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Chapter 11

Chapter 11. Managing Knowledge and Innovation across Borders. World Bank’s IFC. Consulting work done by teams located in target countries. Expected to access internal and external knowledge No protocol for accessing the knowledge

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Chapter 11

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  1. Chapter11 ManagingKnowledge and InnovationacrossBorders

  2. World Bank’s IFC • Consulting work done by teams located in target countries. • Expected to access internal and external knowledge • No protocol for accessing the knowledge • Knowledge pool is so big, not enough time to sort through it • Teams often end up “reinventing the wheel” • Relying on local networks • Struggle to apply outside knowledge to their specific situation. Knowledge management is key

  3. Sharing Knowledge in the Multinational • Multinationals overcome institutional voids, culture barriers, etc. • Shared processes, language, and trust • New knowledge expected to be shared globally from subsidiary • Knowledge sharing increases chances for new information • Turning to others outside of geographic area yields ¼ of firms’ innovations • Often a top priority for CEOs. • One of GE’s five “timeless principles”

  4. Types of Knowledge Explicit knowledge • Knowledge that individuals and organizations know they have • Objective, systematic, texts and manuals, IT-based – easy to share • Helps companies improve standardized work capabilities Tacit • Personal, context - specific, hard to formalize and communicate • Acquired through experience – face-to-face sharing required • Improves creation and innovative capabilities Explicit knowledge is more likely to be used

  5. Figure 11–1: Types of Knowledge and Work Implications Improve routine capabilities Improve Technical capabilities Standardized Work Improve innovation capabilities Customized Work Improve creative capabilities Explicit Tacit Knowledge

  6. Knowledge Sharing in Multinationals Why is knowledge sharing important? • Allows the firm to leverage knowledge from multiple locations The knowledge that is obtained by the seeking unit can be: • Used to operate more effectively • Recombined with existing knowledge to produce new knowledge What influences the effectiveness of knowledge sharing? Provider Unit Seeker Unit Knowledge sharing mechanisms

  7. Knowledge Sharing Challenges: Provider Unit Ability – “Foreigner” Challenge • Explicit knowledge: Proficiency in codifying knowledge • Tacit knowledge: communication skills, global mindset Motivation – Hoarding of Expertise Challenge • Compensation and rewards encourage knowledge sharing • Gain status for being knowledgeable • Norms of reciprocity

  8. Knowledge Sharing Challenges: Seeker Unit Ability – Absorptive Capacity Challenge • Ability to absorb information predicts extent of information sharing • More you know, more you can learn, more you can put into practice • Similarity promotes understanding but more knowledge overlap • Capacity to absorb takes time to build Motivation – Not-Invented-Here Challenge • Capacity to challenge existing processes • Motivation to change • Willingness is low if the unit is successful and has good history

  9. Figure 11–2: Knowledge Sharing Challenges

  10. How to Stimulate Knowledge Sharing • Improving information about superior performance • Designing structural mechanisms to share knowledge • (See example of Mittal Steel and Schlumberger) • A comprehensive approach to mobility and talent management • Reinforcing sharing with performance mgmt. and incentives • Framing knowledge around the story, not the data • (See example of IFC)

  11. Mittal Steel and Schlumberger Communities of practice • Formed around common interests – guided, not controlled, by firm Schlumberger – online knowledge management, “Eureka” • Communities to exchange information • Two “homes” – hierarchal home, Eureka online home Similar: Mittal Steel • Members of different units meet together in specialized groups • Conference calls, smaller meetings, discuss common issues

  12. IFC’s SmartLessons • “Pull” from seeking unit needs to be strong when seeking info • IFC encourages knowledge sharing through stories • SmartLessons: • Encourage honesty • Highlight contributors • Let users determine the value (rating)

  13. Knowledge Acquisition: External Knowledge • Scanning for global solutions • Explicit – listening post • Tacit – comprehensive units in business centers • PRO-lots of talent CON-fierce competition • Partnering or merging • Partners provide fresh knowledge • Outsourcing for simple and complex tasks • Social capital required for knowledge acquisition • M&A is the ultimate form of partnering • Playing the virtual market • Crowdsourcing, open calls for research

