How the Wireless Communication Industry Works

Transcription

1 GLOBAL INNOVATION MANAGEMENT IN WIRELESS COMMUNICATIONS INDUSTRY M. Hosein Fallah, Ph.D. Wesley J. Howe School of Technology Management Stevens Institute of Technology Hoboken, NJ Thomas G. Lechler, Ph.D. Wesley J. Howe School of Technology Management Stevens Institute of Technology Hoboken, NJ Abstract: Companies competing in global markets are facing the challenge to globalize their innovation processes. They need to identify new market needs and to access evolving markets around the globe. Leaving those markets unchallenged to competitors could impact their home markets. To serve these markets with innovative products they have to simultaneously identify, access and develop new technological know-how all over the globe. Today many countries are investing heavily in technology related research to support their industries. Hence important new technological know-how is no longer limited to US, Europe and Japan. R&D leaders and researchers struggle to understand global innovation competence and its impact on their business. This paper analyzes global innovation competence in the Wireless Communication Industry. It is no accident that industry leaders lost their leadership positions within just a few years. The authors examine the industry evolution in this context and discuss the basic problems of the need to implement processes supporting innovations in a global setting. Wireless communications companies are competing more and more on the basis of their competence to innovate on the global level. This competence requires many different skills. Strategies, organizational structures and effective processes are needed to access and integrate geographically dispersed knowledge in order to maximize the global innovation competence. It also requires a capability to manage the relationships between culturally diverse institutions, including standards and regulatory bodies, and knowledge/technology clusters and their interactions. Keywords: Global, innovation management, wireless technology 1

2 Introduction In many industries, the globalization of markets is not a new phenomena. Successful global companies have faced the challenges of worldwide competition by globalizing different functions of their value chain from marketing and customer support to sourcing, manufacturing and distribution across many different countries. Hence, the new challenge these companies face is globalization of R&D. Technology leaders are not safe any more. The threat is caused by rivals developing and applying technologies in other countries. New evolving markets in other areas of the world effect the home markets of established technology leaders. At the national level, many countries are investing high proportions of their GNP to develop new technologies and to support their industries to be competitive in the global market. New competitors accessing those technologies may be in a position to compete with technologically superior products in the global markets. The question for established global technology leaders is: How to sustain or gain an attractive competitive global position? Traditionally, global companies build their competitive advantage by achieving economies of scale and economies of scope. The economies of scale are achieved by addressing many different markets with the same kind of product. The higher volume allows operations on a large scale with all positive effects on the product cost. Even further, global companies can seek less expensive resources in areas such as operations. The combined effect of these activities results in a favorable cost advantage. Other market related advantages, as well as disadvantages, apply which are reflected in the structure of their value chain functions. On the technological side, global companies have to sustain growth through innovation, in a world where knowledge is increasingly dispersed all over the glob. The ability to leverage this knowledge is not fully exploited. This could have severe consequences in competition for global dominance. In this paper we explore whether the global management of innovation has an effect on the success of the firms. To put this question in perspective, we will examine the case for wireless communications infrastructure. The telecommunications industry has been the bedrock of high-tech innovation. From a technological perspective, it is a global industry by its nature. Networks are connected and the technologies are used in nearly every region of the world. Wireless technologies are quite young, so it is possible to derive insight from historical and recent developments. While the industry benefited from rapid growth in the past two decades, it has faced great challenges in the past few years. In the wireless infrastructure industry, technology leaders, who were also the market leaders lost their competitive position within less than a decade. The question is, why these companies did not see the threats, or could not react to maintain their leadership positions. Our proposition is that these companies did not realize the need for managing their innovation on a global basis. For a variety of reasons, they did not seek to understand the global needs and did not access the technologies developed and adopted in other markets that satisfied those needs. We observe that while Bell Labs researchers continued to work on the CDMA technology, GSM dominated the wireless market. This paper analyzes the impact of managing innovation globally from the perspective of the equipment providers. Our objectives are: 1) to explore the need for managing innovation in a global setting; 2) discuss the basic problems and concept of global innovation management and 3) develop an understanding of the technology and market drivers and barriers. Our focus in this paper, however, is not to analyze corporate strategies and the effect of tariffs and subsidies, as they may affect the market success of a particular product. 2

