consumer markets are emerging in developing economies where customer requirements, particularly at the “bottom of the pyramid”3 dif- fer radically from those in mature markets. Increasing knowledge convergence across industries and technology complexity are challenging many industries to extend their capabilities into new arenas that are located away from tradi- tional locations or clusters.4 Demographic changes are leading to a shift in the locus of brain-power to emerging economies, fuelled by a combination of the baby boom generation reaching retirement and declining numbers of science and technology graduates in the West, countered by increasing numbers in developing economies. External pressures, including environmental issues, are challenging business models in some industries and also leading to varying regu- latory responses that seek innovative solutions. Technology transfer is leading to strong competencies being developed in unexpected places. Finally, offshore

The Old Reality The New Reality

Traditional consumer markets in developed economies Large new consumer markets opening in emerging economies

Specialisation within industries based on discrete knowledge elements

Increasing technology complexity and industry convergence

Locus on brain-power in US, Japan and Western Europe

Changing demographics driving a migration of brain- power to emerging economies

External pressures limited to low impact local regulations and standards in some industries

Growing external pressures such as environmental concerns, resulting in varied local regulations

Home-centric innovation competencies Technology transfer leading to dispersed pockets of competencies

R&D and innovation kept largely in-house or with trusted local suppliers

Offshore outsourcing across the value chain leading to the migration of capabilities

FIGURE 1. Radical Shifts Leading to Greater Knowledge Dispersion

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU8

outsourcing is resulting in the migration and then development of capabilities in new locations across the value chain.

In addition to the powerful forces shaping greater knowledge dispersion, as competition intensifies, many different industries are witnessing a contraction of cycle times putting immense pressure on companies to innovate more rapidly. At the same time as more resources are needed to meet the demands for innova- tion, economies around the world have worsened and with the inevitable drop in consumer spending and confidence there has been mounting pressure to cut costs across the board.

Once predominantly a home-based function, over the last three decades innovation has become undoubtedly more international, as many companies have sought advantage from accessing dispersed knowledge. A global survey of 187 major companies representing an annual R&D spend of $76.4 billion suggested that by 2004, over two-thirds of their total R&D was being carried out at company-owned R&D sites abroad.5 While this internationalization had ini- tially been focused on Japan, the U.S., and Western Europe, in the last decade, India and China emerged to take an increasing share of foreign-owned innova- tion activity, up from a combined 5.8 percent at the beginning of the period to 14 percent by the end. Given the growing importance of these markets both in terms of sales and as centers for engineering, technical, and scientific capabilities, this growth is not surprising. What is perhaps surprising is that many companies have spent the last thirty years expanding their bricks-and-mortar networks without a serious strategic review of where their innovation activities really need to be. In other words, companies seem more adept at opening new sites than at reviewing and culling existing ones.

An innovation strategy that focuses purely on the expansion of a global bricks-and-mortar footprint creates more problems than it solves. In conversa- tion with the CEO of a global electrical equipment manufacturer, one of the authors was told that the firm’s ability to innovate was being compromised by the size of its innovation network. Over the years, a combination of acquisitions and organic growth had resulted in 160 innovation centers around the world.

These centers brought high management and co-ordination costs, but few of the expected benefits of a broad footprint. Instead of leverag- ing the rich tapestry of local knowledge they had access to, the network was inefficient as duplication was rife and centers tended to com-

pete rather than collaborate. Although this is perhaps one of the more extreme cases, for many companies the problems will be familiar ones.

At the other end of the spectrum to large bricks-and-mortar footprints, companies that rely on a home-centric approach to innovation face different, yet equally serious challenges. While they aren’t encumbered with costly, wide- spread innovation footprints, they do miss out on accessing the type of rich, complex knowledge from around the world that can truly differentiate a prod- uct or service or even allow a company to create a new market.6 As the forces

Keeley Wilson is a Senior Research Fellow at INSEAD.

Yves Doz is the Timken Chaired Professor of Global Technology and Innovation at INSEAD.

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 9

driving knowledge dispersion are more likely to intensify than dissipate, the lack of a global innovation footprint will increasingly hamper a firm’s ability to innovate. Many companies that have failed to establish innovation centers out- side their home base have tried to redress these shortcomings by relying on a “virtual” network to access dispersed knowledge. However, virtual networks are limited to accessing the type of simple, codified, modular pieces of knowledge that competitors will also have access to. They deliver little competitive advan- tage if any.

A home-centric approach to innovation also fails to position companies to compete effectively at the genuinely creative, low-cost, high-value innovation in high-growth economies.7 Together, the BRIC countries alone (Brazil, Russia, India, and China) have populations of close to three billion and an annual aver- age GDP growth rate from 2009 to 2013 forecast at 4.9 percent, much higher than the expected growth of the U.S., Japan, and Europe’s four largest econo- mies (France, Germany, Italy, and the UK) over the same period.8 Yet to exploit the potential of emerging economies requires having innovation centers on the ground to understand consumer needs and local limitations. Take the example of the development of low-cost cars. When Renault developed the $5,000 “Logan” car, it used components from existing and previous Renault models added to a simpler, cheaper chassis. It could be argued that the Logan was more a product of re-engineering than innovation. In contrast, India’s Tata Corporation ignored the orthodoxies of established auto manufacturers, focusing instead on the needs of its potential customers, India’s vast and growing middle class, currently estimated at over 100 million households with PPP of between $2,000 to $3,000. The result was the truly innovative, fuel-efficient “Nano” car, for which Tata filed over 40 patents and put on the market at a starting price of $2,000.9

Knowledge Requirements Shaping an Agile Model

At the basis of an agile innovation model lies an understanding that inno- vation needs to be organized and managed based on the nature of the knowl- edge being sought from any given location. Different types of knowledge require different modes of access and integration. Furthermore, as the knowledge needed for innovation changes rapidly and the number of potential knowledge sources increases, a company needs to react to these continually shifting knowl- edge requirements.

