Culture Impacts on Innovation

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Information about Culture Impacts on Innovation
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Published on June 15, 2008

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Culture Impacts on Innovation - Discussion on Differences of German and Chinese Innovation Systems and Cultures 中德创新体系和文化的差异及趋势:  Culture Impacts on Innovation - Discussion on Differences of German and Chinese Innovation Systems and Cultures 中德创新体系和文化的差异及趋势 Dr.-Ing. / MBA Jian Wu 15. June 2008 Presented on SACE Workshop 2008 My Profile:  My Profile B. S. , Fudan University in Shanghai Dipl.-Ing. (M. Eng.) and Dr.-Ing. (Ph. D.), Technical University Aachen Dipl.-Wirtsch.Ing.(MBA), Technical University Munich Senior Scientist in German National Research Institutes Technical Sales Consultant, Project Manager, Product Manager, Product Marketing Manager at large international companies in IT and communications Senior Business Consultant in China trends study for a large international company International Management Consulting in China Business Work on “Culture Impacts on Innovation in Industry” Example: China als Market Leader in Solar Tech?:  Example: China als Market Leader in Solar Tech? Agenda:  Agenda Situation and Questions Introduction of Innovation and Culture Comparison of Innovation Systems and Cultures Conclusions and Future Views Slide5:  Situation and Questions Innovation: Status in German Industry:  Innovation: Status in German Industry Just 5% inventions are valued economically In USA and Asia it is different China and India are not only location for productions but also for innovations “China has been developed not as idea copier, but also idea developer” Innovations only in classic industries like machinery, industrial facilities and automobile Germany should be more innovation friendly to keep its position Further Comments Ranking USA China Deutschland Failed German Inventions: Fax, CD, MP3, Walkman, Videorecorder (http://www.welt.de/wirtschaft/article2055649/Deutschland_als_innovativster_Standort_Europas.html) Sector Innovation in German Industry:  Sector Innovation in German Industry Top Intermediate Below Average European Sector Innovation Score and Comparison with Germany Problem Fields in German Industry:  Problem Fields in German Industry 2003 2004 2005 2006 Problem Field: Microelectronic Industry Bankruptcy Grow up Status in China High-Tech Industry:  Status in China High-Tech Industry China ICT Export Status in China High-Tech Industry:  Status in China High-Tech Industry Questions:  Questions What kind of advantages does Germany still have in high tech innovations? Or has Germany only advantages in innovations of traditional industries? Will China become an innovation leader soon? What kind of innovations are more favorable in China than in Germany?  How secure is your working place in Germany due to the strong competition situation in the global business environment? How could both countries better cooperate in technology innovations?  How could you profit by these cooperations? Comments on German Innovation:  Comments on German Innovation Reader‘s Comments on „Deutschland als innovativester Standort“: Surprise “hätte ich auch nicht gedacht das wir so innovativ sind.. “ “Es ist zwar noch einiges zu tun um die Auswirkungen bspw. der Globalisierung gesellschaftlich gerechter und akzeptierter zu machen, aber alles in allem kommen wir endlich mal wieder ein Stück voran.“ Innovations concentrated in traditional areas “Deutschland ist Weltmarktführer in unzähligen Branchen, die gerade dem Mittelstand zuzurechnen sind, als da wären Werkzeugmaschinen, Verpackungstechnik, Medizintechnik, Optik, Energietechnik, Wehrtechnik, Flugzeugbau, Schiffbau, Autobau usw. usw. usw.“ “D. zehrt noch von dem Unternehmergeist des späten 19. und des 20. Jahrhunderts.“ Culture of entrepreneurship required “Es fehlt eine Kultur bei uns, die sich anders verhalten als der Rest und die auch völlig anderes tun, wie sonst, sollte etwas völlig Neues entstehen. “ “Fakt ist, wir haben zu wenig Unternehmer und zu viele Nieten in Nadelstreifen (beschönigend Manager genannt), ……“ Slide13:  Introduction of Innovation and Culture Innovation:  Innovation What are Innovations The introduction of new goods The introduction of a new method of production The opening of a new market The conquest of a new source of supply of raw materials or half-manufactured goods The carrying out of the new organization of any industry Joseph Schumpeter 1883-1950 one of the most influential economists of the 20th century Prof. Hardvard University Innovation  Creative Destruction Innovation:  Innovation What is Innovation A new way of doing things that is commercialized. The process of innovation cannot be separated from a firm’s strategic and competitive context Michael E. Porter 1947 - Prof. Harvard Business School Economist & Strategic Management Innovation = Invention + Commercialization Innovations and Markets:  Innovations and Markets Innovator’s Dilemma: Time Current Vendor New Entrant Traditional Market New Market Examples: Disk Drivers Mainframe Computers Innovation Types depend on Organization Types (Source: Clayton M Christensen – 1997) Culture:  Culture Culture Types Culture I civilization and refinement of the mind Culture II patterns of thinking, feeling, and