3 Evolution of Wireless Network Generation Standards and Timelines A key to understanding the market dynamics today is the development of the wireless technologies. After the invention of two-way radio communications at the beginning of the last century, it was possible to develop wireless mobile systems. The concept is to reuse the same radio frequency (RF) in a group of cells arranged in a honeycomb structure to serve a large number of users (Zysman & Menkens, 2001). The cell structure also enabled user mobility. Researches in US and Europe pushed the edge on the technology. Today, the wireless technologies are based on technological standards differentiated in four generations. These standards are crucial for the development of the wireless devices and network infrastructure. In this section we will describe the origins of the wireless technologies and their evolutions. First Generation (1G) Technology Evolution The first generation (1G) commercial mobile systems were based on analog technologies, using frequency-division multiplexing (FDM). The commercial systems in North America used AMPS (Advanced Mobile Phone System) standard developed by AT&T- Bell Laboratories in 1970 s and was put in service in Due to the technology limitations, most phones were large and had to be permanently installed in a vehicle. NAMPS (Narrowband Advanced Mobile Phone Services), developed by Motorola offered increased capacity and some enhanced features, such as Short Message Service (SMS) and Voice Mail notification. NAMPS phones automatically switch to AMPS in areas where NAMPS systems are not available. Europe pursued its own standards using the same analog technology. Ericsson and Nokia led the effort. Nordic Mobile Telephone (NMT) System, and Total Access Communication System (TACS) were among the the standards deployed in Europe. In this timeframe, Wireless was viewed as a local service, hence there was no push for coordination and common standards. The industry lacked global leadership. Second Generation (2G) A boost to wireless technologies came from the introduction of the second-generation (2G) using Time Division Multiple Access (TDMA) digital technology. The second generation, solved many of the 1G problems and added new capabilities, including, facsimile and messaging. TDMA was adopted by the TIA (Telecommunications Industry Association) in 1992, and. the first commercial system began operation in US, in The standard was called IS-54 at first and now known as IS-136. It is mainly deployed in North America. The Global System for Mobile (GSM), the second generation technology which emerged in Europe, also uses TDMA as its core technology. The research work on GSM was carried out in Europe, initially on the national level and then cooperatively among the European companies. Nokia pioneered much of the early research on GSM. The GSM standard was adopted in 1987 by the European Telecommunications Standardization Institute (ETSI ) to standardize cellular communications among European countries. Nokia and Ericsson took a leadership position in deploying GSM globally. GSM has emerged as the world's leading 2G technology. 3