While experts have defined numerous categories of knowledge, for the purposes of building an agile innovation organization, we have used three broad categories that the knowledge being sought can fall into: explicit knowledge, which is codified, definable, and transferable via common language or processes; embedded knowledge, which is context-related, observable, loosely definable, and is accessed by “seeing through different eyes”; and finally, existential knowledge, which is context dependent, systemic, exists in behavior and norms, and can only be “learned by doing.”10 As illustrated in Figure 2, each of these knowl- edge types corresponds with a different approach: from accessing dispersed

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU10

knowledge virtually from a distance at one extreme, to being fully involved with a bricks-and-mortar site at the other:

Attracting—When the knowledge needed is explicit (codified, modular, and self-contained), ranging from well-defined scientific discoveries to programming code, blueprints, and CADs, it can be attracted by a company in a virtual environment. Explicit, codified, and modular knowledge can move from its location of origin to the attractor company via the Internet and other mediated communication tools without losing its integrity or meaning.11

Foraying—When the knowledge is technological but embedded in a local context, it should be accessed in situ (i.e., there is a need to understand user behavior or some facet of how the technology was created and used effectively). This does not necessarily require a full-time innovation cen- ter being set up. Instead, small teams can embark on foraying expeditions to see and understand the knowledge in its original context before trans- lating it for use elsewhere.

Experiencing—When the knowledge is existential (systemic, locally rooted, and is impossible to attribute to a specific owner—either an indi- vidual or entity), it needs to be accessed via a long-term presence on the ground in the form of a bricks-and-mortar innovation center.

Attracting, foraying, and experiencing are not mutually exclusive but are constituent parts of an agile innovation organization. It is unlikely that a com- pany could build an effective innovation model by focusing exclusively on only

FIGURE 2. A Model for Agile Innovation

Accessing Absorbing

Existential

Embedded

Explicit

T yp

e o

f K

n o

w le

d ge

Bi-cultural Bridges and

Business Pull

Relays, Prototypes,

and Visits

Internal Expert

Assessment

Experiencing

Foraying

Attracting

Full Immersion

Distance

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 11

one of the approaches we outline, as this would imply a need to access only one type of knowledge, be it simple and codified or context dependent. Take the example of Nokia. Anssi Vanjoki, a member of Nokia’s Group Executive Board, recently explained that after years of an inward-looking approach to innova- tion, Nokia now has an agile global innovation model.12 Nokia attracts large quantities of codified knowledge. Nokia used foraying when seeking out loosely defined embedded knowledge about technologies in China and how customers use services and applications. However, when it came to learning about enter- prise applications, multimedia, and entertainment, it adopted an experiencing approach and immersed itself in locations such as Vancouver, where it could learn about and absorb the subtle nuances of how consumers and entrepreneur- ial companies behaved in relation to “new media” products and services.

By aligning the mode of access to the nature of the knowledge being sought, an agile model has the power on the one hand to transform a hodge- podge of disparate sites around the world into a strategic function that deliv- ers value, and on the other to enable companies to establish a global footprint without incurring the costs and long lead times of a purely bricks-and-mortar network. Whatever a company’s starting point, an agile innovation model will deliver efficiency and effectiveness.

The vertical axis of Figure 2 outlines the nature of the knowledge being sought, and aligns the three different approaches of attracting, foraying, and experiencing against these. However, using the most appropriate approach to access new knowledge from around the world is only half of an effective agile innovation model. To realize value from dispersed knowledge it needs to be absorbed, integrated, and combined with a company’s existing knowledge base13

or new knowledge acquired from other sources. The horizontal axis of Figure 2 captures this two-stage process, illustrating that different modes of access require new processes and capabilities to support the absorption and integration of new knowledge.

Attracting: Being a Magnet for Knowledge

A direct result of the forces driving greater knowledge dispersion is that new technologies are just as likely to be developed in one of the emerging hot- spots around the world as in more conventional locations. It is obviously unfea- sible for companies to cover all eventualities by having an innovation presence in every market. Thus, attracting provides a solution to access explicit knowledge in the form of complementary technologies and innovative ideas from around the world by encouraging the holders of that knowledge to seek out the recipi- ent company. Depending upon whether a company is looking for answers to a well-defined problem or looking more broadly for ill-defined yet potentially interesting knowledge, there are two different attracting approaches that can be undertaken: “focused attracting” and “broad attracting.”

What we refer to as “focused attracting,” is often discussed under the banner of “open innovation,”14 but in essence it is a way to extend a firm’s boundaries beyond its current pool of employees and partners to solve specific

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU12

innovation or R&D problems. There are a number of firms (such as Innocen- tive, YourEncore, and NineSigma) that act as intermediaries between companies and a wide network of potential problem solvers (which can include retired scientists, entrepreneurs, university labs, and government research centers). These firms create a virtual marketplace for very focused and well-defined prob- lems to be solved. Procter & Gamble, for instance, regularly seeks solutions to innovation problems by focused attracting as part of its “connect and develop” strategy. By 2006, it had completed over 100 projects through NineSigma tech- nology briefs and had over a third of the R&D problems it posted on Innocentive solved.15 Critical to the success of focused attracting is having a very well- defined knowledge gap for which for a company “knows what it doesn’t know.”

In contrast, “broad attracting,” provides much greater latitude for dis- covery. Instead of posting specific problems for a wide audience of knowledge holders to solve, in broad attracting, the knowledge holders seek out firms they believe could be interested in their innovations or ideas. To stimulate an inflow of knowledge, the recipient firm can publish general research themes it is interested in, and this will also help to focus the flow of incoming knowledge. However, the idea is to search for “diamonds in the sand”—innovative ideas, components, and solutions from around the world that it would otherwise be difficult to access. For very little cost, both in terms of resources and time, broad attracting allows a huge quantity of new technologies and ideas to be accessed and assessed.

