Top 10 Innovation Articles review

8/19/2019 Top 10 Innovation Articles review

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HBR's 10 must reads on Innovation

1. Innovation's Holy Grail by C.K. Prahalad and R.A. MashelarAs you innovate !or today's "ustomers# !o"us on a$ordability and sustainability.Indian "om%anies lead the &ay &ith a (#000 "ar# a %enny's &orth o! %honetime# and other disru%tive o$erin)s.

(. *to% the Innovation +ars by ,i-ay Govindara-an and Chris rimblePartner your innovative u%starts &ith %rote"tors o! your "ore business. o)ether#they'll drum u% )reat ideas that &or.

/. Ho& G Is isru%tin) Itsel! by 2e$rey R. Immelt# ,i-ay Govindara-an# and Chris rimble o stay in the )lobal innovation )ame# it's not enou)h to "reate %rodu"ts !or ari"h home maret and ada%t them abroad. 3ou also need to do the reverse4innovate !or develo%in) marets and tailor the o$erin)s !or &ealthy ones# as Gdid &ith %ortable ultrasounds.

5. he Customer6Centered Innovation Ma% by 7an"e A. Betten"ourt and Anthony +.8l&i"Brea do&n the -obs "ustomers need to )et done into dis"rete ste%s9and "reate%rodu"ts and servi"es that mae those -obs easier# !aster# or unne"essary.

:. he Innovation ,alue Chain by Morten . Hansen and 2ulian Birinsha&;eed to im%rove your "om%any's innovation %ro"esses# but not sure &here tostart< his !rame&or &ill hel% you =nd and => the &ea lins.

?. Is It Real< Can +e +in< Is It +orth oin)< by Geor)e *. ayInnovate too "autiously# and you ris stran)lin) )ro&th. Here's ho& to s"reenbi)# risy %ro-e"ts !or %ro=tability and "om%etitive advanta)e.

@. Innovation4 he Classi" ra%s by Rosabeth Moss KanterMost "om%anies ee% re%eatin) the same innovation mistaes# lie settin)unrealisti" %er!orman"e tar)ets and overlooin) small but %ro=table ideas. Avoidthese errors9and turn ideas into maret su""esses.

. is"overy6riven Plannin) by Rita Gunther M"Grath and Ian C. Ma"Millan7aun"hin) a ne& venture< 8se this %ro"ess to un"over# test# and revise your)uidin) assum%tions so you "an %revent !ailure9or at least !ail "hea%ly andlearn !rom the e>%eriment.

. he is"i%line o! Innovation by Peter . ru"er

+ant to lead your "om%any to brilliant ideas that %ay o$ in the maret%la"e<Ins%iration alone &on't )et you there. It also taes "are!ul analysis o!o%%ortunities in ey areas# su"h as ne& te"hni"al no&led)e and industry"han)es.

10.Innovation Killers4 Ho& inan"ial ools estroy 3our Ca%a"ity to o ;e& hin)sby Clayton M. Christensen# *te%hen P. Kau!man# and +illy C. *hih


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Mis)uided =nan"ial analysis may be stiDin) your "om%any's innovation e$orts.Here's ho& to avoid main) bad "alls about investments' value and %otential !orsu""ess

Innovation's Holy Grail: Idea in Brief he authorEs main idea &ith this arti"le is that Ftraditional innovation is headin) !or

obsoles"en"e. hat is innovation %ro)rams built on assum%tions o! auen"e and

abundan"e# ty%i"al o! =rms in develo%ed "ountries &hose em%hasis is on %remium

%ri"in) and in"reasin) %ro=t mar)ins. Instead# the author states that =rms should

embra"e FGandhian Innovation &here the !o"us is more on a$ordability and

sustainability and underserved "ustomers%o%ulations and "reatin) solutions that

are orders o! ma)nitude "hea%er than todayEs o$erin)s &ithout sa"ri="in) Juality.

