From Global to Metanational: How companies win in the knowledge economy
By Yves Doz, Jose Santos and Peter Williamson
2001 Harvard Business School Press, Boston
Review by Madanmohan Rao firstname.lastname@example.org
This book definitely belongs on the bookshelves and in the briefcases of managers seeking to tap global sources of innovation in the fiercely competitive knowledge-driven economy of the 21st century.The book provides refreshing perspectives which differ from much of current knowledge management (KM) literature which focuses on tapping existing expertise within organisations rather from outside.
The authors are professors at the INSEAD business school in Fontainebleau, France. The material is divided into nine chapters citing numerous references like Managing Across Borders (C.A. Bartlett, S. Ghoshal), The Competitive Advantage of Nations (M. Porter), Regional Advantage (A. Saxenian), Knowledge Works (M. Fruin), The Sources of Innovation (E. Hippel), Managing the Global Frontier (P. Williamson), Design Rules (C.Y. Baldwin and K.B. Clark), Entrepreneurship in the Global Firm (J. Birkinshaw), and Designing the Global Corporation (J.R. Galbraith).
The book is based on interviews carried out at 36 companies, a dozen each from the Americas, Asia and Europe, covering incumbent leaders (eg. 3M, HP, ABB) and new globalisers (Acer, STMicroelectronics) across multiple sectors (IT, biotech, consumer goods) and approaches (brand building, knowledge sharing).
In the global economy of the 21st century, CEOs need to harness critical technologies not just in their own backyard but halfway around the world, the authors begin. Business leaders need to realise that their most demanding or sophisticated customers are in locations where their subsidiaries may be weak. And finally, knowledge bases need to be mobilised from dispersed locations around the globe – while at the same time, the cost of distance is falling rapidly for commodities that are mobile, such as capital, goods and information.
Based on level of global
integration along one dimension and national responsiveness on the other,
companies can be classified into different types. Traditional “projectors”
include McDonalds and CNN. Multi-domestic or multi-local players adapt
to local preferences (eg. Unilever). Transnationals project competitive
advantage from headquarters as well as lead subsidiaries (eg. ABB, 3M,
CNN.com) -- but unlocking the potential of dispersed knowledge is the
exception rather than the rule.
However, important lessons are also emerging for companies from sources outside their core industries. Non-traditional uses of existing products and services are emerging from new lead markets. Companies like Nokia represent the new form of multinational, and NTT DoCoMo’s I-Mode success is an example of the new emergence of breakthroughs in the world of mobile communications from markets very different from established clusters like Silicon Valley.
The authors coin a new term for the emerging breed of global player, the metanational: a company that builds a new kind of competitive advantage by discovering, accessing, mobilising and leveraging knowledge from many locations around the world. Such companies do not rely just on projecting home-country know-how to other locations, but fish around in a global pool for innovative knowledge, and harvest that value.
“Metanationals view the world as a global canvas dotted with pockets of technology, market intelligence and capabilities,” the authors explain. Their advantage comes from not just crossing international borders, but transcending them.
The authors identify three kinds of capabilities of successful metanationals: sensing, mobilising and operationalising, whose properties are summarised in the table below. In contrast, traditional multinationals (and even new ones like Yahoo and eBay) project home-country experiences to other locations, and keep high value-added activities (R&D, marketing, strategy) at home. In this traditional model, globalisation means “teaching the world” from headquarters or a few dominant clusters.Table: Planes of capabilities of metanationals
Numerous case studies in the book illustrate these principles in action. The new breed of metanationals is often “born in the wrong place,” eg. Nokia in Finland (mobile), Oerlikon in Switzerland (guided missile systems), Acer in Taiwan (PCs), Yamaha in Japan (pianos), AIG in China (insurance), and SAP in Germany (business software). Necessity was the mother of invention for these companies, and they learnt new ways of globalising because they had to.
STMicroelectronics, with a base in Italy and France (outside the traditional bastion of Silicon Valley), became a world leader in customised chips by learning about circuitboard needs from key customers around the world and identifying source knowledge and capabilities from across the world to solve these problems. It then expanded operational proficiency across a range of sectors like automotive, navigation, TV set-top boxes and mobile phones.
Nokia developed a cadre of managers to understand emerging customer needs in multiple markets, increasing customisation, new types of functionality, fixed line substitution, and even the fashion accessory industry. (In contrast, Motorala tried to lead by projecting from its original cellular technology home in the US, and missed the shift to digital and GSM standards.)
All this requires fundamental changes in organisational culture, processes, structure, staffing, performance measurements and incentives, the authors caution. The challenge for existing multinationals is to realise that the old model of projection no longer differentiates competitors. Incumbents must realise that the home base need not always be the prime source of R&D, new trends can emerge in markets that are not “heavyweight” (eg. small but pioneering Nordic markets in the mobile world), and local adaptations need not be relevant only locally.
The problem is particularly challenging in sectors like mobile communications, agri-chemicals and pharmaceuticals, where new knowledge bases are emerging in different disciplines.
Challenges in trying to “shoehorn” older models and structures can arise by via proliferation of unguided networking (“global debating society”), non-systematic addition of new responsibilities, and drowning in complexity.
Challenges in applying traditional knowledge management (KM) techniques in the metanational model lie in the “stickiness,” subtlety and complexity of knowledge in distant and unfamiliar environments. IT-driven techniques like online communities of practice or expertise locators may not be sufficient for the new kinds of tacit knowledge that need to be tapped; rotation and co-location of personnel will be required.
The authors identify a number of categories of knowledge along a continuum: explicit knowledge (eg. technical blueprints, patents), experiential knowledge (practices, skills, routines), endemic knowledge (in consumer behaviour reports, management processes), and existential knowledge (cultural assumptions).
They also offer a number of lessons for multinationals and startups hoping to adopt metanational models of operation: set up a metanational pilot project, seek global diversity, allow the periphery to lead, set up a magnet with global scalability, promote widespread interactions, connect the magnet to the operating network, keep the end results globally relevant, and devise metrics which emphasise level of learning and outcomes.
“The race to penetrate world markets is being replaced by the race to learn from the world,” the authors conclude. “Hunt, fish, seek, or sow the seeds of metanational innovation. Just be sure you do it,” they advise.
Madanmohan Rao, a KM consultant and author from Bangalore, is the editor of “The Knowledge Management Chronicles”
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