Nokia is a good example of a company that uses broad attracting to boost its corporate research activities by attracting university research and entrepre- neurial ideas from around the world. Each year, Nokia defines its general inno- vation interests and posts them on the Internet. In 2007, for example, these included (among others) enterprise services, consumer and community services, human interface, content, and search and platform architectures. Researchers from anywhere in the world at universities, companies, and research institu- tions can then contact Nokia to describe their own research and propose a research project within one of the specified domains. As a direct result of this broad attracting activity, Nokia currently has several dozen significant collabora- tive projects underway around the world. From Nokia’s perspective, adopting a broad attracting approach to innovation means that they can cast a wider net than would otherwise be possible and tap into research that they would not otherwise know about. From the perspective of the researchers who approach Nokia with their ideas, they are seeking the opportunity to see their innovations commercialized by the industry leader and work with Nokia’s own researchers.

Any company—large, small, well known, or relatively unknown—can engage the services of one of the knowledge intermediary firms to drive and support focused attracting activities, but not every company possesses the attri- butes required to engage in broad attracting. It is critical that knowledge hold- ers aspire to work with companies engaged in broad attracting and trust that these firms have the means and skills to make effective and profitable use of the knowledge they are able to contribute. This type of pre-relational trust can only

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 13

exist if the attracting company possesses the following distinctive reinforcing attributes:

A Respected Brand and Technology or Industry Leadership—Knowledge holders will aspire to see their ideas or innovations adopted by companies they and their peer group admire. Companies that represent the pinnacle of innovation in their industry will obviously be able to attract the best and brightest new ideas. Nokia has continually leveraged its strong brand and credibility as a leading innovator to attract around 3,500 small companies to work with it. In other industries, companies with strong, prestigious brands such as BMW and Procter & Gamble are the first port of call for many knowledge holders.

Leading Market Share—Knowledge holders will want to see their ideas as widely implemented as possible and will consequently gravitate towards companies that have strong market share.

A Good Reputation for Working with Other Companies—A company that has a reputation for “hoovering” its partners to capture a disproportionate gain from knowledge contributions will find it difficult to attract new knowledge.

There are significant benefits to using “attracting” to access explicit knowledge as part of an agile innovation model. Companies are able to access a vast quantity and continual flow of knowledge from a very wide canvas by using mechanisms and processes that allow knowledge holders to seek them out instead of having to continually chase new knowledge. The costs related to attracting are much lower than those associated with building and running a bricks-and-mortar site. Efficiency is improved as a small number of people can filter and assess the incoming flow of new knowledge, freeing up other innova- tion resources to focus on accessing more complex, locally rooted knowledge. By “broad attracting,” Nokia was able to get an option on nearly every new technol- ogy related to core GSM mobile phones and at the same time focus its limited local bricks-and-mortar resources to accessing locally rooted knowledge related to design, multi-media trends, and fashion.

There are limitations to “attracting.” As we have already discussed, com- panies are constrained to accessing complementary and codified knowledge, even if they sponsor its creation. The parameters that define the type of knowl- edge most suitable for attracting are:

Codified—Attracting is best suited to technical or scientific knowledge that can be transmitted fully in blueprints, drawings, computer databases, and programs, manuals, or prototypes. The knowledge has to be able to travel independent of the environment or context in which it was created. Prob- lems can arise when incoming knowledge is assumed to be context-free, but is later found to be context-dependent when its absorption and inte- gration fail.

Owned—Knowledge that can be attracted has to be owned and held by someone or some entity, and it is therefore much more likely to be tech- nical or scientific knowledge used in subsystems or systems. Technologies

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU14

with strong intellectual property rights and content, which can be licensed or easily used as a stand-alone input, are much more effective.

Close/Complementary to Core Knowledge Base—Attracting is only effec- tive when the incoming knowledge is closely related to a firm’s existing knowledge base. If the knowledge is too distant, assessing and evaluat- ing its potential will be extremely difficult. Absorbing and integrating it into products or services will likely fail, as building interfaces with unfa- miliar knowledge requires a deep understanding of all the constituent knowledge.

Foraying: Scouting with a Mission

Foraying is a flexible approach to finding and accessing embedded knowl- edge. It involves learning expeditions being mounted that identify embedded knowledge in as many or as few locations as necessary and for however long is deemed appropriate. It provides a much more effective and efficient method for accessing embedded knowledge than relying on a bricks-and-mortar network. Many companies have used this lightweight approach to reach for new knowl- edge beyond familiar territory and to bring innovations to market before their larger and more powerful competitors. Take the example of KPN. Although only a mid-sized player, its foraying activities in Japan enabled the Dutch Telecom operator to be the first in Europe to introduce i-mode (an innovative suite of Smartphone services) and it went on to play a leading role in the multi-operator i-mode alliance.

Having a small team of people or “scouts” who act as relays between the source of new knowledge and their own organization is essentially how foraying works. These scouts go on learning expeditions to find and access new knowl- edge as it exists or operates in its original context and are then responsible for devising methods and processes to decontextualize and transfer the relevant knowledge back to their home base.

When Japanese mobile telecoms operator NTT DoCoMo acquired a minority stake in KPN in 2000, the Dutch firm sent a small survey team to Japan from its product innovation department to scan the market and DoCoMo’s offer- ings to see if anything would be transferable to Europe. However, KPN recog- nized that the real value in learning from Japan wasn’t just about benefiting from pure technologies that would provide enhanced features such as color dis- plays and multiple ring tones. The way Japanese consumers used mobile services was very different from that of their European counterparts. DoCoMo’s i-mode provided a platform that gave its customers mobile access to a wide range of content providers and services at a time when data services were embryonic in Europe. To be able to transfer i-mode to Europe as a suite of Smartphone ser- vices based on a common platform required experiencing why, how, where, and when the Japanese used it. Understanding the social phenomenon was critical and this was something that could only be done by being on the ground.