he arti"le "reates a s%e"trum !or this innovation that "onsists o! t&o

dimensions variablesL4 the sour"e o! te"hnolo)ies involved and an or)aniationEs

"a%abilities. he author sites three inds o! Gandhian Innovation4

• isru%tin) business models N outsour"in) o! I so!t&are and servi"e %roviders

• Modi!yin) or)aniational "a%abilities N &orldEs =rst su%er "om%uter built usin)

7inu> and standard o$6the6shel! "om%onents

• Creatin) or sour"in) ne& "a%abilities N ata MotorEs ;ano "ar develo%ed by

sour"in) "om%onents !rom a broad set o! su%%liers meetin) its s%e"i="ations he arti"le "ontinues on "itin) several more e>am%les o! this ty%e o! innovation

in various areas su"h as tele"ommuni"ations Bharti AirtelL# emer)en"y res%onse

servi"es# and dru) develo%ment !or a %soriasis treatment. +hile no one "an ar)ue

that the e>am%les "ited in the arti"le are su""ess!ul and "reatively innovative &ith

minimal resour"es# I tae e>"e%tion &ith ho& the author im%lies =rms Fmust ado%t

Gandhian Innovation in order to remain "om%etitive. I have had =rst6hand

e>%erien"e &ith several Indian based I so!t&are servi"es =rms# and &hile their

%ri"es are mu"h lo&er than domesti" "ounter%arts their Juality and s%eed are not

su%erior as "laimed in the arti"le. In my e>%erien"e develo%ment taes about three

times as lon) due to time one delays and assum%tions made re)ardin) system

reJuirements. he %soriasis dru) e>am%le too 10 years Fearly (000 throu)h

laun"h in Mar"h o! (010L to brin) the %rodu"t to maret. 3et the arti"le states that

the dru) &as develo%ed at a F!ra"tion o! the time normally taen. >hibit 1 o! our

Bio"on "ase establishes a traditional develo%ment %i%eline that taes 1061: years#

ri)ht in line &ith the %soriasis e>am%le. he =rst senten"e "laims innovationFvanished !rom "or%orate %riorities durin) the most re"ent re"ession. he

innovation that %rodu"ed A%%leEs iPad# released in the *%rin) o! (010# &as surely in

!ull6s&in) &ithin A%%le durin) the re"ession. But this %rodu"t# &hile hu)ely

su""ess!ul by any measure# &ould be the %oster "hild !or the authorEs traditional

innovation o! Fauen"e and abundan"e and F%remium %ri"in). A%%le "reated an

entire ne& %rodu"t "ate)ory that &ill serve as a %lat!orm !or innovative solutions !or

years to "ome.


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;o& this isnEt to say that the innovation !rame&or identi=ed by the author is

not &ithout merit. I &ould a)ree that in develo%in) e"onomies su"h as India and

China that FGandhian Innovation may very &ell be the most liely strate)y !or

su""ess. he assum%tion that %rodu"ts aimed at the very "hea%est end o! the

maret &ill %rovide the )reatest bene=t throu)h e"onomies o! s"ale and eO"ient

use o! "a%ital are %robably &ell suited !or develo%in) marets &here theover&helmin) ma-ority o! the %o%ulation is o! very modest means. Com%anies in

develo%ed "ountries looin) to enter develo%in) marets may too have to !ollo&

this !rame&or. But to insist that the R in!rastru"ture o! =rms lie li 7illy# Ro"he#

IBM# A%%le# and others are )oin) to !ade a&ay is bein) naQve. here is a )ro&in)

strin) o! !ailed %rodu"ts !rom =rms tryin) to %rodu"e a less e>%ensive iPad to "ater

to the lo&er end o! the maret HP# RIM# et"L. his is be"ause the ma-ority o! the

maret# in this "ase# is &illin) and able to a$ord the %remium %rodu"t. But I also

donEt "laim A%%le is )oin) to dominate in a maret su"h as India &ith the same

strate)y.

