China and Innovation – Now Overtaking Japan

It’s not that long ago that a colleague told me that innovation would come out of China two generations hence. I did not believe him after seeing a little of what China was doing first hand.

Interesting to read this article today in the Start Advertiser:

As a result, China is expected to overtake Japan soon as the world’s second-largest R&D investor, although it still remains far behind the U.S. China’s domestic doctorate awards in science and engineering have also increased more than tenfold since the early 1990s, and its share of the global pool of researchers has grown from less than 14 percent in 2002 to more than 20 percent today. 

Only a few years ago, China’s approach to innovation hardly played a role in international economic diplomacy. Today, it is a hot topic in U.S.-China economic relations, adding further to contentious disputes about exchange rates, trade and foreign direct investment.

The article continues:

Rather than fearing China, we need to focus our research and policy debates constructively on how this relationship can be improved.

I could not agree more. The entire article can be found here.

And now this in the Harvard Business Review Blog on August 4 for another perspective.

The Economics of Happiness – is Globalization Retreating?

I cannot wait to see the movie The Economics of Happiness. For a long time I have been a real fan of globalization – and the underlying technology that makes it possible.

However the trailer (see below) of The Economics of Happiness tells a different story – the real desire of the community to go back to the “village atmosphere”, where once again manufacturing was local. And indeed, the economics of this seem to back up this move.

Xerox establishes Open Innovation R&D Hub in India

It is interesting to see the real spread of Open Innovation across the globe. The notion of co-creation has to be the way forward, especially as organizations such as Xerox address new markets with new solutions. The old models just will not work in these environments.

Xerox has announced it will open an R&D hub in India with a very Open Innovation flavour.

Here is a quote from an article in the Economic Times:

….We are not looking to hire lots of researchers but will collaborate with local universities, start-up companies, governments and businesses. It will be based on open innovation rather than closed innovation (or, entirely in-house). In an open innovation model you co-create and co-innovate with partners in industry, universities and government.

…..The Chennai innovation hub will be a centre of connectors. For every person we hire, we will partner at least 50 or more people.

Every person will be working on at least five projects and with each project, there will be at least 10 people and hence, it has a big magnifying effect. There will be a large number of innovators working. It will eventually be larger than the European center of Xerox.

New Accenture Study on Globalization released at World Economic Forum

A combination of intensified globalization brought on by recent turbulence in the global economy and the acceleration of new information technologies is driving companies and governments to look for new business models to meet increased demands for efficiency, competitiveness, short-term agility and long-term growth. This is one of the key findings of a study released today by Accenture at the World Economic Forum.

According to the study (download here), based on a survey of more than 400 business leaders globally as well as a year-long field analysis of business and technology developments, such maturing technologies as cloud computing, mobile communications and collaborative computing will offer companies the “hidden wiring” required to compete in a multi-polar world, one in which emerging markets are challenging the traditional strengths of more mature economies.

Throughout the global economic crisis, emerging markets have demonstrated resiliency and weathered the storm as well as — if not better than — more mature markets due to strong local growth, highly competitive cost structures and an ability to serve customers at low price points. This challenge has not been lost on the executives polled by Accenture: 88 percent conceded that their companies have not done enough to develop effective strategic responses to the new disruptive business environment.

When asked which factors will have the most significant impact on their business over the next five years, 41 percent of the executives surveyed said it would be the growth in size and reach of new players in emerging markets, followed by an increase in IT capabilities (35 percent) and slower economic growth in developed markets (27 percent). Respondents also said that the most significant challenges raised by future developments in information technology would be managing complex networks of suppliers, business partners and customers (37 percent), followed by protecting proprietary information and data (28 percent) and competition for technologically and analytically skilled employees (27 percent).

The study, “From Global Connection to Global Orchestration: Future Business Models For High Performance Where Technology and the Multi-polar World Meet,” finds that in the aftermath of recession, new economic value will be created through a combination of the effective use of new technologies and strategies to address the dynamics of globalization. Business leaders surveyed by Accenture highlighted the growth in size and reach of new market players from emerging markets and the increased capabilities that new information technologies provide as the two developments that will have the most significant impact on their business over the next five years.