acting programmed by a particular group (nation or organization) “culture is the collective programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values.” Culture = Collective Value System Geert Hofstede 1928 - Prof. of International Management Maastricht University, the Netherlands Culture Impacts on Innovation Process:  Culture Impacts on Innovation Process Feedback Acquire/ Divest Spin-in/ Spin-off License-in/ License-out Culture Factors Technology Knowledge Motivation Tolerance Individualism Creativity Openness Entrepreneurship Unconformity Customer orientation Risk taking Innovation Creation Selection Implementation Launch Long term orientation Target orientation Ready for Change Market Networking Skill Flexibility Target orientation Slide19:  High Low Feedback Time Effectiveness Long Short Artifacts Values Underlying Assumptions most intangible most innertial Moderate intangible and innertial tangible and easy to change manageable area Practices (Source: own graphics) Culture Impacts: Effects of Culture Levels Artifacts Visible -Corporate Identity Facilities Offices Furnishings Values Statement Slogan Mission Strategy, norms Philosophy Assumptions Unconscious Beliefs Perceptions Thought Feeling Invisible Culture Level has long time effects Relationship between Innovation and Culture:  Relationship between Innovation and Culture Hypotheses: Certain culture types are advantages for certain innovation types. Economic development requires different innovations and therefore different cultures. Innovation Types and Culture Types:  Innovation Types and Culture Types External Positioning Internal Maintenance Mechanic Process Organic Process Adhocracy entrepreneurship, creativity, risk taking, innovation. Market competitor oriented, performance and target driven Clan team work, family atmosphere, common values and target understanding Hierarchy bureaucracy model, standardized, formalized, stability Component Knowledege Destroyed Incremental existing products existing process Architectural reconfigurating existing product Modular new product existing process Radical new market, new industry Enhanced Architectral Knowledge Enhanced Destryod Innovation Types Culture Types Henderson-Clark Model Cameron-Freeman Model Mapping Culture Types to Innovation Types:  Mapping Culture Types to Innovation Types Innovation Lifecycle: Culture Types adhocracy: B. market: clan: D. hierarchy: Examples: Siemens Mobile Phone Telecommunication Innovation Gap due to Culture Types Slide23:  Comparison of Innovation Systems and Cultures Culture Dimensions:  Culture Dimensions Hofstede’s Culture Dimensions Power distance index (PDI) (权威度). The degree of inequality among people which the population of a country considers as normal. Individualism versus collectivism (IDV)(个性度). The extent to which people feel they are supposed to take care for, or to be cared for by themselves, their families or organizations they belong to. Uncertainty avoidance index (UAI) (避险度). The degree to which people in a country prefer structured over unstructured situations. Masculinity versus femininity (MAS) (刚性度). The extent to which a culture is conducive to dominance, assertiveness and acquisition of things. Versus a culture which is more conducive to people, feelings and the quality of life. Long-term versus short-term orientation (LTO) (长期导向度). Long-term: values oriented towards the future, like saving and persistence. Short-term: values oriented towards the past and present, like respect for tradition and fulfilling social obligations. Power Distance Index (PDI):  Power Distance Index (PDI) Low PDI Decentralization Fewer supervisory personnel Narrow salary range Consultative decision making Inequalities minimized High PDI Centralization and hierarchy popular More supervisory Wide salary range Subordinates expect rules Inequalities desired Attitudes to Innovation Low PDI: higher motivation to innovation, effective communication High PDI: lower motivation to innovation ineffective communication Inividualism vs. Collectivism (IDV):  Inividualism vs. Collectivism (IDV) Low IDV Strong in-group relationship Importance of learn how to do Relationship prevails over task Collective interests over individual interest Group decision making High IDV Less in- and out-group conflict Importance of learn how to learn Task prevails over relationship Individual interests over collective interests Individual decision making Impacts on Innovation Low IDV: Less creativity, less self-motivation, weak network seemingly efficient in-group activities High IDV: high creativity, high motivation, strong networks Uncertainty Avoidance (UAI):  Uncertainty Avoidance (UAI) Low UAI More happy feeling Fast acceptance of new products No more rules as necessary More changes of employer Tolerance ambiguity and chaos Motivation by achievement High UAI Less happy feeling Hesitance toward new products and technologies Emotional need for rules Fewer changes of employer Need for precision and formalization Motivation by security Impacts on Innovation Low UAI: more liberalism, tolerance to new things, higher creativity, better at invention worse at implementation High UAI: more conservative, less creativity, less tolerance to chaos better at implmentation Masculinity vs Femininity (MAS):  Masculinity vs Femininity (MAS) Low MAS Weak separation of gender roles Less aggressive