Stop the Innovation Wars: Idea in brief

his arti"le brieDy "overs the idea as to ho& innovation "annot ha%%en in silos and&hen lar)e "om%anies as the %eo%le to do innovation in su"h a &ay it only ends u%du%li"atin) their e$orts. he model thus develo%ed to sto% innovation &ars is Juitea versatile one as there is "oheren"e bet&een the innovation initiative and &hat is"alled the %er!orman"e en)ine. his idea is made as a mi> bet&een 2im Mar"hEsideas about balan"in) e>%loration &ith e>%loitation# and Paul 7a&ren"e and 2ay7ors"hEs ar)ument that =rms need to both inte)rate and di$erentiate "or%orateunits.An innovation initiative is best or)anied as a %artnershi% bet&een a dedi"atedteam and the )rou% that handles on)oin) o%erations# the %er!orman"e en)ine.Althou)h "onDi"ts bet&een %artners are inevitable# they "an be mana)ed# by!ollo&in) three ste%s4

1. Divide the labor. he %er!orman"e en)ine should tae on only tass that are%arallel &ith on)oin) o%erations9 in the same dire"tion# %a"e and same %eo%leinvolved. All other tass should be assi)ned to the dedi"ated team.

(. Assemble the dedicated team. his dedi"ated innovation team should beassembled !rom s"rat"h. All e>istin) "onne"tions &ith the "om%any should be"ut and a "om%letely ne& team &ith ne& %eo%le should be assembled.

/. Mitigate the conicts. he "onDi"ts bet&een the innovation team and the%er!orman"e en)ine must be miti)ated to the ma>imum. he %er!orman"een)ine should be headed by a senior leader &ho "an ee% the )oals o! theor)aniation in %riority.

!ase St"dy


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In (00?# 7u"ent si)ned a deal to hel% a ma-or tele"ommuni"ations "om%anytrans!orm its net&or. our years earlier# su"h a hu)e servi"e deal &ould have beenhard to ima)ine. 7u"entEs histori"al stren)th &as in %rodu"ts and in main)te"hnolo)i"al breathrou)hs in tele"ommuni"ations hard&are. But a!ter the dot6"ombust# 7u"ent needed a ne& sour"e o! )ro&th and looed to servi"es.

+hile the "om%any had the ne"essary te"hni"al sills !or servi"es# it hardly had theor)aniational ;A. e"hnolo)ists# not "lient relationshi% mana)ers# held most o!the %o&er. And the %a"e o! servi"e o%erations &as &ee to &ee# a star de%arture!rom tele"om hard&are %ur"hasin) "y"les# &hi"h lasted years. As su"h#7u"ent re"o)nied that nearly the entire %ro-e"t needed to be e>e"uted by adedi"ated team.

7u"ent assembled that team as i! it &ere buildin) a ne& "om%any. It hired anoutside leader# a veteran o! servi"es !rom *# and several e>%erien"ed servi"ee>e"utives. It ado%ted ne& HR %oli"ies that mimi"ed those o! servi"e "om%anies.And it "reated a ne& %er!orman"e s"ore"ard# one that em%hasied &or!or"eutiliation# not %rodu"t line RSI.

It even tied "om%ensation !or servi"e deliverers dire"tly to their utiliation rates. he result# in !our yearsE time# 7u"entEs servi"e )rou% &as )eneratin) more than (billion in revenues

At the heart o! every hybrid automobile lies a re)enerative brae. raditional braesdissi%ate the ener)y %rodu"ed by a vehi"leEs motion# )eneratin) !ri"tion and uselessheat. Re)enerative braes# by "ontrast# "a%ture the ener)y and %ut it ba" to &or.An ele"tri"al )enerator built into the brae re"har)es the hybridEs massive batteriesas the "ar slo&s.Chris Ban)le# then "hie! o! desi)n at BM+# &as dis"oura)ed by slo& %ro)ress earlyin the "om%anyEs =rst e$ort to desi)n a hybrid vehi"le# laun"hed in (00@. he