4 Third Generation (3G) The third generation mobile technology uses Code Division Multiple Access ( CDMA). CDMA has its roots in pre-world War II America. It was patented as a way to control torpedoes. Some of the applications of the technology were declassified by US Navy in the 1980 s. Qualcomm patented CDMA technology for wireless communications. The wireless industry became attracted to CDMA, because it enabled many simultaneous conversations, rather than the limited stop-and-go transmissions of analog and the previous digital options. Bell Labs researchers also saw the potential of CDMA and focused on the new technology. CDMA is characterized by high capacity, security, and small cell radius. CDMA was introduced commercially in Hong Kong in It is currently used by major cellular carriers in the United States and is the backbone of Sprint's Personal Communications System (PCS). Along with Sprint, other major user is Verizon Wireless. In a CDMA system, users share time and frequency resources simultaneously. This is made possible by assigning each user a distinct digital code. This code is added to the information data and modulated onto the carrier, using spread spectrum techniques. CDMA was adopted by TIA in 1993 as IS-95. IS-95 uses the same frequency bands as AMPS and supports AMPS operation. IS-95 provides significant capacity improvement and increased interference rejection over other digital cellular standards. The initial version of CDMA, classified as cdmaone (IS-95), could not support broadband services, which the industry required for the third generation wireless. Hence, IS-95 was classified with GSM and TDM as secondgeneration wireless networks. The industry working through ITU adopted Wideband CDMA (or CDMA-2000) as the standard for 3G networks. The Universal Mobile Telecommunications System (UMTS) is the 3G standard being implemented by European carriers. It provides service in the 2GHz band, and offers greater capacity and higher data rates. The Wideband CDMA (WCDMA) is the core technology for UMTS. 2.5 Generation Transitional technologies as enhancements to 2G have been introduced as 2.5G. EDGE (Enhanced Data rates for Global Evolution) is one such standard. EDGE was initially developed by Ericsson for mobile network operators who fail to win UMTS spectrum. EDGE gives GSM operators the opportunity to offer data services at speeds that are near to those available on UMTS networks. EDGE can also provide a migration path from GPRS (General Packet Radio Service) which is another interim step to UMTS by implementing now the changes in modulation that will be necessary for implementing UMTS later. EDGE is also defined as a 3G technology, according to IMT Most of the world's operators have chosen to use WCDMA as their 3G technology. TDMA operators have two migration paths to 3G: they can migrate to GSM and further on to WCDMA, or go via cdmaone (IS-95) to CDMA2000 (3G). The PDC (Personal Digital Cellular), a 2G TDMA-based standards used in Japan, by DoCoMo will also evolve into WCDMA. 4th Generation Although the 3rd generation systems are just beginning to be deployed, the researchers are already talking about the 4th Generation. 4G technology is viewed to be IP based, with speeds of up to 20 mps. It is envisioned that 4G could offer a unified standard globally. Figure 1 depicts the evolution of mobile standards. 4

5 Figure 1. Evolution of Wireless Technology Technology Leaders The technologies described here were developed in close collaboration between industry and national research laboratories. The development of the technological standards is an important base for the development of the products. It is a favorable position to be a technology leader to lead the market, set the standards and create a competitive advantage by patenting technical solutions on the base of the new standards. In the area of wireless technologies, many companies have strived for leadership position. Bell Labs researchers did much of the pioneering work creating AMPS, TDMA, and CDMA technologies. It seems however, that the business strategy of AT&T and then Lucent was not aligned with global management of this technology. Hence, other regions, particularly Europe, which pursued its own research leading to NMT and then GMS standards pushed for the global leadership. Nokia recognized the importance of the emerging global market and made a strong commitment to wireless communication (Haikio, 2002). Nokia invested heavely in research with a global focus. Today, Lucent s wireless business continues to shrink, with its market limited primarily to US service providers, while Nokia has been able to dominate the handset market and is becoming a leader in the infrastructure as well. Table 1 lists the technology leaders for various generations of wireless communications, by region. Table 1. Wireless Technology Leaders by Region 1 Generation 2 Generation 3 Generation 4 Generation USA Bell Labs/ Motorola Bell Labs/Motorola Bell Labs/ Qualcomm/ Motorola? Asia Europe NTT/NEC NTT/NEC NTT/NEC Nordic Group Ericsson/Nokia Ericsson/Nokia 5

