Tapping Into the World Innovation Hotspot

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  • Topic: Innovation system, Innovation, National innovation system
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Big Picture
BY JOHN KAO

Tapping the World’s Innovation Hot Spots
Countries around the globe are creating distinctive innovation models. What are those models, and how can you take advantage of them? DURING THE TWENTIETH CENTURY , the world watched as the United States churned out innovation after innovation. Now, however, the tables are turning. Many other countries are placing innovation at the top of their national agendas. From Singapore to Finland, from Chile to China, countries around the world are designing novel approaches to innovation strategy. They are creating forward-looking education and talent-development policies, pouring money into large-scale initiatives, and snapping up new assets in the form of intellectual capital and infrastructure. What does this new “innovation world” mean for companies, and what are the implications for the people who lead them? Executives can now weigh different national approaches to innovation in terms of their firms’ strategic requirements. The models described in this article offer companies both range and richness in developing their

John Hersey

hbr.org

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March 2009

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Harvard Business Review 109

Big Picture Tapping the World’s Innovation Hot Spots

plans. Some of the models exist in a “pure” form in a given country, as the centerpiece of a national innovation system; others are but one component of a nation’s overall strategy. By partnering directly with various countries and setting up a lab or a marketing office in a yeasty environment where talent is concentrated and resources are readily available, companies can select from a menu of benefits. For example, hightech start-ups can be “born global” by availing themselves of talent, capital, R&D tax credits, regulatory relief, and specialized facilities in such innovation hot spots as Helsinki, Singapore, and Shanghai. Companies can also position themselves as “systems integrators,” which incorporate the elements of the models that are most appropriate for their strategies. Indeed, corporate strategists have more opportunity than ever to pick and choose from best practices and resources across the globe and combine them in new and unpredictable ways. In doing so, they can practice what I call innovation arbitrage, taking advantage of differences in regulatory environments as well as in the cost of talent, specialized services, and other inputs to the innovation process.

IDEA IN BRIEF


There’s a whole new world of innovation opportunities opening up for your company – if you know where to look. Dozens of countries sponsor programs to lure innovative enterprises to their home territories. Singapore offers tax relief, employee training, and R&D grants to life sciences firms that locate there. India provides talent management for some of the world’s most sophisticated technology development work. Finland is becoming a global center for innovative design. To capitalize on these and other innovation hot spots, identify which countries’ offerings best fit your company’s innovation strategy. Be prepared to mix and match. For example, Nile Therapeutics, a biopharmaceutical firm, uses intellectual property from Italy and conducts clinical tests in Eastern Europe. The company employs eight people rather than the 100 that similar firms require.



Model 1: The Focused Factory The production and operations expert Wick Skinner used the term “focused factory” in a 1974 HBR article to describe the benefits of concentrating manufacturing effort on just a couple of tasks. The focused-factory innovation model combines a clear strategic intent with a concentration of infrastructure and high-octane talent in an effort to discover and deploy new solutions to big challenges. Countries such as Singapore and Denmark, for instance, focus their innovation investments on a handful of industries or research fields. Singapore has made an impressive commitment to scientific research, illustrated by its plan to increase...
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