sour"e o! the %roblem# Ban)le sa had nothin) to do &ith en)ineerin) %ro&essTBM+ em%loyed the ri)ht e>%erts. he %roblem lay in the "om%anyEs !ormalstru"ture and %ro"esses.8nder its &ell6established desi)n %ro"edures# there &as no reason !or batterys%e"ialists to s%ea &ithBrae s%e"ialists. here &as no routine &or Do& bet&een them. Ban)le ultimatelyde"ided to "reate a dedi"ated team to enable the dee% "ollaboration that &asne"essary amon) all "om%onent s%e"ialists involved in the re)enerative braedesi)n. He named it the Fener)y "hain team# and it su""eeded in movin) the%ro-e"t !or&ard Jui"ly. Althou)h a dedi"ated team &as reJuired !or thisone as%e"t o! vehi"le desi)n# all other as%e"ts o! BM+Es =rst hybrid laun"h9desi)n#en)ineerin)# sales# maretin)# distribution# and so !orth9&ere handled by its%er!orman"e en)ine.


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Ho# G$ Is Disr"pting Itself his arti"le !o"usses on a very interestin) as%e"t o! Innovation. G !or )enerationshas been main) %rodu"ts &hi"h they develo% in develo%ed "ountries and thenbrin) them to develo%in) "ountries. A""ordin) to the author this is the time !or adi$erent ind o! innovation &hi"h he "alls reverse innovation. his is &hen %rodu"tsare develo%ed in develo%in) "ountries and then bou)ht to develo%ed "ountries.

hese %rodu"ts are built usin) the %rodu"ts at the lo"al marets thus bein)

sustainable and "hea% and then brou)ht as a$ordable e>"ellent models indevelo%ed "ountries. he arti"le also states the e>am%les o! Mahindra andGatorade. Mahindra develo%ed lo& HP tra"tors !or the Indian marets and then soldthem in the 8*A maret &here they sold it to hobby !armers. Gatorade &as also%rodu"t &hi"h &as a"tually a "ure !or diarrhea &hi"h &as later then develo%ed as anener)y drin to re%lenish the ele"trolytes !or the s%orts men.


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%he !"stomer&!entered Innovation Map

his arti"le !o"usses on ma%%in) all the -obs their "ustomer is tryin) to do toidenti!y brea throu)h o%%ortunities &hi"h "an then be e>%loited to identi!y ne&and e>"itin) o%%ortunities &here the "om%any "an innovate. he author and histeam have develo%ed a method "alled -ob ma%%in) &hi"h means breain) do&n&hat the "ustomer &ants into a series o! dis"rete ste%s. By doin) this the author!eels that the "om%any "an )et a "om%lete vie& o! all %oints &here a "ustomermi)ht reJuire more hel% or servi"e !rom the %rodu"t. +ith this -ob ma% the "om%any"an analye the bi))est dra&ba"s o! the %rodu"t and servi"es &hi"h the "om%anyuses. It di$ers !rom %ro"ess ma%%in) in a &ay that it hel%s "om%anies to identi!y&hat the "ustomer is tryin) to do as a)ainst &hat he is doin).. In looin) !or &ays


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innovate# itEs most e$e"tive to e>amine &hat "ustomers are tryin) to )et done&hen they Fhire a %rodu"t or servi"e# not &hat their e>istin) %ro"ess is.

o do so# "om%anies must de"onstru"t every "ustomer -ob into ei)ht universalste%s41. e=nin)4 +hat as%e"ts o! )ettin) the -ob done must the "ustomer de=ne u%

!ront in order to %ro"eed<(. 7o"atin)4 +hat in%uts or items must the "ustomer lo"ate to do the -ob</. Pre%arin)4 Ho& must the "ustomer %re%are the in%uts and environment to do the

-ob<5. Con=rmin)4 Sn"e %re%aration is "om%lete# &hat does the "ustomer need to

veri!y be!ore %ro"eedin) &ith the -ob to ensure its su""ess!ul e>e"ution<:. >e"utin)4 +hat must "ustomers do to e>e"ute the -ob su""ess!ully<?. Monitorin)4 +hat does the "ustomer need to monitor to ensure that the -ob is

su""ess!ully e>e"uted<@. Modi!yin)4 +hat mi)ht the "ustomer need to alter !or the -ob to be "om%leted

su""ess!ully<. Con"ludin)4 +hat must the "ustomer do to =nish the -ob

+ithin ea"h o! these dis"rete %ro"ess ste%s lie multi%le innovation o%%ortunities !ormain) the -ob sim%ler# easier# or !aster.