6 Market Evolution Although wireless communication was offered as a local service in the beginning, it moved quickly to a global context. The evolution of the market was greatly influenced by breakthrough technologies, the leadership of the technology providers, regional policies and consumers response. The market has exploded since early 1990 s. There are currently more than 800 million subscribers worldwide (Figure 2). To understand the linkage between the technology development and the market, the market reactions have to be analyzed. First Generation Market Development The invention of cellular concept by Bell Labs researchers in the late 60 s created a new paradigm in mobile communications. The first generation of mobile systems had major limitations in quality of voice, bulkiness of the terminal and high cost; and hence the market diffusion was very slow. Based on the number of vehicles that might need a phone and the number of people who could afford to pay, it was projected by some that the cellular industry would only see limited growth. By 1984, there were only 25,000 subscribers worldwide. In the United States, AMPS was introduced in Europe had a lack of coordination and the Europeans were pursuing multiple standards. With AT&T focused on the US market, little was done to translate technology leadership to a global competitive advantage. The global market was open to competition. Steinbock (2001) observes: «The evolution of diverse standards should have allowed U.S. and Japanese rivals to catch up to their European challengeers, but neither did. In the United States, regulators stumbled; in Japan the bubble economy imploded.» 900 Millions Subscribers Year Figure 2. Growth of Wireless Subscribers Worldwide Improvements to the technology boosted the market. The real breakthrough came with the digitization and the EC commitment to a unified standard (GSM). As the research improved the technology, the market reacted and has been growing rapidly since early 1990 s. Figure 2 shows the growth of subscribers since To understand the link between the technology development and the market, the market reactions have to be analyzed. 6

7 Second Generation Market Development The tremendous market growth was caused by the second generation of wireless technologies. Using application-specific integrated circuits (ASICs), the size of the phone shrank to a small handset. Digital technology improved voice quality and services, and more importantly, significantly reduced the cost of handset and infrastructure systems, leading to further acceleration of the industry s growth since the mid-1990 s. It turned out that this small technical evolution of the handset led to rapid growth for the cellular mobile industry for at least two reasons. First, the industry s consumer base was changed from the number of vehicles to the number of people, which is a much larger base. Second, the function of the phones was also changed from being able to call from a vehicle to being able to call from anywhere. This greatly increased people s desire to have a phone and therefore significantly increased the penetration rate. Figure 2 shows the subscriber growth over the past decade. The advent of 2nd generation wireless was also a turning point in the market leadership for wireless communication. As the number of users grew so did the demand for greater mobility. In particular the EC saw the need for a unified standard across Europe. Nokia and Ericsson responded to this need. GSM emerged from the European collaboration as the market leader. Although TDMA systems (D-AMPS) were introduced in 1991 before GSM was launched (1992), as shown in Figure 3, by 1998, GSM captured more than 40% of the global market share. Others 2% Analogue 30% GSM 44% PDC 11% CDMA 7% TDMA (D-AMPS) 6% Figure 3. Worldwide Cellular Subscribers by Technology (1998) 1 Within the GSM market, Nokia has achieved a leadership position. By the year 2000, Nokia s share of the GSM market soared to over 25% (Figure 4). 1 Source: ITU, World Telecommunication Development Report

8 % Nokia Motorola Ericsson Panasonic Alcatel Siemens Samsung Sagem Others Figure 4. GSM Vendors Market Shares in Third Generation Market Development While the global market was shifting to GSM, many researchers, including those in Bell labs were focused on CDMA technology. These researchers expected everyone to move to CDMA when the technology was commercially available. Very little effort was spent on managing the 2nd generation globally. The global competition began to shift to the European providers. Building on the success of GSM, the European Telecommunications Standards Institute (ETSI) members reached a consensus agreement for a third-generation (3G) mobile phone standard on January 29, This standard called a Universal Mobile Communications System solution UMTS. UMTS UTRA ( Terrestrial Radio Access) draws on both wideband code division multiple access (W-CDMA) and time division multiple access-tdma technologies. W-CDMA is used for wide-area applications while TD-CDMA is used primarily for low mobility indoor applications. This standard was expected to create a global market, and to be the widest third-generation standard in use. ETSI submitted its proposal to the International Telecommunications Union (ITU), and has placed itself in charge of setting worldwide standards for future networks. Standards bodies elsewhere, including the United States and Japan, also submitted their proposals to ITU in June However, the industry has diverged so much that implementing a single standard globally is extremely difficult if not impossible. The huge embedded base of GSM in Europe and Asia will continue to favor those in GSM leadership position. As shown in Figure 5, in 2001, the North American suppliers had only about 12% of this huge market. Market Leaders The development of the markets led to a change in the market domination of the companies. The leadership of AT&T Bell Labs in wireless technologies did not carry forward. to preserve a competitive advantage for the corporation. Lucent s market position deteriorated as global competition became stronger. By the year 2000, Lucent s global market share in wireless dropped to 1.5%.. (Figure 6). 2 Source: 3g-generation.com 8

