Do you fancy yourself as a global customer? Irrespective of where you live, IT companies across the world now perceive 'you' as a potential customer. In fact, their ability to partner companies operating in your vicinity makes all the difference between their success and failure.
Have you ever thought about what it takes to develop new products for you? Living in a flat world has necessitated many changes in the way multinational corporations - including IT companies - work, to keep coming up trumps. After all, these companies no longer serve local customers, but serve global customers instead.
Innovation, too, has taken on global and collaborative hues. For instance, while developing the iPod, Apple Computers worked with 10 global partners to zero in on the right ideas and components. Apparently, it used resources in both USA and Japan even during the product design and customer requirement definition phases.
Global customers imply global partners
Reaching out to so many more people is not easy. It requires new know-how, coming from global partners, to generate ideas that are likely to appeal beyond established market boundaries. It also calls for specialist insight into local markets, so that standardised products may be customised. Global innovation also creates a role for global customers to test new products.
In an article, The Globalisation of Markets, published in the Harvard Business Review, Theodore Levitt elucidated his 'simplicity theory, which suggests that corporations can achieve faster growth rates by selling standardised products worldwide. However, this perception of a global customer and global market is significantly different from the current modus operandi of many IT companies; these companies have adopted a tiered process of new product development: first global, then local. In short, a process that has room for customisation into local versions after a global version has been developed.
Partnership - the new weapon for success
Apparently, it is no longer a question of just thinking out of the box, but thinking out of an organisation - in conjunction with partner - that holds the key to global innovation. While a few global corporations, like IBM, can afford to set up bases in multiple continents to avail of a range of cost benefits and simultaneously implement the world's best practices across their offices, more IT companies - especially SMEs - must rely on partnerships to grow to the next level.
But even an IT giant like IBM recognises that isolation inhibits innovation, and hence has extended its research beyond the boundaries of labs to stay in touch with society's needs and challenges. Its researchers work closely with global colleagues in university labs, and foster collaborative relationships through fellowships, grants and shared research programs. In India, IBM researchers support faculty and students from leading schools. The lab is also collaborating with many institutes of higher learning to evolve Service Science, Management and Engineering (SSME).
The crux is to establish high-end collaborative work processes to cope with rapidly evolving technologies, markets and social conventions. As Dr Daniel Dias, director, IBM India Research Laboratory, puts it: "People are looking for value that arises from a creation, and not just looking at technology for its sake. When it comes to innovation, there is a need to 'think collaboratively' and in a multifaceted manner, as this determines who wins and who loses. Innovation today is more about services, processes, business models or cultural innovation than just product innovation."
Focus on collaborative work processes
Perhaps for this reason, the Borderless World Conference that was held in May 2007 in Australia, hosted by the Australian Information Industry Association (AIIA) along with IBM Australia and Alcatel, placed a lot of emphasis on partnerships and globally-integrated enterprises. While speaking on this subject, Michael Cannon-Brookes, vice president for IBM Business Development in China and India, spoke of how "......the rules have changed, the tyranny of distance is irrelevant, and geography is history."The need of the hour is to "....direct resources into innovating business models, access high-value competitive skills through global resourcing and integrating globally."
Sheryle Moon, CEO of AIIA, would probably agree. In her blog, Talking Technology, she says, "The goal of world class and sustainable competitive advantage can no longer be achieved in isolation. The increased scope, size and complexity of projects means that organisations are looking to build stronger partnerships to help ensure the success of their undertakings, and more importantly, to mitigate risk and ensure an acceptable return on investment."
Moon also speaks of the AIIA's national partnering programme, CollabIT, which "....encourages clusters of like-minded companies to work together to identify skills and synergies, forge alliances with multinationals and access new markets that might otherwise be out of reach."
A choice of partnering arrangements
The change in success strategy is interesting. Decades ago, corporations would limit their teams to permanent employees. Partnerships were looked upon with suspicion, as areas from where trade secrets and goals could potentially leak. In contrast, points out Moon, "Partnering has [now] proven to be one of the most powerful business tools for dealing with fast-changing markets, technologies and customers." She goes on to describe various modes of collaboration - informal arrangements, outsourcing and joint ventures.
For instance, according to an Infosys company spokesperson, in India, Infosys and Microsoft share a 360-degree reciprocal relationship, as mutual customers, providers and partners. Infosys is a Microsoft Global Systems Integrator and Gold certified partner. They have a strategic joint IT-led business transformation program called Catalytic IT, which enables enterprise businesses and their employees to realise a simplified, flexible IT environment that lowers the total cost of ownership, and allows rapid change and innovation. The program offers solutions under three broad areas: to modernise legacy systems, architectures and processes to help increase business responsiveness, to lower costs, and mitigate risks; to optimise IT infrastructure and transform it into a strategic asset; and to ensure the seamless and secure flow of information needed to enhance collaboration, increase productivity, and drive innovation.
The value of this alliance is typified in the Web-based solution Infosys built for Service Corporation International, a $2.3 billion funeral services industry leader operating through more than 1,600 funeral homes and cemeteries across North America. This low-cost Web version of SCIâ€™s thick-client product, based on the Microsoft ASP.NET platform, resulted in improved customer service and annual IT savings of US $4 million for SCI.