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AGILE INNOVATION: Keeley Wilson and Yves L. Doz

In this article ao!t A"ile Innovation the a!thors Keeley Wilson and Yves L. Doztal# ao!t the i$%ortance ao!t ho& innovation is a critical activity to every co$%any'ss!ccess. Innovation drives di((erentiation and %rovides a co$%any co$%etitiveadvanta"e. In the &orld o( "loalization and intense co$%etition co$%anies cannot )!sts!rvive ased on the e*%ertise and inventions that are %rod!ced in ho!se. In order tos!cceed co$%anies have to "o eyond local o!ndaries and connect &ith diversec!lt!res aro!nd the &orld to asor ne& ideas and re$ain co$%etitive y ado%tin" theconce%t o( a"ile innovation. The article e*%lains &hat a"ile innovation is and ho& canco$%anies o%ti$ize their e((iciency and e((ectiveness (or their "loal innovationinitiatives.

The a!thors have %ro%osed an innovation $odel that identi(ies the need toor"anize innovations and ho& to $ana"e the$ de%endin" on the !siness needs. Asthe #no&led"e re+!ire$ent varies, de%endin" on the need the %otential so!rcesincrease or decrease. A co$%any needs to constantly ad)!st itsel( to the chan"in"


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re+!ire$ents to o%ti$ize its !se. The a!thors have !sed three road cate"ories in&hich the #no&led"e ein" so!"ht (alls into: - E*%licit Kno&led"e: this is the ty%e o( #no&led"e &hich codi(ied, trans(erale via co$$on lan"!a"e or %rocess. / E$edded#no&led"e: this is conte*t related, oservale, and loosely de(inale and can eaccessed y loo#in" (ro$ a di((erent %erson's %ers%ective. 0 E*istential #no&led"e: this

is de%endent on the local ehavior and nor$s and can e only learned y doin" it.

Each one o( the #no&led"e cate"ories has a corres%ondin" a%%roach as to ho&to asor the #no&led"e and inte"rate it in the %arent co$%any's syste$.- I( the#no&led"e is e*%licit it can e easily attracted y a co$%any in a virt!al environ$ent e."No#ia %!licly anno!ncin" on the internet their re+!ire$ents (or an a%% and %eo%le (ro$all over the &orld havin" the si$ilar conce%ts or ideas "ettin" attracted to s!$it aso!rce code to release their &or# on a lar"e scale. / When the #no&led"e istechnolo"ical ased on e*%ertise in the local area there is a need to !nderstand andtrans(er this #no&led"e e((ectively and can e seen as a (orayin" e*%edition %ro)ect.This does not re+!ire a (!ll1ti$e innovation center &hich is set !% in the local area (or

!nderstandin" and translatin" that #no&led"e o!tside. 0 When the #no&led"e ise*istential and dee%ly rooted in the local c!lt!re and it is very di((ic!lt to !nderstand andtranslate over a s$all %eriod and y a s$all "ro!%, there(ore there is a need (or a local%resence o( the co$%any's in the (or$ o( ric#s1and1$ortar innovation center.