Compromise and negotiation Nurturing and care of unfortunate Cooperation Work to live High MAS Strong separation of gender roles More aggressive Assertiveness, Respect for big and strong things Fast competition Live to work Impacts on Innovation Low MAS: Better in service innovation and soft skill rlated branches High MAS: Better in industry innovation and in technology related branches Long-term vs. Short-term Orientation (LTO):  Long-term vs. Short-term Orientation (LTO) Lower LTO Value oriented towards past and present: tradition and fulfilling social obligation, less saving Focus on bottom line Strong control system Focus on previous work Process oriented, think for truth High LTO Value oriented towards future: saving and persistence Focus on market orientation Future target orientation Opportunism in operation Flexibility in process, think for whole Impacts on Innovation Low LTO: learn from the past, effectiveness in implementation, finding nature less pragmatic High LTO: free to learn from others, fast growth, more pragmatic less profenssional and structured Culture Impacts: National Culture Patterns:  Culture Impacts: National Culture Patterns National Culture: Western and Eastern Patterns 40 80 120 PDI IDV MAS UAI LTO China Germany India Japan United Kingdom United States Western Pattern Eastern Pattern (Source: own graphics) Western Innovations Industrialization Long-linked technology Basic technology New business models IT and internet Bio-technology Medicine technology Eastern Innovations External innovations Incremental innovations Efficient Production processes Customer orientation IT and internet applications Software Technology Chinese Innovation Structures and Cultures:  Chinese Innovation Structures and Cultures Main Characters in Chinese Innovation System and Culture Innovation Structure Strong political targets Improved infrastructure Resource mobilization Less individual freedom Incomplete legal system Higher transaction cost Innovation Culture Risk taking Flexibility Market orientation Less structured Weak external networking Strong Incremental and modular innovation In add-on functions Application with short technology linkage Weak Basic technology Project management Safety related sector Complex value chain integrated sector Long-linkage technology German Innovation Structures and Cultures:  German Innovation Structures and Cultures Main Characters in German Innovation System and Culture Innovation Structure Solid technology base Good infrastructure Complete legal system Long decision making Lack on resources Higher control cost Innovation Culture Process oriented Reward value for security Strong commitment Inflexibility Risk avoidance Strong Architectural Innovation Safety and security Application with long technology linkage Effective implementation Basic Technology Weak Consumer innovation Service related sector Dynamic sector Emerging market Challenges across Innovation Lifecycle:  Challenges across Innovation Lifecycle Source: based on InnovationPoint 2007 Strengths China Strengths Germany Battlefield China Startup Integration Operation Improvement substitution In traditional technology fields Competition in Innovation Fields:  Competition in Innovation Fields Strengths Germany Long Short Strong Weak Battle- fields Strengths China Slide35:  Conclusions and Future Views Conclusions:  Conclusions German innovation system and culture have their strengths in complex value-added integration and long period innovations due to its solid technology base and implementation capabilities, like infrastructure and environment German innovation system has also weaknesess in some fast changing and isolated fields due to lack of talent resources and less flexible characters China becomes a highly innovative country due to fast improvement of the innovation structure and the cultivated innovation culture, like target-orientation and entrepreneurship China will leapfrog some innovation stages and surpass Germany in some technology fields, like micro electronics and automobile supplier Globalization enforeces cooperations in technology innovations between Germany and China to facilate advantages and minize disadvantages Germany is and will stay as a location of the whole Chinese innovation value chain Example in Innovation Cooperations:  Example in Innovation Cooperations Future Views:  Future Views Scenario I German firms still keep their advantages in some niche areas, but loss leadership positions in other fields. Chinese Firms become technology leader in a lot of traditional and new fields, and play dominant roles in the related markets with their marketing strengths China Integration Degree Upgrading Time Germany Future Views:  Future Views Scenario II German firms will still keep their leading position in some areas and share new technologies with Chinese firms in some key markets Chinese Firms become technology leader in a lot of traditional fields and share with German technology in some key areas, like cars, B2B, machinery, infrastructure There will be multilateral value networks of innovations in the global markets Germany China Rest of the World Inventor Trasformer Financier Broker China Integration Degree Upgrading Time Germany Slide40:  Are you ready for the innovation challenges in the future? Thank You! Jian.wu@ww-bc.com

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