“Together, these forces are accelerating the need for companies to master five competitive and interdependent dimensions of business: new consumers, talent, innovation, capital, and resources,” said Mark Foster, Accenture’s group chief executive, Global Markets and Management Consulting. “Our research shows that high performers in both developed and emerging markets are looking to leverage information technology with a certainty and pace that will give them the flexibility to adapt their business models and stay ahead of the competition as new economic circumstances arise.”

According to the study, economic power shifts between companies and individuals and between national economies are becoming more common, creating greater business complexity with more people to buy from and sell to, as well as more competitors. At the same time, this complexity is fostering more ways to create economic value. Accenture has identified six market-shaping interactions that have the ability to create new economic value:

— Co-production with customers. Companies are finding more opportunities to engage with customers and suppliers in such areas as co-producing products and sourcing ideas as a part of the innovation process.

— New bridges between producers and consumers. Intermediaries are using technology to build new bridges between producers and consumers, helping companies extend the markets they serve, particularly in emerging-market economies. Nearly sixty percent of business leaders surveyed for the study said that greater consumer connectivity would have a significant or very significant impact on competition in their industries over the next five years, with the proportion even higher among business leaders from emerging markets compared with those from developed markets (68 percent compared with 56 percent)

— New forms of business-to-business (B2B) commerce. New forms of B2B activity are becoming technologically possible, advancing the promise of “e-markets” first discussed a decade ago. Hong Kong-based Li & Fung, for example, has used information technology to transform itself into a global, horizontal provider of services traditionally performed internally by retailers and wholesalers — services such as supply chain management, production and operations. This is an especially powerful trend that is helping make cost structures more variable in a volatile world.

— Consumer-to-consumer content. Technology is enabling like-minded consumers to form clusters of cooperative structures that span multiple countries and regions in order to share information, evaluate products and services and conduct purchases. Accenture’s research reveals that 57 percent of executives believe the growing bargaining power of knowledgeable consumers will significantly affect competition in their industries over the next five years. Business leaders in emerging markets are especially alert to this trend, with 67 percent expressing this view, compared with 52 percent of executives in developed markets.

— Peer-to-peer production. Individuals can form groups that provide products and services to reduce the market power of existing suppliers or to exert greater control over the way a product or service is produced or consumed. International peer-to-peer microfinance platforms are making possible new forms of lending to small entrepreneurs in high-growth economies.

— Cooperative consumption. The growth of social networking and digitization enables consumers to form clusters that boost their bargaining power. Shanghai-based Liba.com, founded in 2003, which sells everything from paint to ceiling lamps, now has 1.6 million members. Liba.com has 300,000 unique visitors a day on its website and produces approximately 30,000 transactions a month during group buying events in Beijing, Shanghai, Guangzhou and elsewhere.

According to Foster, in order to create new forms of economic value and growth, companies can take advantage of any or all of these new combinations of production, collaboration and consumption to reshape their business models ahead of the competition.

“Responding to the newly complex and competitive ecosystem will require businesses to re-evaluate the roles they have played and the sources of value that they have followed traditionally,” Foster said. “However, organizations also have a great opportunity to harness these new market forces to their advantage to optimize, extend and transform their business models.”

Globalisation shapes Employees skills

From CNN

Responding to globalization of the workplace, employees worldwide are developing a new suite of cross-cultural and language skills that will equip them to prosper in a more multinational environment, according to recent findings from a global workplace survey.

The survey, by global workforce solutions leader Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB), finds that individuals across all generations believe the experience they gain in a globally oriented environment will be critical to their careers.

Gen X (aged 30-47) reports the most direct experience within a global business environment, while Gen Y (aged 18-29) is driving the trend toward globalization, making international experience central to their job selection and promotion. Although baby boomers (aged 48-65) receive less formal support and training than their younger colleagues, they still feel they can succeed in a globalized workplace.