Is It eal( !an We Win( Is It #orth Doing: Idea in Brief

his arti"le e>%lores ho& minor innovations &hi"h ty%i"ally mae u% most o! a"om%anyEs develo%ment %ort!olio# do not a"tually )enerate the )ro&th &hi"h"om%anies loo !or. he author then dis"usses ( tools &hi"h "an hel% "om%anies to

address this short!alls. he "om%any "an undertae a systemati"# dis"i%lined revie&o! their innovation %ort!olios and in"rease the %ro%ortion o! ma-or innovations &hile"are!ully mana)in) the ris.

he ris matri> &ill reveals the distribution o! ris a"ross a "om%anyEs innovation%ort!olio# sho&in) the "om%any ea"h %ro-e"tEs %robability o! su""ess or !ailurebased on ho& bi) a stret"h it is !or the =rm. he less !amiliar the intended maretand the %rodu"t or te"hnolo)y# the hi)her the ris. his &ay a "om%any "an !o"uson their "ore businesses and )enerate innovations &hi"h are more stable and lessliely to be risy

he R6+6+ Freal# &in# &orth itL s"reen allo&s "om%anies to evaluate the riss and

%otential o! individual %ro-e"ts by ans&erin) Juestions in three broad to%i" areas4FIs it real%lores the nature o! the %otential maret and loos at the !easibility o! buildin) the %rodu"t. FCan &e &in


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Innovation: %he !lassic %raps: Idea in Brief

Most o! the time mana)ers stumble in their R e$orts be"ause they are en)a)edin a diO"ult balan"in) a"t&here they need to balan"e e>istin) revenue streams&hile "reatin) ne& ones but this "an %ut an end to "or%orate entre%reneurshi% orintra%reneurshi% as &e no& it. his ris "an be miti)ated i! "ertain lessons !rom the%ast are heeded by the mana)er some o! them bein).*trate)y 7essons

• ;ot every innovation idea has to be a blo"buster. ven enou)h numbers o!

small or in"remental innovations "an lead to bi) %ro=ts.

• rans!ormative ideas "an "ome !rom any !un"tion e). maretin)# %rodu"tion#=nan"e# or distribution.

• onEt !o"us only on ne& %rodu"t develo%ment

• *u""ess!ul innovators use an Finnovation %yramid# &hi"h arran)es all the

innovative ideas on the basis o! the riss &ith several bi) bets at the to% that )etmost o! the investmentT a %ort!olio o! %romisin) midran)e ideas in test sta)eTand a broad base o! early sta)e ideas or in"remental innovations.

•


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*tru"ture 7essons

• +hile loosenin) !ormal "ontrols# "om%anies should ti)hten inter%ersonal

"onne"tions bet&een innovation e$orts and the rest o! the business. 7ie the%revious arti"les the innovation team "an &or &ith %er!orman"e en)ines.

• Game6"han)in) innovations o!ten "ut a"ross established "hannels or "ombine

elements o! e>istin) "a%a"ity in ne& &ays.

Pro"ess 7essons

• i)ht "ontrols stran)le innovation. he %lannin)# bud)etin)# and revie&s a%%lied

to e>istin) businesses &ill sJueee the li!e out o! an innovation e$ort.

• Com%anies should e>%e"t thin)s to "han)e tra" on"e in a &hile. I! em%loyees

!o"us only on doin) the ri)ht thin)s and not main) mistaes and learnin) thenthey &ill never be able to innovate su""ess!ully.

*ills 7essons

• 7eaders should be &ell eJui%%ed &ith stron) "ommuni"ation and leadershi%

sills.

• Members o! su""ess!ul innovation teams sti" to)ether throu)h the develo%mento! an idea

Innovation )illers: Ho# *inancial %ools Destroy +o"r !apacity to Do ,e#%hings

he arti"le be)ins on ho& !or years the author has been %uled about &hy so manysmart# hard&orin) mana)ers in &ell6run "om%anies =nd it im%ossible to innovatesu""ess!ully. heir study has hel%ed them identi!y ho& =nan"ial tools have a"tuallyended u% bein) innovation iller des%ite the !a"t that the -obs have been ma%%ed

%ro%erly to the "ustomer and their latent needs identi=ed.

he three main tools &hi"h the author de"ides to %oint =n)ers at as ma-orinnovation illers are4

• he use o! dis"ounted "ash Do& CL and net %resent value ;P,L to

evaluate investment o%%ortunities "auses mana)ers to underestimate thereal returns and bene=ts o! %ro"eedin) &ith investments in innovation asinnovation de"isions "annot be based on somethin) as dire"t as C.

