THE COURSE NAME IS INNOVATION AND THE DRIVE FOR GROWTH

THE REAL WORLD

Daikin Industries

Daikin Industries is one of the world's largest manufacturers of air-conditioning equipment (88 percent of the firm's sales come from air-conditioning-related products). The corporation controls approximately 20 percent of the world market and had revenues estimated at approximately $23 billion in revenue in 2009. Research and development has been a critical part of the growth and success of this Japanese firm. Today, the firm is working on new innovations in areas such as air-conditioning systems that clean the air of pollutants, adjust air humidity, and rid the air of odors.

The implementation processes for the firm's innovation efforts are a key part of the firm's success. Daikin is a worldwide firm. This, in part, explains why structurally the firm has established separate units that focus purely on research in electronics and mechanical engineering. These units are quasi-independent to encourage maximum creativity. The work between these and other units of the firm is coordinated by R&D planning department. In contrast, the firm has established its chemicals research area as part of the dominant unit focused on those activities. This unit is located principally in the United States. Thus, the firm structurally has responded to different markets in different ways to ensure that the maximum amount of appropriate creativity is encouraged. Where there is an environment that encourages creativity, the firm incorporates its research and development efforts in the unit. However, if the culture of the unit or country in which it is located is not supportive, the research efforts become headquartered in quasi-independent units.

Daikin also encourages maximum creativity by not specifying in extensive detail the role of different units and individuals in those units. The Corporation allows each unit and the employees within those units to look for new opportunities and be creative.

Consistent with its organizational flexibility, the firm develops what it calls a "culture of continuous action." The belief is that the firm must act and pursue opportunities when they occur. Daikin's view is that analysis is critical, but analysis cannot paralyze the firm. Again, culturally, the firm has clearly differentiated itself from many Japanese firms where quick action is not always a predominant value.

Within each unit, the corporation encourages a flat structure that has maximum participation by employees. The teams within these units typically are cross-functional and include individuals from various disciplines within the firm.

1. This vignette illustrates some of the differences that must occur in a worldwide firm as it conducts its R&D effort. What are some other differences you might expect?