The KPN scouting team consisted of young people, all between 26 and 28 years of age. They were encouraged to spend evenings out-and-about enjoying

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 15

Tokyo’s nightlife as this gave them much greater exposure to what i-mode was really about. Without understanding the different social and cultural context within which i-mode had been born and was used, KPN would not have been able to translate it for its European markets. In 2001, KPN launched i-mode in the Netherlands, Germany, and Belgium. By 2007, its customer base for i-mode in these markets had grown to 3.3 million. Foraying had enabled KPN to rapidly and effectively access new knowledge from the other side of the world and bring an innovation to its European markets.

There are clear benefits to engaging in foraying as an alternative to a permanent presence when the knowledge being sought is embedded. Foraying provides a high level of flexibility and a focused use of resources. However, there are clear knowledge parameters that define when foraying is a feasible option:

Close to Core Knowledge Base, with Some Overlaps—No matter how expe- rienced scouts are, they will only succeed if there is a high enough knowledge overlap between the new knowledge being sought and the firm’s existing knowledge base. In other words, they need to understand enough about the new knowledge to both grasp how it operates in its original context, what needs to be transferred, and how the knowledge will be recreated and put to use in the firm’s home context. For example, the French aerospace company, SNECMA sent a team of scouts to Mos- cow in the 1990s to look for new technologies that the Russians had developed during the cold war space race. What they found were some radically different technologies such as plasma propulsion, which had developed along a completely different technological trajectory to those in the West. However, despite the originality of some of the Russian technology, SNECMA was able to transfer it into their organization and absorb it into their innovation pipeline. Although the Russian technology represented a different approach to rocket and satellite propulsion, the fundamentals of space launcher propulsion were universal enough for SNECMA’s researchers to be able to understand the new knowledge. The plasma propulsion technology accessed from Russia was highly comple- mentary to SNECMA’s own technology.

Focused but Not Too Tightly Defined—The boundaries of what knowledge is being sought and where it is likely to be located need to be discern- ible. A broad-brush approach (for example, to investigate whether there is “anything of interest” in a given location) would not be feasible within foraying, as without focus and targets, there would be too great a reli- ance on serendipity to yield any useful findings. Even though the type of knowledge each was looking for was very different in nature, both KPN and SNECMA were looking for knowledge that they could define: KPN wanted to understand the technical, social, and business model elements behind a specific mobile telecoms product in Japan; while SNECMA wanted to see if any interesting and useful space propulsion technologies had been developed in Russia during its years of isolation. In both cases, while a specific agenda could not be articulated in advance,

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU16

learning expeditions could be mounted with the general direction and focus having been specified. Yet, at the same time, by only loosely defin- ing their interests, both companies left room for discovery and learning.

Identifiable Knowledge Holders—To embark on a foraying expedition, knowledge holders (such as a research institute or company) or a point of entry to potential knowledge holders need to have been identified prior to sending out scouts. DoCoMo was a clear knowledge holder for KPN, while SNECMA leveraged its well-connected contacts at the Moscow Aviation Institute as a point of entry to the wider aerospace community in Russia.

Experiencing: Immersion in the Local Context

The approaches of attracting and foraying can be highly effective in giving companies access to knowledge that is relatively discrete and closely related to their existing core knowledge base. However, when the knowledge being sought isn’t definable, nor easily observable—but is locally rooted and complex and is very different from a firm’s core knowledge base—then access is dependent upon “learning by doing, seeing, and being there.”

Whether the aim is to break into a new product area or enter a new market, the most effective way to access and understand existential knowledge is by immersion in the local context. This requires a much more heavyweight approach with the establishment of a bricks-and-mortar site. Whereas foraying relies upon the knowledge holder being able to be identified in advance, the ex- istential knowledge being sought through experiencing is diffuse, systemic, and does not have an obvious holder. Instead it is held in norms, social interactions, and culture. It is complex, locally rooted, and deeply embedded; therefore to access this knowledge, a company needs to grow local roots and relationships. This is exactly what HP Labs did. In the 1990s, a group of people within HP Labs (the corporate research division of HP) began to question the need for the group to expand out of its traditional developed markets and take advantage of the growth opportunities of emerging markets. They recognized that most MNCs in developing countries focused on serving the tiny proportion of “rich” people at the top of the pyramid, whereas they believed the greatest (and most under exploited) opportunities lay with the huge group in the middle and bottom of the pyramid.

In addition to the 4,000 software engineers they employed in India, HP already had an interest in developing economies with its Emerging Market Solu- tions (EMS) group. Their role was to adapt existing HP technologies to make them affordable and usable in poor countries. However, HP Labs saw a greater opportunity by really delving under the surface in India, to understand where technology needs would be in the future in emerging markets in terms of busi- ness models, technology, and user requirements. The type of knowledge HP Labs was looking for couldn’t be codified and shipped back to their home base in Palo Alto. To be able to create new products and services, HP Labs had to understand how people lived in India; how the government, administration, and commerce

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 17

worked; and what difficulties and frustrations arose from living and working in a huge, poor, and largely rural country. In 2000, HP Labs set up a new lab in Bangalore to focus on understanding the daily realities of potential indi- vidual and corporate customers in India and to develop solutions and products designed around their requirements.