• i>ed and sun "osts &hile "al"ulatin) !uture investments are "onsidered insu"h a &ay that they themselves be"ome ma-or in"umbents in the de"ision o! the "om%any to mae a "all on &hether the innovation is &orth investin) in.

• he heavy em%hasis on earnin)s %er share P*L as the %rimary driver o!

share %ri"e and hen"e o! shareholder value "reation# maes the "om%aniesnot &ant to )et into businesses &hi"h do not )ive returns immediately.

Most established "om%anies start by "onsiderin) a broad ran)e o! %ossibleinnovationsT they &inno& out the less viable ideas# ste% by ste%# until only the most%romisin) ones remain. Many mareters and en)ineers re)ard the sta)e6)atedevelo%ment %ro"ess &ith disdain.


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he arti"le identi=es t&o ma-or riss to the ;P, tool. irst# %ro-e"t teams )enerallyno& ho& )ood the %ro-e"tions su"h as ;P,L need to loo in order to &in !undin)#and it taes only nanose"onds to t&ea an assum%tion and run another !ull s"enarioto )et a !alterin) %ro-e"t over the hurdle rate. he se"ond dra&ba" is that thesta)e6)ate system assumes that the %ro%osed strate)y is the ri)ht strate)y. Sn"ean innovation has been a%%roved# develo%ed# and laun"hed# all that remains is

sill!ul e>e"ution. he sta)e6)ate system is not suited to the tas o! assessin) innovations &hose%ur%ose is to build ne& )ro&th businesses# but most "om%anies "ontinue to !ollo& itsim%ly be"ause they see no alternative.

he %ro-e"ted value o! an innovation must be assessed a)ainst a ran)e o! s"enarios#the most realisti" o! &hi"h is o!ten a deterioratin) "om%etitive and =nan"ial !uture.Kno&in) that the eJuity marets &ill %unish them !or a &rite6o$ o! obsolete assets#mana)ers may stall in ado%tin) ne& te"hnolo)y.

It is there!ore im%ortant !or CUS s%onsors o! innovation %ro-e"tsL to re"o)nie thatsome o! the tools ty%i"ally used !or =nan"ial analysis# and de"ision main) about

investments# distort the value# im%ortan"e# and lielihood o! su""ess o!investments in innovation.

Winning in $merging Mar-ets by %ar"n )hanna . )rishna G/ 0alep"

he arti"le !o"uses on the emer)in) )iantEs "hoi"es in ho& to e$e"tively "om%ete in

their emer)in) maret. he mer)in) Giants have distin"t advanta)es !rom the

multinationals !or the strate)i" "hoi"es in that they have %ro>imity# "ultural

no&led)e# and %oliti"al no&led)e. Mainly the strate)i" advanta)e is derived !rom

their distin"t lo"ational advanta)e in most o! the &ays they "om%ete &ith e>ternal

"om%etition. hey have a "ultural advanta)e in almost every "ase. s%e"ially &hen

it "omes to %rodu"t tastes%re!eren"es# and re"o)niin) lo"al talent to =ll theirmana)ement teams &ithin the or)aniation.

ata Motors is a tru" manu!a"turin) "om%any in India. hey made ma-or strate)i"

%ositionin) moves in their domesti" marets &ith the introdu"tion o! their A"e. he

A"e &as a small eO"ient tru". A!ter livin) in India# they realied ma-or maret

needs not bein) addressed by the "urrent maret o$erin)s o! small tru" se)ment.