The findings are part of the Kelly Global Workforce Index, which obtained the views of approximately 90,000 people in 33 countries across North America, Europe, and Asia Pacific.

Employees around the globe are recognizing how to thrive in a workplace with fewer international barriers, according to Kelly Services Executive Vice President and Chief Operating Officer, George Corona.

“Exposure to the international workplace is becoming the norm as more highly skilled people develop the capacity to export their talents wherever needed around the globe,” Corona says. “In this environment, the ability to work collaboratively with multinational teams is a critical requirement that we expect to become more commonplace.”

Key findings of the survey reveal that:

--  81 percent of Gen Y believe it is important to their career prospects
    that they become more globally oriented, followed by Gen X (78 percent) and
    baby boomers (71 percent).
--  69 percent of Gen X have recently worked closely with colleagues from
    a different country or culture, followed by Gen Y (67 percent) and baby
    boomers (66 percent).
--  84 percent of Gen X feel that they possess the skills to work in a
    more globally oriented workplace, followed by Gen Y (82 percent) and baby
    boomers (81 percent).
--  In deciding where to work, exposure to a global environment is
    considered 'extremely important' by 32 percent of Gen Y, 30 percent of Gen
    X, and 26 percent of baby boomers.
--  Only 35 percent of Gen Y receive formal cross-cultural or language
    training from their employers, followed by Gen X (33 percent) and baby
    boomers (27 percent).     

Although Gen X and baby boomers have more international experience, Gen Y more readily embraces that experience as a factor in determining future job choice and career progression. Gen Y also receives the bulk of employer-provided training.

“We are seeing a generation emerge that is very confident operating in a global environment. This will lead to many more transferrable skills, and a business dynamic where human capital can be deployed seamlessly to almost any location on short notice.

“Given the significant role this will play in transacting future business and attracting new talent, we expect to see many more firms devoting resources to equip staff with the language, culture, and flexibility they need to be successful in a truly global context,” Corona concludes.

For more information on the survey results, please visit www.kellyservices.com.

Some Really Interesting Facts on Asia and Europe

Some interesting, perhaps little-known facts provide a useful contrast between Asia and Europe and demonstrate both the present-day reality and the scope of the future opportunity:

• GDP per capita in Asia (approximately US$15,000) is less than half the EU average, and there is a much wider standard distribution. A large population lives in poverty throughout the continent.
• While India and China are among the fastest-growing economies in the world, the latest figures on GDP per capita are $2,800 for India and $6,000 for China. They should both still be considered developing economies.
• The top GDP per capita countries (2008) in Asia: Singapore ($52K), Hong Kong, Japan, Taiwan, South Korea ($23K), Malaysia, Kazakhstan and Thailand ($8.5K).
• India has 22 official languages that are as distinct and different as the 23 EU languages; half a dozen different scripts are used. English is spoken by a mere 7 percent of the people in India. However, it is possible to get deep penetration into the Indian market with five key languages.
• There is very little content in local Asian languages on the Web, in general. Based on a survey done by Asia Online in 2007, less than 15 percent of the total content on the Web is in Asian languages. Almost 90 percent of the Asian language content is in Chinese and Japanese. There is a huge need for more local language content in Southeast Asia.
• China now has the fastest-growing patent office in the world. The World Intellectual Property Organization (WIPO) states that China is clearly an emerging scientific and technological power.The share of Asian country-based patent filings is now in excess of 50 percent of all patents filed across the world.
• India has more gifted and talented students in high school than the total school student population in the U.S. China has more students in science and technology college degree programs than India and the U.S. combined.
• McKinsey & Company has identified a “Rising Asia” as a stable long-term trend that will fundamentally change consumption patterns.
• Gartner (NYSE: IT) suggests using IT to reach the market. The research firm suggests that global companies use IT to “lighten” their Asian business model in order to address specific cultural, geographic reach, and supply chain considerations.
• Wealthy Asians are concentrated in major cities like Shanghai, Beijing, Hong Kong, Singapore, Kuala Lumpur, Mumbai, Delhi, Seoul, Manila and Bangkok.
• China is now the fastest-growing market for Bentley and BMW.
• Even countries like Laos, Nepal, Pakistan, Sri Lanka, Myanmar, and Cambodia — which have very low GDP/capita — are interesting markets for cellphones and basic commodities.
• An understanding of the critical perspectives of Buddhism, Hinduism and Confucianism can dramatically enhance communications strategies targeting most parts of Asia.
• Google (Nasdaq: GOOG) is not dominant in key Asian markets. In Korea, it has less than 2 percent search market share; in China, about 17 percent; and in Japan, about 20 percent. Local companies dominate because of their better understanding of local content, language and customer preferences. This suggests that standard U.S. approaches may not work well in many Asian markets.
• Chinese social networking startups have produced many innovations that have led to their becoming profitable much faster than their U.S. equivalents, like MySpace and Facebook. Asian innovation is gradually making its way to the West.
• Most of Asia has been relatively unscathed by the global financial and real estate market collapse. (source Commerce Times)

