Polycentric Innovation: The Center of the World is Shifting Eastward Premium

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What if emerging countries weren’t just a source of cheap labor or new markets for developed countries? We look at the prospects of “polycentric innovation.”

Innovation is no longer a prerogative of the West.
All sorts of popular assumptions are falling to the wayside and history is being written elsewhere. Navi Radjou discusses the emergence of ideas in a polycentric world, and he urges business organizations to accept inevitable transformations (i.e., a networked world, globally connected knowledge, etc.), so that people everywhere can benefit from innovation born throughout the world.

Polycentric innovation means creating networks from talent, capital, and ideas from wherever in the world they are found to build new levers for value creation.

Characteristics of a Polycentric Company
• 3 Prerequisites: Open-minded decision-makers, Networked organization, Adaptability.

• A 4 steps Gradual Process :
0) Multinationals concentrate R&D in the West (Sony, Apple, Pernod Ricard)
1) Companies begin to transfer part of their R&D to countries where labor is inexpensive (call centers, customer services);
2) Multinationals recognize the potential of emerging countries. They delegate more responsibility to local business units, which start to orient their R&D toward regional needs (Microsoft, L’Oréal);
3) Companies begin to form R&D networks, where ideas (i.e. new products, business models, etc.) from emerging countries and Western divisions mutually nourish each other (IBM, P&G, Danone) ;
and 4) In this final step, R&D is organized in hubs spread across the world (Xerox, Suzlon).

Two Polycentric Innovation Champions

Innovation champion Xerox has opened a hub in Chennai, India. Monica Beltrametti, vice-president at Xerox Research Centre Europe, explains how and why. She explains that innovations from frugal India very quickly benefit the whole Group, helping improve services, processes, and collaboration methods.

Suzlon presents an original model of polycentric innovation.
The Indian company ranks 3rd in the world in wind power generation and is established in 20 countries. Its strong performance stems from powerful innovation capacities deployed within close range of global customers. It also benefits from cutting-edge talent management and people recruited near its main R&D centers…in Northern Europe!

Read our dossier
Polycentric Innovation: The Center of the World is Shifting Eastward

Business Digest no. 212, December 2010.
Based on an interview with Navi Radjou, executive director of the Centre for India & Global Business, Judge Business School, Cambridge University, November 2010, and the interviews with Monica Beltrametti, VP Xerox Research Centre Europe, and with John O’Halloran, president technology, Suzlon Energy, November 2010.