6 myths of global innovation6 myths of global innovation european conference industrial technologies...

Global Innovation | © 2016 Max von Zedtwitz / [email protected] | 1

6 Myths of Global Innovation European Conference Industrial Technologies 2016

Amsterdam, 23 June 2016

Prof. Dr. Max von Zedtwitz

GLORAD Center for Global R&D and Innovation www.glorad.org, [email protected]

Shanghai, PRC | Silicon Valley, USA | St. Gallen, CH | Kaunas, CEE | Heilbronn, DE | Sao Paulo, LATAM


Myth #1

The World is Flat.


Location Matters: In Innovation, the World is Spiky!

Number of transnational R&D centers: 5,877

At the 80% Threshold, • 6 countries account for the

origin of all global R&D… • … going into only 17 countries

At the 80% Threshold, • 6 countries account for the

origin of all global R&D… • … going into only 17 countries


Myth #2

Strong IP Regimes Matter.

#1 The World Is Flat.


New Global R&D Locations 2001 – 2010 (Poor IP Countries!)

GLORAD R&D Database

Zedtwitz & Gassmann: Mkt vs Tech Drive. Research Policy 2002.


Patent Applications in China: Now #1 in the World

GLORAD R&D Database, 2015

CN MOST, US BEA, SIPO, WIPO #931

2,377,000 Patent Applications! 2,377,000 Patent Applications!


Myth #3

We No Longer Matter.

#2 Strong IP Regimes Matter.



The World’s Most Inventive Cities

http://www.forbes.com/sites/williampentland/2013/07/09/worlds-15-most-inventive-cities/

#15 Raleigh, NC 409 PA, 3.74 PR

PA = PCT patent applications PR = PCT patent applications per 10,000 residents

#14 Copenhagen, DK 733 PA, 3.75 PR

#13 Seattle, WA 1126 PA, 4.25 PR

#12 Goteborg, SE 374 PA, 4.4 PR

#11 Mannheim, DE 658 PA, 4.95 PR

#10 Munich, DE 1378 PA, 4.97 PR

#9 Minneapolis, MN 1672 PA, 5.06 PR

#1 Eindhoven, NL 1565 PA, 22.58 PR

#8 Stockholm, SE 1102 PA, 5.72 PR

#7 Boston, MA 2208 PA, 5.8 PR

#6 Stuttgart, DE 1124 PA, 6.18 PR

#5 Grenoble, FR 358 PA, 6.23 PR

#4 Malmo, SE 444 PA, 6.85 PR

#3 San Francisco, CA 5138 PA, 7.57 PR

#2 San Diego, CA 2689 PA, 8.95 PR


New Global R&D Locations 2001 – 2010 (Traditional Loc.)

GLORAD R&D Database

Zedtwitz & Gassmann: Mkt vs Tech Drive. Research Policy 2002.

Between 2000 and 2015:

• 813 R&D centers added in “advanced countries”

• 1,048 elsewhere

Between 2000 and 2015:

• 813 R&D centers added in “advanced countries”

• 1,048 elsewhere


Global Flow of Cross-Border R&D Investments

BRIC, RoW relatively unimportant still in total cross-border R&D

Inter-triad R&D still dominant

Triad leads also as source in other countries

Non-triad destinations split between BRIC and Rest of the World

BRIC, RoW each about one third of inter-Triad investment

Ref. Zedtwitz & Gassmann, Global Innovation Index Chpt 9, 2016

146 86 44

Re

st

192 23 66

BR

IC

3,131 1,332 1,235

Tria

d

Triad BRIC Rest

DESTINATION

SOU

RC

E


Prizes (Nobel, Turing, Pritzker)

958 Prize Winners in total (up to 2012)


Academia Mostly Western-Led

ARWU Ranking, 2011

1. Top-10: US + 2x UK 2. Top-100: The “Developed World”

3. Top 100-200 emerging + SEA: Scattered Picture 4. Top 200-500 emerging + SEA: The Rise of China


Myth #4

One Size Fits All.

#3 We No Longer Matter.




Global Innovation Survey

“In a global innovation network, know-how should flow from the headquarters to overseas innovation centers, not the other way around.”

DO NOT AGREE AT ALL COMPLETELY AGREE

9 18 17 2 12 3 4 11 14 10


Open Collaboration

R&D

Open Collaboration

R&D

Integrated R&D Network


R&D Hub

R&D Hub

Do-Alone R&D

Do-Alone R&D

Multi-Node R&D

Multi-Node R&D

“Different Horses for Different Courses”

No / little cooperation Much cooperation and collaboration

Mo

re in

tern

atio

nal

M

ore

dis

pe

rse

d

No

thin

g in

tern

atio

nal

Central R&D

Central R&D

Intl. Manuf.

Intl. Sourcing

Techn. Parks

Intl. Distr.