Accessing existential knowledge calls for the deployment of a wide range of functional specialists from the innovation armory. The diffuse and complex nature of the knowledge being sought renders it unlikely that any one func- tional group alone would be successful. HP Labs adopted a multi-functional approach to local learning in India, involving ethnographers, designers, technol- ogists, and business people. This diverse group worked together through a pro- cess of observation, structured interviews, statistical analysis of market insights and technology trends, and joint ideation and concept development to identify end-user needs and then create solutions to meet these. The process proved successful, resulting in a number of innovations including: “script mail devices,” which enable people to send and receive hand-written e-mails via the telephone or can support the electronic capture of hand-written and image data; and the “shop-keeper’s assistant,” which is an inventory tracking device designed for use in India’s five-and-a-half million “mom-and-pop” stores.

Being the most expensive and long-term approach, companies need to be sure that they only embark on experiencing via bricks-and-mortar sites when the nature of the knowledge being sought meets the following criteria:

Diffuse Ownership—There is no one identifiable group or entity that pos- sess the sum of the knowledge being sought. For example, when Novartis opened a research centre to focus on tropical diseases in Singapore, the knowledge it wanted to access was distributed across patient groups in neighboring developing economies, NGOs who understood about deliver- ing health services in poor countries and the local scientific community. It was vital for Novartis to understand how local patients behaved (as this differed from the group’s expertise and experience of patients in the developed world) and the implications of different health systems to those that informed their core knowledge base. Novartis could then combine this diffused new knowledge with its core drug development and delivery knowledge to develop new types of drugs and business models.

Complex—The knowledge is deeply rooted in the local context in a com- bination of norms, behavior, actions or beliefs. It is not easily articulated and is very difficult to transfer to other locations. Disney’s early difficulty with its theme park in Paris provides a good example of this. In the U.S., much of the success of Disney’s parks was rooted in local social and cul- tural norms, for example, a ban on alcohol that fit with the company’s wholesome family orientation, and “service with a smile” denoting sincer- ity and concern in the United States. When transferred to the new park in Paris, these cornerstones of the Disney experience, failed to translate well to the European context, where a glass of wine was an integral part of

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU18

lunch and a complaint met with a smile was deemed highly inappropri- ate, condescending, and even insulting.

Difficult to Contain—The structure of the knowledge is unknown or fuzzy. A more precise definition of what can be learned will only begin to be revealed through the process of learning more from the location in which the “experiencing” is taking place. Thinking back to HP Labs in India, their initial mandate was to develop solutions and products to meet unmet needs. This very broad definition could only become more focused once the early, exploratory research had identified specific problems fac- ing Indian consumers and businesses. Only through continual learning did HP realize that there was a problem with tracking product inventory in India and that due to the structure of the retail sector, individual stores would not be able to afford to implement a solution. Therefore, the in- ventory-tracking device they developed (the shop keepers assistant) was positioned to support the inventory management of large suppliers, such as Hindustan Unilever, who then handed them out to small retailers. Nei- ther the problem nor solution were obvious at the outset but were only revealed through continual learning.

Absorbing and Integrating New Knowledge

We stated earlier that understanding which mode of access to use when seeking new knowledge is only the first step in building an agile innovation organization. Accessing knowledge is not an end in itself, and so to gain value from an agile model requires a second step to absorb and integrate the new knowledge that has been accessed from around the world. There are very few companies that successfully integrate the sites within their current innovation footprints to leverage the knowledge unique to each location. The reason for this failure is that absorbing and integrating knowledge from different places is dif- ficult16 and requires different tools, processes, and mechanisms depending upon the nature of the knowledge being absorbed.

Bringing Attracted Knowledge into the Organization

The “attracting” approach to accessing new knowledge allows for much easier knowledge absorption and integration than the other modes of access that deal with more complex knowledge. The explicit knowledge that is gained through attracting is codified and therefore can easily be passed to relevant internal specialists for assessment. Based on their deep knowledge of the cur- rent product or service range together with an understanding of the innovation pipeline, these people should have little trouble assessing the new knowledge for suitability.

In the example of Nokia, its research leaders are responsible for vet- ting the inflow of ideas it attracts and selecting proposals to carry forward. When the new knowledge has the potential to provide unique value to Nokia, the company enters into a confidential contract with the external researcher,

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 19

which can involve the co-location of a Nokia team of researchers with the knowledge holder or knowledge holding entity to facilitate the smooth integra- tion of the knowledge into Nokia’s innovation pipeline. When assessment of the new knowledge concludes that its primary benefit is to the wider mobile tele- communications ecosystem, it is channeled towards an open innovation project. In cases where Nokia researchers recognize that the attracted knowledge fits directly with the interests of its ecosystem partners or companies involved in complementary activities to their own, they pass the knowledge on to the rel- evant place.

Explicit, attracted knowledge faces less resistance to integration from the “not invented here” syndrome than the embedded and existential knowledge gained through foraying and experiencing. The technological complexity inher- ent in most products and service solutions today means that many companies already outsource the development of non-critical, modular components.17 So, when small, discreet pieces of knowledge are “attracted” and integrated into the innovation process, they don’t tend represent a threat to staff, but are treated like any other outsourced knowledge.

Absorbing Knowledge from Foraying

As we saw in both the examples of KPN in Japan and SNECMA in Russia, scouts who search for new knowledge in its home context play a crucial role in transferring the knowledge, or setting up mechanisms to transfer the knowledge back to the home base. Choosing the right scouts is therefore key to the success of absorbing and integrating new knowledge from foraying. They need to be able to understand new knowledge in its originating context and how it needs to be abstracted, translated, and re-created to fit into a different context. The task of understanding what is relevant and how to make it transferable lies with them. The KPN multifunctional team that went to Japan not only brought back codified knowledge in the form of special i-mode enabled phones, but the team members were able to explain to their colleagues back in Europe how i-mode was used in Japan.

