Partnerships for Global Innovative Opportunities
05 Sep, 2013
By Mona Pearl
Use partnerships as a form of FDI.
George Bernard Shaw’s saying, “We don’t stop playing games because we grow old, we grow old because we stop playing games” can be transferred into the global business world. Companies may not become old, but definitely stale and set in their ways. I am practically stunned by the changes in innovation, as more of the smaller and middle-market companies seem to look into the new, test and produce new ideas, while the old/established companies stopped. Too many established companies feather a nest and then sit in it, sinking relentlessly into what should have been temporary shelter, trying to preserve instead of realizing it’s time to move on. Ironically, nothing facilitates reinvention more than failure, because if you don’t fail, or if you become too risk averse, you become comfortable with mediocre victories.
Game-changing innovations that produce a competitive advantage or drive new business models are unusual for large corporations. Understanding what is necessary to stay ahead is one thing; very few have the conviction and discipline to act on it. The new way to innovate is through collaboration as top sources for new ideas. This greatly contrasts with what is commonly thought as innovation: internal R&D. It is not how much a company spends on R&D, or the number of patents, or the market forecast. It is about growth and pursuing the competitive advantage of tomorrow by partnering.
In a world where everything is becoming better, but more of the same, in order to engage in product, process and strategy innovation, why not use partnerships as a form of FDI and tap into the pool of innovative opportunities across borders?It is a way to use a modular approach and distinguish your company’s strategy, reinvent and gain a competitive edge.
Innovative Opportunities: Achieving sustainable success in a growing global competitive arena
To create innovative opportunities across borders, we may want to pose the following question:
How can countries/cities act strategically to attract FDI and how can companies identify these pockets of success while increasing their global impact?
This changes the balance of global growth strategies, as we see it includes different modes of collaboration, clusters, alliances and more. This is another challenge the global economy is presenting that some companies have been taking advantage of for years, but most have yet to discover.
Businesses are increasingly making emerging markets their target to sell products and/or services, and invest in them for growth. But what about the stages leading to that?What about partnering and investing in innovation across borders?Being on the ground floor for the new developments that will change the face of the industry, or even create a new industry?There are countries that their flagship is their innovation, and therefore, a fertile ground for companies looking for their next competitive edge. For example, let’s have a look at the top 20 rankings of the countries in the Global Innovation Index 2013:
Source: The index is published by Cornell University, INSEAD and the World Intellectual Property Organization.
How can companies have a forward looking strategy and tap into the resources of these and other countries in order to develop collaborative partnerships that build regional, and possibly, global leadership?
In the latest (2012) IBM Global CEO Study, in order to address rising complexity, organizations need to look beyond traditional partners and conventional views on innovation for new inspiration and necessary capabilities, and:
- Explore unconventional partnerships. Study nontraditional alliances emerging in other industries and look for parallel applications in your own. Address market shifts or create new solutions by integrating capabilities not commonly found in your own industry.
- Think like a disruptor. Intentionally stretch thinking beyond business as usual, even when business as usual is working.
- Question norms. Introduce new stimulation from outside — customers, academics and partners who are not part of your normal innovation circle.
- Innovate together as a system. Some problems are simply too difficult to solve even with a cadre of partners. Approach untenable issues or grand challenges by partnering across the entire system, with competitors, governments, non-governmental organizations and more.
Global Partnerships for Innovation
From Wall Street to Madison Avenue to the Silicon Valley, the biggest success stories in the history of U.S.- based businesses have been less about one individual or one company’s triumphs. On the contrary, top successes at U.S.- based companies have been the result of collaboration and acceptance of a win- win philosophy. Unfortunately, too many have lost sight of this important lesson and insist on going global solo. By going it alone, they rely on traditional business models like import/export, outsourcing, franchising and licensing.
While these business models are still relevant today, greater success can be accomplished by incorporating corporate partnership models such as collaboration, M&A, joint ventures, alliances, clusters, and others more suitable for long-term strategic global growth. Each one of these models needs to be examined for its contribution to the company, its strategic plan and resources. Partnerships provide the edge for radical innovation, and not only merely dipping their toe in the waters. It is a major driver for disruptive innovation. Instead of settling for simply creating new products or implementing more efficient operations, they’re more likely to be moving into other industries or even inventing entirely new ones.
