Study: The Puzzle of Innovation in China

10 4.3 ORGANIZATIONAL TRANSFORMATION Translating a defined innovation road map into reality can turn into a major headache for many companies. Often, failure in executing the defined innovation road map is primarily due to a lack of the right organizational pillars supporting the endeavor. In addition, road maps are not realized in a short period of time, but rather step-by-step within a minimum time horizon of 5 years. Chinese entities must be systematically entrusted with increased responsibilities to enable them to successively evolve their local innovation competencies along a commonly observed development path (see fig. 07). Within this path, one distinguishes between four stages of development: Early explorers, local adaptors, local designers and global innovation motors. FIG. 07 І FOUR STAGES OF INNOVATION STAGE I EARLY EXPLORERS STAGE II LOCAL ADAPTORS 1 INNOVATION MARKET PERFORMANCE ⋅ No development of products and business models that are tailored to local markets ⋅ Adaption of existing products to local markets ⋅ Increased revenues of local entity through adapted products (up to 10%) 2 INNOVATION ATTITUDE ⋅ Market-specific innovation is of minor priority ⋅ No innovation strategy in place ⋅ Innovation gaining in importance ⋅ First draft of innovation strategy SEVEN DIMENSIONS 3 4 5 INNOVATION ACTIVITY AND LOCALIZATION INNOVATION ORGANIZATION AND CULTURE INNOVATION SKILLS ⋅ Products are designed for original domestic market only ⋅ Products are imported without adaption ⋅ No own local R&D ⋅ Local management with only low autonomy granted by HQ ⋅ Limited innovation capabilities and skills of staff ⋅ Adaption of finished products and applications to local market demands ⋅ R&D gradually transferred to China ⋅ Local management with limited autonomy but first cross-border teams established ⋅ Staff shows first innovation skills but products are mainly adapted 6 INNOVATION IN INDUSTRIE 4.0 ⋅ No engagement in I4.0 ⋅ Profits gained from traditional products without digital interfaces ⋅ First I4.0 prototypes designed with enhanced functionalities, e.g. monitoring applications 7 INNOVATION COLLABORATION ⋅ No collaboration for innovation yet ⋅ Collaboration with customers and suppliers to drive innovation

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