To be able to assess the value and usefulness of new knowledge, a scout- ing team needs to reflect a range of specialist skills. Once KPN’s initial team of young scouts had outlined some of the potential opportunities for i-mode, a 25-strong team from various departments including marketing and technol- ogy development was brought together to work on transferring the embedded knowledge to Europe. Everyone in the team split his or her time between Japan and Europe. It was vital for every function to see i-mode in its original context and then translate that into something that would be feasible in Europe, given different technical standards, usage patterns, and cultural norms. Concurrent with the deployment of the larger team, KPN stationed a seasoned executive in Japan. He communicated with senior officials at DoCoMo while leveraging his technical knowledge to drive the more specialized elements of the project.

With all foraying activity, there is a point at which the scouts need to widen the net of their engagement with their own organization to build mul-

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU20

tiple bridges to the new knowledge they have accessed. In the case of SNECMA, after an initial three-man team had identified and assessed potentially useful new technologies in Russia, stronger bridges were built by inviting Russian sci- entists to demonstrate the technologies they had developed to large groups of SNECMA engineers in France. French engineers, chaperoned by the scouts, vis- ited Russia to see the new technologies in situ. This led to the formation of joint ventures to design and manufacture plasma propulsion engines for spacecraft and the engine for the Russian Regional Jet program.

With both KPN and SNECMA, the success of the absorption and integra- tion process was less about the transfer of the codified technologies and more about building an appreciation of the context within which these had been developed and were used.

The Challenge of Integrating Existential Knowledge from Experiencing

Due to the intangible, complex, and rooted nature of existential knowl- edge, the process of absorbing and integrating it across multiple boundaries, is a difficult one that is dependent upon two critical factors: the presence of “cross- cultural relays” and having a business pull.

It is paramount to the absorbing process to have cross-cultural relays that act as bridges between the local context of the experiencing activity and the home organization. Their role differs from that of scouts in foraying in that the nature of the existential knowledge they seek requires more than a cursory appreciation of a different context but a deep understanding of the subtleties of the social norms, behaviors, and beliefs that shape different contexts. Put another way, scouts are rooted in one context but need to be open and curious about others. Cross-cultural relays on the other hand are multi- or bi-cultural. They engage in significant personal experience of living or working in different contexts. They have a deep appreciation for and understanding of the context of the firm’s home country and the context in the location of the new knowledge.

Trust is vital for the success of any team, but it is even more so when working in new and unfamiliar contexts and with broadly defined goals.18 It is therefore critical that strong bonds of trust exist between the home base and cross-cultural relays, as this provides the latter group with the credibility they need to perform their role successfully. At HP Labs in India, cross-cultural relays were put in place to ensure that the learning in India wasn’t isolated or impris- oned but was integrated into the wider organization. One of the directors of the Indian lab was an Indian woman who was based in Palo Alto and had been part of HP Labs in the U.S. for many years. Another was an eminent Indian scien- tist based in India. In addition, an American senior manager was put into the Indian lab who had spent a number of years with HP as an expatriate in Taiwan, and during his career had worked in various functions and different businesses within the group. Together, this team had all bases covered. They were plugged into the local context of the lab and the wider Indian scientific and business communities, the home base context in the U.S., and different functions and

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 21

businesses across the HP global network. This enabled a constant interaction between the new site in India, its local eco-system, and HP elsewhere in the world. Furthermore, the director in Palo Alto and senior manager in India were both long-time trusted HP employees, with extended formal and informal net- works within the group. Meanwhile, the director in India was a highly respected and trusted member of the local scientific and technical community. Without these cross-cultural relays, the knowledge being sought in India would have remained too closely coupled to the local context to have been of greater value to the wider HP innovation pipeline.

Failing to have adequate bridges between the experiencing activity and the rest of the organization will prevent the absorption and integration of new knowledge. A stark example of this can be seen in the Japanese cosmetics group Shiseido’s attempt to break into the global perfumery business. Shiseido recog- nized the huge potential from creating a complementary business in perfumery and the distribution benefits this would bring. However, as in most of Asia, the market for perfume in Japan was small and after a number of failed attempts to enter the segment from its home market, Shiseido realized that to build a suc- cessful perfumery business it would need to do this from the world’s leading market in France.

Shiseido did well at building local linkages in France. It hired the former marketing head of Yves Saint Laurent Parfums to build its new business, built a plant in the perfume industry cluster of Gien, and hired a former executive from another leading French perfume company to run it. They also hired designers Issey Miyake and Jean Paul Gaultier to develop perfumes, which were rapid and lasting successes in a conservative industry where new brands seldom suc- ceed. However, the Japanese, in light of their previous difficulties in the perfume business, had been very careful not to assert strong control over the French operations and as a result hadn’t built any bridges between France and Japan. In essence Shiseido had built a highly successful French perfume house, but one that was so locally rooted that when the group wanted to transfer selective elements of knowledge back to Japan, such as product design and global adver- tising for luxury brands, it was unable to do so. They didn’t have the people in place who could recognize what needed to be changed or adapted in order for the learning to be transferred to Japan. Today, more than a decade after the launch of its French perfume business, the learning and innovation capabilities from the experience that have been successfully transferred to Japan remain rather limited.

Shiseido’s failure to establish cross-cultural relays had a detrimental effect on the company’s ability to absorb and integrate the new knowledge it had accessed in France. However, even when cross-cultural relays are in place, existential knowledge can remain difficult to move and diffuse. This leads to the second critical element for absorbing and integrating complex knowledge: for the knowledge to be transferred, there has to be a business pull or need. For example, not only did HP Labs have cross-cultural relays, but HP’s business groups were interested in and supportive of the Lab in India because it would

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU22

provide opportunities for them to create new products and services not only for developing markets, but with potential in established markets.