Lead Users

Strat. Alliances

Central R&D

R&D-1

R&D-2 R&D-3

R&D-4 R&D-5

R&D-6

R&D-1

R&D-2 R&D-3

R&D-4

R&D-5

R&D-6

R&D-1

R&D-2

R&D-3

R&D-4

Do-Alone R&D

• Single R&D center in home country

makes all technologies and products

• Economies of scale and protection of IP,

but not very innovative

Open Collaboration R&D

• R&D center leverages outside expertise

from partners, suppliers, universities

• Misses out on local talent and cannot

overcome local content regulations

R&D Hub

• Strong R&D center controls dispersed

small overseas R&D units

• Very efficient, but insensitive to local

creativity and entrepreneurship

Multi-Node R&D

• Uncoordinated dispersed R&D units

• Highly sensitive to local customers

• No critical mass and often inefficiency


• Mutually coordinated competence centers

• High coordination costs and complex to

manage


Open Collaboration

R&D

Open Collaboration

R&D



R&D Hub

R&D Hub

Do-Alone R&D

Do-Alone R&D

Multi-Node R&D

Multi-Node R&D

Global Innovation Networks Evolve

No / little cooperation Much cooperation and collaboration

Mo

re in

tern

atio

nal

M

ore

dis

pe

rse

d

No

thin

g in

tern

atio

nal

Synergy

Costs

Compe- tences

Tapping

External Orientation

Tapping

Conso- lidation

3

1

Central R&D

Central R&D

Intl. Manuf.

Intl. Sourcing

Techn. Parks

Intl. Distr.

Lead Users

Strat. Alliances

Central R&D

R&D-1

R&D-2 R&D-3

R&D-4 R&D-5

R&D-6

R&D-1

R&D-2 R&D-3

R&D-4

R&D-5

R&D-6

R&D-1

R&D-2

R&D-3

R&D-4

Trend 1: External Orientation

• Open up to foreign hires

• Foreign R&D joint ventures and suppliers

Trend 2: Tap into Overseas Resources

• Set up overseas technology listening posts

• Develop small R&D outposts to support

local markets

Trend 3: Exploit Synergy

• Reduce area overlaps and coordinate

multiple contributing teams

• Globalize limited scope of local R&D units

Trend 4: Consolidate

• Consolidate, reposition and integrate local

R&D unit by centralizing control over

budgets, projects, and key headcounts

Trend 5: Link Internal Competences

• Allow local R&D units to develop

indigenous sources of expertise

• Cross-link mature R&D units

Trend 6: Recentralize due to Costs

• Co-locate smaller R&D units into large

R&D centers


Myth #5

Emerging Market Companies Compete on Costs Only.

#4 One Size Fits All.





Huawei 华为 Internationalization of High-Tech

World's largest telecom equipment maker 1988: Founded 1996: HK 1997: Russia, Latin America 1998: Middle East, North Africa 2000: Europe 2001: US 2003: Cisco lawsuit

2007: 72% of sales from overseas markets

1737 PCT patents (#1)

2010: $28bn in revenues $3.7bn in profits $3.7bn in R&D 140,000 employees

2014: $46bn in revenues $4.5bn in profits $6.4bn in R&D 170,000 employees

The Wall Street Journal, July 19, 2015


China Now a Net Contributor to Global R&D Balance

2012: With GDP to R&D ratio of 1.98% China passed Europe (average of 28 member states) with ratio of 1.96%.

http://md.tech-ex.com/2014/news/mainland/30543.html http://www.rdmag.com/articles/2013/12/2014-r-d-magazine-global-funding-forecast-executive-summary

0

1

2

3

4

1995 2000 2005 2010

R&

D In

vest

men

t in

% o

f G

DP

Japan Japan

China China

USA USA

Europe Europe

2011: China passes the world average R&D ratio of 1.9%.


Robots On The Rise

AnBot

1.49m, 18 km/h, 78 kg

Developed by the National Defense University in 2016

“It can patrol, avoid obstacles, identify and recharge on its own. It is equipped with weapons to prevent and control violence by remote control. Moreover, it could be a service provider, which makes it more practical.”

Edward Snowdon: “Surely this will end well.”

Jia Jia / “Girlfriend”

Most beautiful robot so far

Takes orders directly from the cloud

Built by the University of Science & Technology in Heifei

Ref. http://en.people.cn/n3/2016/0426/c90000-9049431.html http://www.engadget.com/2016/04/17/jia-jia-robot/


What Does “Whaaaaah” Mean? – Taiwanese App Helps!

“Babies are like smoke alarms: You can't tell if you burnt the toast or if the whole house is burning down.”

Infant Cries Translator

Developed by National Taiwan University Hospital Yunlin doctors Chang Chuan-yu and Dr Chen Si-da

Differentiates between 4 types of cries: Hunger, diaper wet, sleepy, pain (within 10 seconds)

92% accurate for babies less than 2 weeks old

84% accurate if less than 2 months old

77% accurate if less than 4 months old

Collected 200,000 cries from 100 newborn babies over a two year period. Parents now upload new cries – along with diagnosis – into the cloud that the App taps into with a learning algorithm.

Available as an App since early 2015 ($2.99)

Works for all races and genders, but…..

