Thought Leadership

Leveraging Local Innovation for Global Growth

Leveraging Local Innovation for Global Growth

VC Gopalratnam, VP IT, and CIO, Globalization, Cisco

Globalization has caused our world to shrink. With the increasing integration of the markets for products, services, labor, and capital worldwide, the economic, cultural, demographic, political, and environmental needs of various countries are becoming interdependent. To remain competitive in such a globalized marketplace, companies must continuously innovate. Successful companies understand that globalization can help shore up competitive advantage because it provides access to diverse intellectual capabilities, ensures lower labor costs, and presents growth opportunities- along with the ability to bring products to market more quickly.
While in the past, most R&D activity took place at company headquarters and the results were 'exported' to global markets, today companies recognize the need to innovate in local markets and become relevant there in order to be successful. With emerging economies such as India and China gaining significance in the global marketplace, the trend today is for most transnational and multinational companies to set up operations in the two countries and offshore certain processes or functions to the regions with the necessary capabilities and growth potential.
Organizations realize that 'local' innovation can be adapted to multiple geographies with comparable characteristics. For example, global emerging economies tend to have similar attributes, so a product developed in India is likely to have applications in similar markets worldwide. Consider the example of a remote healthcare solution developed specifically to reach out to the rural masses in India. Such a solution might also be useful in some regions of Africa, where the challenges are comparable to rural India's. With rapid urbanization occurring worldwide, a smart transportation solution that is developed specifically for Bangalore might well be equally relevant for cities such as Rio de Janeiro or even New York, which face similar problems.
This realization has led many organizations to set up R&D and sales centers in countries outside their corporate headquarters. These local offices help to globalize talent, innovation, and growth. Being much more than a sales center or an R&D center, such offices represent every function of the company's corporate headquarters, at every level, from individual contributor to the highest executive levels.
Countries like India are chosen for the setting up of these local R&D hubs because of their proximity to 70 percent of the world's population, which is within a five-hour flight; a growing young English-speaking population; strong engineering talent; an open, partner-friendly government; and a strong partner ecosystem. Also, given the time-zone differences, these centers help enable business to be conducted on a true 24/7 basis.
The Cisco Globalisation Centre East in Bangalore is an example of such an effort. A global initiative launched out of the Globalisation Centre, called Smart+Connected Communities, works with cities worldwide to help them use technology to drive social, economic, and environmental sustainability.
In short, globalization is rapidly helping to connect different regions of the world. For companies that aspire to grow in the global marketplace, where to compete is just as important as how to do it. Companies must invest in regions where the potential for profitable growth exists and is likely to remain for the long term. With technology continuing to transform world economies, and the network changing the way we work, live, play, and learn, nations are being empowered to drive local innovation. To benefit from this opportunity, companies should increasingly use local R&D efforts to create synergies that are relevant across the globe.

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