  14. Enhancing Knowledge Retention Stimulate knowledge sharing among individuals Reduce employee turnover • Keep in mind skills that could be lost in involuntary turnover Invest in making tacit knowledge explicit • Metaphors can help codify tacit knowledge, making it more accessible Reap the knowledge repatriates bring back home Repatriates leave when they feel they can’t share knowledge

  15. How to Encourage Promising Ideas Promote unit diversity AND standardization • Some subsidiary autonomy helps variation • Strong networks and communities help cross-pollinate good ideas Encourage chance encounters AND provide focus • Chance encounters can spawn ideas • Specifying what is wanted and listening to customer complaints Focus on hot spots AND look in surprising places • Be aware of lower-importance areas and consumers – AAT Thailand Have a culture of experimentation AND stretch goals • 70-20-10 ratio of how time should be spent – encourage innovative time • Don’t get complacent or afraid to be the first to do something

  16. Figure 11–3: From Ideas to Innovations Knowledge Sharing Innovations

  17. Building Transnational Innovation Capability • Stretch goals are the starting point for innovation • Go local • Observe local market context – deeply understand company needs • Build trust as it relates to sharing of intellectual property • Reach out • Headquarters and peer units can help formulate solutions • Don’t draw inward under stress! Turn out for advice • Develop trusting relationships outside the local domain • Uncover principles – focus on the “why” • Replace templates with principles to allow adaptation

  18. Organizing R&D Centers • Despite the globalization, distance remains a challenge. • Corporate R&D centers are crucial for firm innovativeness • Sharing and recombining tacit knowledge face-to-face • Innovators most closely linked to those with whom they work • Close relationships (social capital) facilitate knowledge sharing • Put the right people where the uncertainties are

  19. Transferring R&D Capabilities R&D centers nurtured in parent countries before going foreign Capabilities are interwoven skills and hard to master Transfer to emerging markets is difficult – lack of knowledge • Transfer of complexity requires great knowledge of details Transfer involves adapting knowledge to new context

  20. Four Stages of Capability Transfer • Stage 1 • Building foundations – skills training, managerial development, etc. • Stage 2 • Development of local suppliers’ capabilities & performance management • Greater discipline in streamlining areas • Stage 3 • Local development – education, projects, transfers • Local autonomy should be matched with shared values • Stage 4 • Transfer capabilities from subsidiary to headquarters

  21. Exploration and Exploitation • Organizing for innovation means managing tensions of dualities • Innovation requires: • Cycles of divergent and convergent behavior • The need to operate “on the edge” between order and chaos • Link time frames, combine structures and improvisation freedom • Social ties can protect from self-interest but cause rigidity • HRM Implications on global scale: • Recruiting to acquire valuable external knowledge • Training should enhance innovative capability of firm and ability to deliver today • PM systems need to encourage exploration and exploitation

  22. Additional slides for teaching

  23. The Process of Knowledge Acquisition at Google • About 12 billion monthly Google searches* • Seeking information and displaying preferences • See advertising • Product testers • Iterators during product development • Use new products • Media outlets, individual producers • Generate content • Build recognizable brands • Maintain channels for advertising The Ecosystem Behind Google’s Success Content Generators End Users Google Platform • Creators, vendors, engineers, open source community • A large and rapid development group • Generate continual appeal for Google • Each group shares profits • Build upon preexisting products and offerings • Companies and individuals • Providing relevant content on search ads • Cash cow for Google • Commercialization of new Google products 3rd Party Marketers Developers *From “http://expandedramblings.com/index.php/by-the-numbers-a-gigantic-list-of-google-stats-and-facts/” Adapted from HBR Article “Reverse Engineering Google’s Innovation Machine” by by Bala Iyer and Thomas H. Davenport

  24. Exploitation-Enhancing HRM

  25. Exploration-Enhancing HRM

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