A model for managing the transition to a global engineering network spanning industrialized and emerging economies

Abstract

PurposeProduct development in most industries is often done today in a global engineering network (GEN). More recently, there has been a clear shift to using development resources from the so‐called “emerging countries” (ECs) that have growing domestic market, highly skilled workforce, and low labor cost base. The integration of resources from ECs, whether from the company's own businesses there or from external suppliers, poses a new challenge for collaborative work in a GEN. This paper aims to describe these challenges. Further, the process of transition to the use of resources from ECs is fraught with business risks. Further, seeks to discuss these risks and how they can be mitigated and to propose a model, derived from practice, to manage the transition process. The model comprises a set of foundation elements and location‐dependent transformation processes.Design/methodology/approachProduct development teams in three businesses were studied – an automotive supplier, a manufacturer of made‐to‐order electrical equipment and a developer of automation software – over three years. These businesses were in the process of relocating some development activities to ECs. Two of the teams were assisted in this transition and the third observed and the model presented is an outcome of this involvement.FindingsSuccessfully starting a global development team strategy requires clarity and transparency of strategy, good communication, proper organization of effort and focus on product and process standardization. Further, a set of change management processes needs to be launched at participating locations for competence build‐up and team building.Practical implicationsThis model can be used by organizations setting up such EC‐IC teams to avoid the possibility of failure of such critical collaborative efforts.Originality/valueThere is considerable literature on distributed product development and virtual teams. The coverage includes management challenges, technology enablers and organizational and multi‐cultural challenges. However, the specific challenge of teams comprising membership from advanced and ECs is not covered. Further, while the literature deals with the operation of such teams it does not cover the sensitive transition or start‐up phase. This paper deals with this issue.