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Creating and Leveraging Knowledge:

The Worldwide Learning Challenge

Central, Local and Transnational Innovation

Center Ð'- for Ð'- global innovation model

Ð'* The new opportunity or risk that triggered an innovation was usually sensed in the home country.

Ð'* The centralized resources and capabilities of the parent company were brought to bear to create new product or process.

Ð'* Implementation involved driving the innovation through subsidiaries whose role was to introduce to the local market.

Local Ð'- for Ð'- local innovation

Ð'* Relies in subsidiary based knowledge development

Ð'* The local entities use their own resources and capabilities to create innovative responses that are then implemented in the local market.

Two categories of Transnational innovation process:

1. Locally leveraged - ensuring that the special resources and capabilities of each national subsidiary are available not only to the local entity but also to the other units worldwide.

2. Globally linked Ð'- pools the resources and capabilities of many different units Ð'- at both the parent company and subsidiary level Ð'- to jointly create and manage an activity.

Limitations and characteristics of Local and Global Innovations:

For Center Global Innovation:

1. The greatest risk is market insensitivity and the accompanying resistance of local subsidiary management.

2. The major impediment to global linked innovations tends to be the high coordination cost required to link widely dispersed assets, resources, and capabilities into an effective integrated network of free flowing ideas and innovations.

Local for local innovations:

1. Suffer from needless differentiation and "reinvention of the wheel" caused by resource Ð'- rich subsidiaries trying to protect their independence and autonomy.

2. Can be threatened by the "not Ð'- invented here" syndrome that often blocks the successful transfer of products and processes from the innovative subsidiary to others in the company.

The Management Challenge: Building Multiple Innovation Process

The key strength that the Japanese built their global leadership positions in a diverse range of business lies in the effectiveness of their center Ð'- for Ð'- global innovations. They are the champion managers of centralized activities and tasks:

Three Factors of the success of Japanese in managing the center global process:

1. Gaining the input of the subsidiaries into centralized activities.

2. Ensuring that all functional tasks are linked to market needs

3. Integrating value chain functions such as development, production, and marketing by managing the transfer of responsibilities among them.

I. Gaining Subsidiary Input: Multiple Linkages

Important