Transferring knowledge from the local lab in India to the global business groups, required constant communication and collaborative development. Once the lab in India had developed prototype solutions and technologies based on the needs they identified from ethnographic studies and local research, they then demonstrated these to the appropriate business groups within HP. If the business group liked the idea, they worked closely with the staff in India to develop the product or solution for commercial release, thus ensuring the result- ing innovation met both the requirements of the business group and retained the insight and knowledge born in India.

GlaxoSmithKline (GSK) offers another example of business pull support- ing the absorption and integration of new knowledge. In 1995, GSK paid nearly $500 million for Affymax, a Silicon Valley-based technology company that had developed an automated system for the parallel synthesis and screening of com- pounds. Senior managers at GSK made it quite clear within the organization that this was an important acquisition whose knowledge needed to be trans- ferred across GSK’s network of R&D labs. GSK had recently reorganized to create a network of competing labs and this meant that its labs were keen to adopt new processes and technologies that would give them a competitive edge. Therefore, a combination of internal competition and visibly committed senior manage- ment created a real need for the Affymax system to be transferred.

On the surface it might have seemed that with its acquisition of Affymax, GSK had essentially acquired technology in the form of robots and machines to synthesize and screen compounds. However, GSK recognized that merely trans- porting these machines to GSK labs would lose all of the important contextual knowledge about how the machines were developed, built, and used. GSK not only wanted the Affymax technology, but it wanted to know how to use it effec- tively in its own environment as part of the drug discovery process. To transfer the new knowledge from Affymax, the pharmaceutical giant decided to build multiple mirror images of the Affymax lab within its own labs across the world. Staff from GSK went to Silicon Valley for between four and six months to work with Affymax scientists and engineers and to build their own machines. At the end of their secondments, they dismantled these machines for shipment to their home labs where they were then responsible for rebuilding and integrating them.

The examples from both HP and GSK illustrate how existential knowl- edge can be successfully absorbed and integrated across a global organization. The processes an organization adopts to transfer the knowledge will vary, but the core mechanisms of cross-cultural relays—moving between different con- texts, understanding the knowledge at its source and how it can be translated for transfer to a different context, and a business need for that knowledge to be transferred and integrated—remain constant.

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 23

Entering the Era of Agile Innovation

As the trends of increasing knowledge dispersion, convergence, and price competition are likely to escalate, adopting an agile and flexible innovation model will become increasingly critical. We have outlined the three different modes of access that constitute an agile approach to innovation, the scenarios in which each is best employed, and how knowledge is absorbed and integrated within each of these approaches. Figure 3, expands on the simple model of agile innovation, outlining a summary to guide firms through the process of estab- lishing and running an agile innovation organization. The initial conditions in which each of the three approaches of attracting, foraying, and experiencing are best adopted are laid out in the first three columns. The fourth and fifth col- umns then outline the actions required to access, absorb, and integrate the new knowledge specific to each of the approaches.

The ultimate success of an agile innovation organization rests not only upon the implementation of the processes outlined in Figure 3, but is dependent upon firms overcoming two major dangers: namely, the failure to build bridges for knowledge representation, translation, and recreation within experiencing

FIGURE 3. Agile Innovation: A Contingent Process Framework

Kn ow

led ge

Ch ar ac te ris

tic s

Fe at ur es o f

Re cip

ien t

Or ga

ni za tio

n

Fe at ur es o f

Kn ow

led ge

So ur ce

Ac ce ss

Im pl em

en ta tio

n

In iti at ive

s

Ab so rb a nd

In te gr at e

In iti at ive

s

ActionsInitial Conditions

Experiencing

Existential – context dependent, systemic, “learn by doing”

Diffuse ownership

Establish brick and mortar site in new location with cross functional research approach

Cross-cultural relays create bridge

between knowledge source and recipient but requires genuine

business pull

Widely suitable if willing to make resource and management commitment

Foraying

Embedded – technological, context related, “see through different eyes”

Identifiable knowledge holders in given location

Locus of innovation at home with scouts sent on expeditions to learn and replicate

Scouts create mechanisms to

transfer knowledge back to home base

Widely suitable

Attracting

Explicit – codified, transfer via common language or process

Small companies, research institutes in multiple locations

Knowledge holders seek out recipient based on publicised research interests

Internal specialists assess usefulness

of new knowledge – Integrated in same

way as any other module or component

Suitable only if technology leadership, strong market share and good reputation for collaboration

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU24

activities (and to a lesser extent foraying); and the danger of limiting a global innovation model to one of the modes of access rather than adopting a portfolio of complementary activities.

Building quality bridges means having enough of the right sort of people who can act as cross-cultural relays between different contexts—interpreting, translating, or transposing knowledge from its originating context into different and distant ones. Our innovation survey found that as companies are interna- tionalizing their innovation activities, they have recognized what a vital asset people with multi-cultural experience are. The perception is that these people are much better at absorbing, interpreting, and using unfamiliar knowledge and have greater ability to work in dispersed, virtual teams than their mono-cultural counterparts. Yet, at the same time that the value of people who can act as cross- cultural relays is widely recognized, only a subset of firms that aspired to be “innovation leaders” were actively trying to build a cadre of people to fulfill this role through career structures and rewards. The worrisome implication of this is that there are a great many companies who aren’t building the internal people capabilities to function effectively in a global innovation environment. Unless companies take this challenge seriously they will find it increasingly difficult to access the dispersed existential and embedded knowledge that is key to remain- ing competitive.

To gain the real benefits of an agile innovation model, companies need to employ the different modes of access we have outlined to meet different knowl- edge requirements. This will enable companies to access the widest possible range of knowledge inputs in the most efficient manner (in terms of flexibility, management co-ordination costs, and capital expenditure). Procter & Gamble, for example, leverage codified, problem-solving knowledge from around the world with their attracting activities, but rely on foraying to understand latent consumer requirements in targeted markets. We described one element of HP’s experiencing activities in detail with their lab in India, but the group also engages in attracting via its open innovation office. As we have already seen, Nokia has built a global innovation network that encompasses the attracting, foraying, and experiencing modes of access.