Qualities of an ideal partner
On her blog, Moon also focuses on those qualities of an ideal partner that make for a successful, long-term relation. For instance, she believes a partner should â€œâ€¦have strong domain knowledge, be technologically savvy, have a global understanding and outlook, be proficient in the technology and business environments of all parties, have the resources to bring to the project, have a breadth of project and enterprise experience and the ability to extrapolate from that experience, and have a clear understanding of partnership."
Based on the above, Moon cites IBM Ballarat as exemplifying an ideal partnership. According to her, the headquarters of IBM's computing services for South East Asia is the lead company in Ballarat's technology park. Also, IBM's Client Service Centre, which provides helpdesk facilities to over 80 clients across a range of industries, was announced joint winner of the National Award for Excellence in Customer Service in Australia. This achievement is the latest in a series of service excellence milestones for the regional facility, which IBM operates in partnership with the University of Ballarat's School of Information Technology & Mathematical Sciences, with support from the Victorian State Government.
Each of these qualities has its own value. Research conducted by INSEAD (Institut Europeen d'Administration des Affaires, The European Institute for Business Administration) professors Bruce Kogut and Anca Metiu helps emphasise one major asset - strong domain knowledge. Having studied the intellectual aspects and validity of outsourcing a creative IT R&D function to a partner at an offshore location, this duo concluded that ".......while technical knowledge may be quite readily transferable, domain knowledge demands a clear and dynamic understanding of a given product, as well as its requirements and applications."
Does outsourcing innovation to a partner actually work?
Of the several reasons behind outsourcing, cost cutting is the top incentive driving jobs from the West to a cheaper East. But is creativity also that easy to outsource across a great distance? Kogut and Metiu maintain that while the software design and development industry comes across as a 'naturally borderless industry' because of its digital, modular and systemic character, those at the helm of companies taking decisions to outsource sometimes conveniently forget that technology transfer, per se, 'occurs subsequent to, or concomitant with, innovation and creativity'.
What the professors desire to highlight is the importance of face-to-face interaction to foster creativity. For this reason, they differentiate between the quality of onshore and offshore software development. The physical proximity ensured by the former method works as an advantage for engineers to brainstorm ideas, especially when dealing with clients whose needs are varying, or not clearly specified. Of course, it may be counter-argued that as the process of software development starts with very clearly laying down the specifications of a development job, it should be easily outsourceable to an offshore site.
Perhaps this is why Kogut and Metiu's research reveals contradicting conclusions. These range from indicating that ".............face-to-face communications generate a higher number of unique ideas, or that computer-mediated communications tend to produce less non-redundant ideas, or even that there is little meaningful difference in terms of the numbers and quality of ideas generated."
In The Lexus and the Olive Tree, Thomas Friedman spoke of 'information arbitrage' or "having [in place] a wide net of informants and information, and then knowing how to synthesise it in a way that will produce a profit." Bearing in mind that we live in an information age, an organisation's ability to reach out to a partner and create what Moon describes as a 'bigger pool of knowledge' is key to staying afloat in a competitive global marketplace.
Of course, enterprises seeking to establish partnerships,Â alliances, or joint ventures, must carefully consider the objectives of the union prior to determining its form. The bottom line should always remain the same - in Moon's opinion, this should be the ability [of a partner] to create new value through the collaboration. The knowledge a partner brings to a table must add to an organisation's ability to leverage a competitive advantage. This would truly create a win-win situation for all!
Slices of the collaboratively baked pie
Today, in the field of collaborative research and development (R&D), organisations follow different models.
The traditional way was to have several dedicated R&D teams operating individually, and non-collaboratively, within a single organisation. Then, multiple teams started collaborating within the same organisation, especially where inter-disciplinary work was involved. Later, R&D labs of the same organisation, but spread across its various global locations, started working together.
The latest trend revolves around 'sourcing' R&D - and there are several discernible formats within this as well. The simplest, of course, is to outsource the research to an external 'partner' - a sponsored research team at a university, an incubated start-up, or any other team that the organisation has forged specific contracts with, in respect to how work progresses, who owns the intellectual property, and so on.
Another option is to turn to Web-based technology marketplaces like yet2.com or InnoCentive, to buy or sell intellectual property and 'genius' from other organisations and scientists. Here, the e-marketplace acts as a framework that systemises IP ownership and licensing issues.
At the far end of the spectrum, however, are the free and open software and technology developers. They have their own systems of licensing (not patenting), which enable the global community (not partners, but the community at large), to collaboratively develop and share technologies.
Dr Vinay Vaidya, VP-Business & Technology Solutions, KPIT Cummins Infosystems Ltd, feels that a true 100 per cent open innovation model will only work if patents are scrapped all over the world."It is unfair to expect only a few to follow the model while others enjoy the benefits of patenting. For science to progress, an open model is the best. However, in today's world we cannot go back to the open system. It is unfortunate but true,"he says.
With such a disclaimer in place, though, he feels that the research community should know the details of new technologies, whether or not the creators patent them. When this happens, science and technology can progress further by someone else doing things even better, building on your method. He adds, â€œWe have to acknowledge the power of collaboration. Considering the complex nature and subjects of research happening today, most times it is necessary to combine the efforts of more than one company or lab to drive the results in a positive direction."
Janani Gopalakrishnan Vikram