Competition Never Sleeps

Recent scan revealed at least a dozen competing apps on iTunes and GooglePlay

Ref. http://www.reuters.com/article/us-taiwan-baby-app-idUSKBN0UD15K20151230 https://play.google.com/store/apps/details?id=com.infantcry&hl=en http://www.medicaldaily.com/pulse/infant-cries-translator-taiwanese-researchers-develop-app-can-tell-you-why-your-baby-364880


Example of Improving Quality: Goodbaby

Goodbaby Overview

Mission: Revolutionize children's living environment, Improve the quality of life for children.

Established in 1989 in Kunshan, China

China’s largest and the world’s leading provider of infant and children’s products such as strollers, car seats and child safety devices

>40% worldwide share of baby strollers sold

Present in 70 countries. 11 subsidiaries, 35 branch offices and 20,000 employees.

Goodbaby R&D and Innovation

Five global R&D centers worldwide.

Over 100 new products every quarter and upgraded and improved existing products on a continuous basis.

In China, 2,116 registered effective patents, 527 applications for patent registration and 1,617 patents that have ceased to be effective or expired.

Quality

Deployed complete ISO9001 quality management system.

The US Consumer Product Safety Commission ("CPSC") benchmarked Goodbaby in Fall 2010 and praised its Quality Control Center.

2010, Goodbaby wins “National Quality Award" from China Association for Quality, first of this kind for the industry.

http://www.gbinternational.com.hk


Myth #6

Thank Goodness… We’re Safe Here!

#5 Emerging Market Companies Compete on Costs Only.






Migrant Brainpower – Chinese Researchers

http://www.ecns.cn/2015/03-05/156896.shtml http://www.uis.unesco.org/Education

Overseas Chinese Study Power

Approx. 500,000 Chinese students leave China every year for overseas studies

About half go to the US, about 90,000 each to the UK, Japan, and Australia

Tsinghua is the largest source of PhD students in US universities; Peking University is third


China Has The World’s Largest Brain-Drain Problem

Ref. China Statistics Yearbook, multiple years https://foreignpolicy.com/2015/03/03/china-crackdown-western-ideas-resistance/?wp_login_redirect=0

Of 3.05 million students, 1.44 million have returned (as of 2014)

Returnees bring back Western values

274,000 Chinese studied in US universities, 5x than 2000

Of 4,121 Chinese STEM PhDs, only 15% had returned to China five years after graduation – only Iran has less with 8%

High-Level Overseas Talent Recruitment Program ($160K + generous research funding) brought back since 2008:

4,100 PhDs

1,400 professors

46 foreign science and engineering academicians

3 Nobel Prize winners

-

100.000

200.000

300.000

400.000

500.000

600.000

700.000

800.000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Chinese Overseas Students Chinese Overseas Students

Robin Li

Baidu

Wan Gang

MOST

Deng Xiaoping

Chairman Qian Xuesen

Rocket Scientist


PCT Filings by Country of Origin: China Grew 40x since 2000

Source: World Intellectual Property Organization Database

2015 Filings (CAGR ‘00>’15):

1. US: 57,086 (2.7%)

2. JP: 44,052 (10.7%)

3. CN: 29,835 (27.5%)

4. DE: 18,003 (2.4%)

5. KR: 14,564 (16.0%)

6. FR: 8,417 (4.8%)

7. GB: 5,289 (0.6%)

8. NL: 4,334 (2.6%)

9. CH: 4,265 (5.2%)

10. SE: 3,842 (1.5%)

Winners ‘00->’15:

CN: up from 781 (27.5%)

KR: up from 1,582 (16%)

IN: from 190 to 1,412 (14.3%)

Japan: up from 9,569 (10.7%)

Mexico: from 72 to 317 (10.3%)

Less than 3% Growth

UK, Sweden, Netherlands, Germany, US

3.


Global Locations by Origin: Chinese R&D Centers

GLORAD R&D Database


Concluding Remarks

1) What will be Europe’s best path forward?

Leverage Europe’s advantages and fix its weaknesses

More cooperation among countries and European firms

Harness potentials of immigrants

2) What is the role of Chinese innovation for global innovation?

More global R&D from emerging countries

Slow-down in domestic growth will only spur innovation-seeking abroad

What will be the impact in European innovation?

3) Best times for global innovation still ahead

Leading emerging countries to become SOURCES of technology

New technologies and processes help Western firms to leverage global footprint

Once emerging markets finish “emerging”, they shift from replication to innovation

6 Myths of Global Innovation





#5 Emerging Market Companies Compete on Costs Only.

#6 Thank Goodness… We’re Safe Here!


6 Myths of Global Innovation European Conference Industrial Technologies 2016

Amsterdam, 23 June 2016

Prof. Dr. Max von Zedtwitz

GLORAD Center for Global R&D and Innovation www.glorad.org, [email protected]

Shanghai, PRC | Silicon Valley, USA | St. Gallen, CH | Kaunas, CEE | Heilbronn, DE | Sao Paulo, LATAM

6 myths of global innovation6 myths of global innovation european conference industrial technologies...

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