In certain countries, and in specific industries, businesses have the unique opportunity to participate in strategic industry-based clusters, and South Korea is famous for clustering to foster innovation and encourage growth. Comparatively, entering a new market through a cluster is less risky than entering that same market independently. That’s because clusters allow a company to take a developed product into unfamiliar markets with the support of existing infrastructure and established relationships.
Collaboration in Action
Japanese companies have practiced collaboration for centuries, and this has enhanced their global growth efforts. Unfortunately, many U.S. companies fail to understand the purpose or benefits of engaging collaboratively. But there are many. For example, initiating a strategic alliance can help defend an organization from competition or increase effectiveness by learning from (and with) partners in the industry. Internationally, collaboration can radically improve the time to market in terms of innovation, speed, product design and adaptation and on many other levels.
In certain countries, and in specific industries, businesses have the unique opportunity to participate in strategic industry-based clusters, and South Korea is famous for clustering to foster innovation and encourage growth. Comparatively, entering a new market through a cluster is less risky than entering that same market independently. That’s because clusters allow a company to take a developed product into unfamiliar markets with the support of existing infrastructure and established relationships.
Ultimately, the advantages of strategic clusters reduce risk while increasing the prospect for international growth and market longevity. Whether the goal is to expand, relocate, or collaborate, an understanding of clusters offers innovators, manufacturers, and service providers a new way to scan the world for opportunities.
Warren Buffett once said: “If you go to the Middle East looking for oil, you don’t need to stop in Israel. But if you go looking for brains…it is the only stop.” With the highest number of engineers per capita (double that of the United States and Japan), Israel is a nation of innovation and home to the highest concentration of high-tech companies outside of Silicon Valley. This technology cluster has attracted companies from all over the world to partner for some of tomorrow’s opportunities, using innovation as an opportunity for FDI.
Collaborate, Coordinate, Cooperate
Businesspeople around the world marvel at the tremendous success China has achieved during the past two decades. Want to know a secret? It’s embedded deep within the Chinese culture — the spirit of cooperation. Winning through cooperation is a core concept of Chinese culture, which has a tradition of highly valuing mutual social obligations. Today, this principle of cooperation is paramount to success when navigating a global marketplace, and it’s especially imperative when entering a new market for the first time. Regardless of which business structure is ultimately selected for global expansion, it will require a spirit of cooperation and some level of collaboration.
This key ingredient, collaboration, has proven to be a major obstacle for businesspeople who hail from the United States. Certainly, the idea of collaborating between organizations and creating partnerships is nothing new. It’s a long-established tool to achieve results one cannot easily achieve alone. In today’s global business environment; however, alliances are more important (and more complicated) than ever. Creating new value networks, tapping into new sources of innovation, or driving growth through partnerships are just a few examples of how teaming can help generate success abroad. But successfully creating and managing these business structures requires new skills and a trip up the learning curve.
Astute business owners and leaders will choose to collaborate with an existing domestic business. Through a strategic plan and implementation process, businesses gain a deeper understanding about consumer behavior, the culture, and the business practices of a specific market. Equally important, a local partner can offer insight into how a product or service will be used in that culture and can help a company plan for new upgrades and features that may be necessary before moving forward. With this type of collaborative relationship, businesses are more likely to experience a quicker time to market, a quicker return on investment, and a sure foundation for future ventures.
Mona Pearl helps build, fix and grow companies with entrepreneurial mindsets that face complex challenges across borders, and charts and coordinates programs and actions that help them become competitive and sustainable internationally. She is the author of Grow Globally as well as other books and articles on global competitiveness and growth. Learn more by visiting www.linkedin.com/in/monapearl/.
This article includes excerpts from Grow Globally: Opportunities for Your Middle-Market Company Around the World. Copyright 2011 by Mona Pearl. Re-printed with permission of John Wiley & Sons, Inc.
Illustration by jscreationzs at Free Digital Photos.net