9 1% 4% 4% 3% Ericsson Nokia 8% 33% Siemens (NEC) Nortel 15% NEC (Siemens) Alcatel Lucent 32% Motorola Figure 5. 3G (UMTS and WCDMA) Market Share Distribution (2001) % Nokia 1.2% 1.5% 30.6% Motorola Ericsson Siemens 2.6% Samsung Mitsubishi 4.8% Alcatel 5.5% 5.2% 10.0% 14.5% NEC Lucent Nortel 4.8% Others Figure 6. Market Shares of Top 10 Equipment Providers in Source: UMTS World News and Information Facts 4 Source: 9

10 Discussion and Analysis Bad timing may have prevented the evolution of one, single global wireless standard. Just two years before CDMA's 1995 introduction in Hong Kong, European Union adopted GSM as the standard to unify Europe s wireless communication. Technology leaders in US believed that CDMA would be the technology of choice and everyone will move to CDMA. Mobile equipment manufacturers ultimately split into two camps. North America went for CDMA while Europe got behind GSM. This split has had a tremendous impact on the industry. But the issue is not why Europe went with GSM. It was the right decision to best meet the need of the customers. At that time the most mature technology available was chosen. The question is why the technology and market leaders on the other side of the Atlantic did not see the global impact of this decision and did not react prudently to preserve their competitive position. Managing a global technology requires ongoing sensing and mobilization of the knowledge regarding the technology and market needs (Doz, Santos, Wiliamson, 2001). A strong national position as in the case of AT&T and Motorola not only does not guarantee global success, it could actually impede the ability of the corporation to be effective in managing its innovation globally. In today s global market, competition can arise from anywhere in the world. Doz, Santos, and Wiliamson (2001) caution about multinational corporations trying to tweak their operations to become metanational. Global management of innovation cannot be an afterthought. It requires upfront strategy, proper organization structure, right processes and effective application of resources. The consequences of not managing a global technology on a global scale can be grave. But, is the success of the suppliers solely on selecting the best technology? From this point of view US suppliers made the right decision to develop their products on the base of the superior technological standard CDMA. Part of the answer lies in the market situation and the ability of the companies to manage innovation effectively in a global market. In the 1980 s the service and technology providers, viewed mobile systems essentially a local product/service. The US mobile communications industry was focused on US. The RBOCs, which had just separated from AT&T, needed to focus locally and no one seemed to have a global strategy at that time. In fact, the telphone sets for the initial trial of AMPS were not produced by AT&T, they were contracted to OKI Electric in Japan (Farley, 2001). In the late 80 s, analog technologies were dominant in the market. While most of North America was using AMPS, the situation in Europe was more chaotic with incompatible systems (NMT450, NMT900, TACS 900 and others) making roaming difficult within a country and impossible among the countries. There was an immediate need for a reliable unified solution. The European Union had a clear need for integration and transparency. There was a need for a single standard so that people traveling across the member countries would continue to use their mobile phones. In 1987, the European Council issued a directive recommending GSM as the standard to unify mobile communications in the Union, establishing a frequency band and requiring deployment to begin in As the industry was moving to the 2 nd generation, the mindset on both sides of the Atlantic were vastly different. The Bell Labs researchers had already begun to work on a new generation of technology using code-division multiple access (CDMA) that would greatly increase capacity and security. They saw the TDMA technology as transitional to the more powerful technology, CDMA. Therefore the energy was focused on the development of CDMA. 10