While it is true that the recession beginning in 2008 acted as a catalyst forcing many companies to look at their costly innovation models, the reality for innovation and R&D had begun to change over the preceding decade. Significant future growth lies not in the mature markets but in the developing world with its huge populations and unique challenges. This new demand—together with increasing technological complexity and convergence and a shift in brainpower from West to East—has ushered in a need for innovation activities to be more dispersed yet at the same time more agile and efficient. Astute leaders recognize the importance of these changes. In 2009, just prior to his retirement as chair- man of SAP, Henning Kagerman—when asked by one of the authors what he considered to be his company’s most difficult strategic challenge—answered, “to build a global innovation network.” To do this well will mean building an agile innovation organization. It involves understanding when it’s appropriate

Agile Innovation: A Footprint Balancing Distance and Immersion

CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU 25

to e immersed in the local environment with a bricks-and-mortar site and when knowledge can be accessed from a distance. Companies that fail to take this on board risk finding themselves losing out to their more agile competitors in the future.

APPENDIX Research Process

The ideas put forward in this article were developed from three principle areas of research. In partnership with Booz & Company, we conducted a global survey on the configuration and management of innovation networks from 1975 to 2005. The survey was completed by 186 companies from 19 countries and 17 sectors with a combined R&D spend in 2004 of $76.4 billion. We were fortunate in being able to discuss the results with a large group of survey partici- pants at a workshop held to release the results. In the second area of research, we undertook detailed process studies at a number of companies, investigating how they accessed new knowledge for innovation and then integrated this with knowledge from elsewhere in the organization to deliver innovations. In the third area of research, we conducted interviews at 30 global companies from a wide range of sectors to build a picture of their global innovation process. At each company we interviewed between three and ten staff (depending upon the size of the organization and dispersion of their innovation process) from a range of functions involved in innovation. Each interview lasted between one and two hours. The research process was iterative, with an ongoing analysis of interviews informing the direction of subsequent interviews.

Notes

1. J.H. Dunning and S.M. Lundan, “The Internationalization of Corporate R&D: A Review of the Evidence and Some Policy Implications for Home Countries,” Review of Policy Research, 26/1-2 (January 2009): 13-33.

2. C. Stadler, “The Four Principles of Enduring Success,” Harvard Business Review, 85/7-8 (July/ August 2007): 62-72.

3. C.K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Upper Saddle River, NJ: Wharton School Publishing, 2009).

4. M.E. Porter, The Competitive Advantage of Nations (London: Macmillan, 1990). 5. Y. Doz, K. Wilson, S. Veldhoen, T. Goldbrunner, and G. Altman, “Innovation: Is Global the

Way Forward?” Booz Allen Hamilton and INSEAD, 2006. For similar findings, also see UNCTAD 2005, “World Investment Report”; BCG, “Innovation 2006”; B. Jaruzelski and K. Dehoff, “Beyond Borders: Global Innovation 1000,” Booz & Company, 2008.

6. W. Kuemmerle, “Building Effective R&D Capabilities Abroad,” Harvard Business Review, 75/2 (March/April 1997): 61-70.

7. P. Williamson and M. Zeng, “Value-for-Money Strategies for Recessionary Times,” Harvard Business Review, 87/3 (March 2009): 66-74.

8. Calculated based on country economic data from <www.economist.com>. 9. “Inside the Tata Nano—No Small Achievement,” The Economist, March 26, 2009.

10. We loosely draw here on the categories outlined by Y. Doz, J. Santos, and P.J. Williamson, From Global to Metanational: How Companies Win in the Knowledge Economy (Boston, MA: Har- vard Business School Press, 2001), Chapter 5.

Agile Innovation: A Footprint Balancing Distance and Immersion

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 53, NO. 2 WINTER 2011 CMR.BERKELEY.EDU26

11. Although much faster this is not conceptually different from European scientists writing long letters to each other in the 17th or 18th centuries and collectively moving many scien- tific fields ahead.

12. Anssi Vanjoki was speaking at the Center for Knowledge and Innovation Research Work- shop, “Innovating for Transformation,” at the Aalto University School of Economics, Hel- sinki, on Wednesday, August 25, 2010.

13. H. Berry, “Leaders, Laggards and the Pursuit of Foreign Knowledge,” Strategic Management Journal, 27/2 (February 2006): 151-168.

14. H.W. Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology (Boston MA: Harvard Business School Press, 2003).

15. L. Huston and N. Sakkab, “Connect and Develop: Inside Procter & Gamble’s New Model for Innovation,” Harvard Business Review, 84/3 (March 2006): 58-66.

16. H. Bresman, J. Birkinshaw, and R. Nobel, “Knowledge Transfer in International Acquisi- tions,” Journal of International Business Studies, 30/3 (3rd Quarter1999): 439-462.

17. European Commission, “Monitoring Industrial Research: Survey on Business Trends in R&D Investment,” 2006.

18. S. Newell, G. David, and D. Chand, “An Analysis of Trust Among Globally Distributed Work Teams in an Organizational Setting,” Knowledge and Process Management, 14/3 (2007): 158- 168; M. Serva, M. Fuller, and R. Mayer, “The Reciprocal Nature of Trust: A Longitudinal Study of Interacting Teams,” Journal of Organizational Behavior, 26/6 (September 2005): 625–648; M. Mortensen and T. Beyene, “Firsthand Experience and The Subsequent Role of Reflected Knowledge in Cultivating Trust in Global Collaboration,” Harvard Business School Working Paper 09-131, 2009.

Copyright of California Management Review is the property of California Management Review and its content

may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express

written permission. However, users may print, download, or email articles for individual use.