Hyundai and its Success at Globalization

Great story from the Korea Times. When Hyundai Engineering & Construction CEO Kim Joong-kyum took office early this year, the construction market both at home and abroad was not in good shape.

The financial crisis slowed down many large-scale projects overseas, while the domestic market continued to be bogged down by a record-high number of unsold homes. Orders were shrinking with competition at its highest.

All of this meant that the pressure was on for Kim, who was responsible for steering Hyundai E&C through one of the worst economic slumps in history.

Seven months into serving as the top chief, however, Kim has put most of the uncertainties and concerns behind by posting solid records right through the downturn.

Locally, the builder started ramping up efforts to win orders for housing redevelopment projects throughout the metropolitan area and mega public undertakings scattered nationwide.

Overseas, Hyundai E&C won a $1.3-billion gas exploration contract in Saudi Arabia in March. Then, in June and July, it won orders worth $600 million and $1.7 billion, respectively, in Singapore and the United Arab Emirates. Most recently, the company added a $190-million order to build a fertilizer plant in Qatar earlier this month.

The figures added up to hand over Hyundai E&C the market’s No. 1 position again last month after six years struggling to reclaim the top spot.

And many credit Kim for helping one of the nation’s oldest builders renew its industry supremacy.

The veteran Hyundai executive’s willingness to seek transformation and differentiation is what moved the 62-year-old company forward.

Since the first day of taking office, Hyundai E&C officials say that Kim was all about overhauling decades-old systems and practices. Everything from personnel line-up and global management to internal and external communication, the new CEO wanted changed and improved.

Kim said during his inaugural speech: “Hyundai E&C has endured a countless number of hardships throughout its history, but it continued to maintain its market leadership. At this time, what we need is continuous transformation in order to become a global top leader.”

Clinton talks about effects of globalization

Former President Bill Clinton spoke to a sold out crowd at the Pasadena Civic Auditorium in the USA on Monday, lecturing about the current political climate while detailing the advantages and pitfalls of living in an increasingly interdependent world.

Entering to an enthusiastic standing ovation in the 2,900-seat theater, Clinton shared his take on globalization and its effects, focusing on the challenges he believes an interdependent world faces.

“While we’re all connected, this is a very unequal world and in most places it’s growing more unequal,” Clinton said.

Clinton discussed pervasive discrimination that remains against women in most parts of the world as well as the growing income disparity in the U.S. He spent a

significant amount of time arguing for health care reform.

“We’re the only rich country in the world that can’t figure out how to give everybody health insurance,” he said, calling our current system “embarrassing.”

Clinton also addressed humanitarian intervention in the world, arguing that such intervention increased national security by improving the image of the country abroad.

“Anything we do to make chances slightly more balanced makes people think more of us,” Clinton said, adding that he recently returned from a humanitarian visit to Haiti.