11 Ericsson and Nokia saw the opportunity for a global competitive advantage and capitalized on it. The EU s decision to adopt GSM as the standard for Europe paved the way. As Europe moved to GSM other countries followed suit. Today, GSM has over 60% of the market share of mobile communications worldwide, while TDMA is trailing at about 10%. There are some key questions that answering may help us to understand the sources of competitive advantage for global companies. In US, Lucent Technologies (AT&T at the time) with its Bell Labs, that provided technology leadership, did not see the threat and did not act to the treat on a timely manner, and hence lost the ability to become a leader in the global market. We ask : Why didn t Lucent see the threat? Or if it recognized the threat, why didn t it take actions to preserve its competitive position? Did Lucent continue to pursue a US centric strategy for its innovation? Certainly, Lucent and Bell Labs were aware of significant market pull for a unified standard in Europe. Why didn t they anticipate the market need or why did they fail to respond to this need, to maintain their global leadership position? The consequences of Lucent focusing on the US market has been grave. Its global market share has continued to slide. The issue is not limited just to the infrastructure. Figure 7 depicts the market share of the top 4 mobile handset suppliers between 1998 and Again, Nokia has emerged as the market leader with continued growth of its market share while Motorola and Ericsson have been losing their grip on the market. 40 % Nokia Motorola Samsung Ericsson Year Figure 7 The Global Market Share of Handset Suppliers between 1998 and On the other side of the Atlantic, although Ericsson and Nokia were roughly in the same market position in late 1980 s, Nokia has emerged as the market leader with continued growth year after year. Nokia streamlined in the 1990s into a dynamic telecommunications company. The groundwork for the shift to telecommunications was laid in the 1960s, when Nokia's electronics department was researching radio transmission. In the decades that followed, Nokia's mobile phones and telecommunications infrastructure products reached international markets, and by the 1990s, Nokia was established as a global leader in digital communication technologies. Since its entrance into the field of telecommunications, Nokia has faced competition from established international competitors. Yet, in a relatively short time, Nokia 5 Source : DATAQUEST Inc. and Gartner 11

12 has earned global success. Nokia s Cable Work's Electronics department started to conduct research into semiconductor technology in the 1960 s. This was the beginning of Nokia s journey into telecommunications. In 1991 Nokia made agreements to supply GSM networks to nine European countries and by August 1997 Nokia had supplied GSM systems to 59 operators in 31 countries. Nokia has shown an ability to recognize and exploit the opportunities created by continuous technological and market change. Global Innovation Management as a Core Competence The analysis of the global dissemination of wireless technologies in the telecom industry indicates the restructuring process of the telecom industry. One major reason for this restructuring is how the companies perceived and managed their innovation processes. The competence to innovate on a global level will reshape the industry. Our proposition for the wireless industries could be specified: Only those telecom companies developing and mastering the competence to innovate on a global level will play a major role in the future global markets. The major characteristics of this competence are ability to access and process information and knowledge on a global level to generate new socio-technological systems to satisfy efficiently and effectively global customer needs. This requires a high information processing capacity, to interpret, understand and use cultural embedded knowledge for creative solutions, to manage knowledge transfer over cultural and geographical distances and to match discovered product ideas with technical knowledge. The telecom industry is more and more facing the problem of technological knowledge of physical devices being replaced by knowledge-intensive services. The amount of knowledge needed to innovate technologically based services requires a collective effort rather than single person s capacity. Since new knowledge is generated in different geographical spots in the world and the amount of knowledge is continuously increasing, complex innovations will more likely be possible in global innovation communities or clusters. In addition to the complexity Doz, Santoz and Wiliamson (2001) identify seven other forces supporting the global dispersion of knowledge. Today significant knowledge for wireless technologies is evolving in regional clusters, such as Silicon Valley in US, Europe and Asia. The spots where the knowledge is evolving tomorrow are not known. The ability to access these evolving pockets of knowledge could mean a competitive advantage. But it is not only the processing capacity and the access to knowledge that drives innovation, it is also how the knowledge and skills are used. This is dependent on the cultural background of the involved people. This means knowledge is cultural-dependent. The different use of knowledge and skills are a source of creativity and innovativeness, since it creates necessary contradictions during the innovation process. A multi-ethnic environment is more likely to fuel the innovation processes and lead to innovations of higher orders. It seems especially important for the integration of cultural differences into the products which could lead to higher market successes. Also, important is the link between technological change and institutional change. The wireless technologies are part of a system which increases its complexity on a daily basis. The networks do not stop at national borders; instead they are affecting many different cultures. The new technologies are more and more intertwined with their cultural contexts and occur as a response to sociological changes. Interpretations of sociological innovations are necessary to understand and translate their impact into the technological solutions. An example might be the cell phone with a camera, which was developed and successfully introduced for the Japanese market. When the first picture phones were invented in the USA decades ago they could not be introduced to the markets because of a lack of interest. Nowadays this functionality is offered in other markets and will have an impact on the way of 12

13 communication in cultures other than the Japanese. New services and new behaviors will then lead to institutional innovations leading to technological innovations and so forth. Innovations are also affected by the political processes. In the Telecom industry political institutions represented by the regulatory and standard organizations (TIA, ANSI, ETSI, FCC, ITU, EU etc.) are setting the framework for technology selection. As Van de Ven (2002) points out, the role of innovators is changing from purely technology driven innovators to more political driven innovators. His proposition is: Politically-savvy innovators will outperform technically-savvy innovators (Van de Ven, 2002). Successful innovators dominate the framing processes to construct a favorable context. In the Telecom industry this took place in the beginning of the nineties when the European Community decided on GSM as a standard to coordinate the wireless technologies across the Union. Conclusion Successful global companies have faced the challenges of worldwide competition by globalizing different functions of their value chain from marketing and customer support to sourcing, manufacturing and distribution, across many different countries. Hence, the new challenge these companies face is globalization of innovation. In this paper we explored the evolution of wireless communications industry and how lack of attention to the global context resulted in a major shift of the leadership in this market. As we observed with Nokia, on the global markets of the future, telecom companies will compete on the basis of their core competence to innovate and mange their innovations at a global level, which we call global innovation management. We see this competence to be a differentiator since all other functions of the value chain are managed to a great extent globally. The competence for global innovation management requires many different skills those companies must develop. Strategies and organizational structures are needed to integrate ethnic diversity and geographical dispersity to maximize global sensensing and mobilizing of technology knowhow and market needs. The last decade was dominated by the discussion of flexibility and the desire for flat organizational structures. For the competition of tomorrow, companies are facing the flexibility paradigm from a geographical and cultural perspective. That is, how to manage the relationships between culturally diverse, institutions (including standards) and dispersed knowledge/technology and how these factors interact. This is an area of continued research. References Boutellier, R.; Gassman, O.; vonzedwitz, M. (1999): Managing Global Innovation, Springer Publishing. Doz,Y.; Santos, J.; Williamson, P. (2001): From Global to Metanational: How companies win in the knowledge economy, HBS Press. Farley, T. (2001): TelecomWriting.com's Telephone History Series, < Haikio, M.(2002): Nokia - The Inside Story, Prentice Hall. Steinbock, D. (2001): The Nokia Revolution, American Management Association. Van de Ven, Andrew H. (2002): Innovation Scholarship and Practice : The Past, Present and Future, Academy of Management Conference, August Zysman, G. and Menkes, H. (2001):Wireless Mobile Communications at the Start of the 21st Century, IEEE Communications Magazine, January 2001,