hey also "reated demand !or a vehi"le that &as not even available to the maret

%rior to their %rodu"t bein) introdu"ed. Im%ortant su%%ly "hain "han)es &ere

mana)ed to a""ount !or the %ri"e %oint they needed to a""ommodate their ne&

vehi"le. *o not only did they mae si)ni="ant %rodu"t innovation moves# but they

also had to edu"ate the %ubli" on the bene=ts o! the ne& %rodu"t. It is )reat

e>am%le o! ho& an emer)in) )iant "an tae advanta)e o! their lo"al %ositionin) to

mae better %rodu"ts and su%%ly "hain develo%ments. In addition# ata Motors

)ave their "ustomers a ne& &ay o! servi"in) the vehi"les that &as more amiable to

their "ustomer base in rural areas o! the "ountry# &here the institutional voids

"reated issues !or "ustomers to have their vehi"les re%aired e$e"tively. ata


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su""ess!ully over"ame these issues &ith their innovation to many di$erent

institutional voids.

Another e>am%le in the boo &as a Cosan# a &orld leader in su)ar and ethanol

%rodu"tion. hey &ere su""ess!ul in "onsolidatin) both the harvestin) o! su)ar and

%rodu"tion o! ethanol a!ter the dere)ulation in Brail o! the su)ar industry. It &asJuite hel%!ul !or them to be in Brail &hile doin) many "onsolidations &hen

dere)ulation started# and they too the institutional void le!t a!ter the dere)ulation

to inte)rate their business u%stream. hey "ontrolled the ethanol not only in the

&holesale maret# but also retail maret throu)h a"Juirin) =llin) stations.

*u""ess!ully verti"ally inte)ratin) their business. Also %ro)ressin) their !armin)

no&led)e &ith modern a)ri"ultural s"ien"e "losin) institutional voids le!t !rom a

re)ulated industry. Another stren)th &as their ability to im%rove &orin) "onditions

!or the manual laborers throu)hout the su)ar "ane manu!a"turin) %ro"ess. his not

only bene=ted them =nan"ially# but also )ave them a mu"h more %ositive ima)e

!rom the em%loyees &ho had been under bad &orin) "onditions %reviously.

he "ha%ter also %oints out %otential %ositive a$e"t o! "on)lomerates "omin) out o!

emer)in) marets. 8sin) business units )ives mer)in) Giants the ability to

!ra)ment their businesses and "reate syner)ies in brandin) o! the entire Deet.

+hi"h is usually detrimental in develo%ed marets# but be"ause o! the "onsumer

mindset in emer)in) marets it a"tually bene=ts mer)in) Giants. Also there &ere

ma-or bene=ts in labor shi!tin)# be"ause o! le)al systems that mae "onsolidated

businesses more diO"ult. It allo&s "on)lomerates to shi!t their human "a%ital into

the business that need it most &ithout lettin) %eo%le )o. his &ould be "ostly i!

there &ere no other business units to shi!t human "a%ital. here are also =nan"ial

reasons !rom the internal =nan"in) o! other business to the business# &hi"h maes

mer)in) Giants more autonomous !rom outside entities. Ho&ever# it &as not all

%ositive to be a "on)lomerate. he "on)lomerates still have many o! the same

issues that &ould %otentially %la)ue those in many develo%ed multinationals. he

most %rominent issue bein) subsidiin) losin) business units &ith the %ro=table

ones. his is %robably an unavoidable side e$e"t o! any %oorly mana)ed

"on)lomerate. Ho&ever amon) the mer)in) Giants# "on)lomerates %osition

themselves &ell to tae advanta)e o! ne& and %ro=table business o%%ortunities.

he Ayala Grou% &as an e>am%le o! an mer)in) Giant that &as able to start their

business &ith demand !rom develo%ed marets and transition into a stron) %osition

&ithin India &here they &ere basedL. Ayala started as an outsour"in) "om%any !orso!t&are develo%ment !or "om%anies in develo%ed marets. By havin) no real

demand domesti"ally &hen they in"or%orate# but havin) a hi)hly silled labor

lo"ally they "reated a )ood name !or themselves. Sver time they shi!ted u% the

value "hain into Juali=ed te"hni"al en)ineerin) and %ro)rammin). Sn"e India &as

"losin) their institutional void# havin) a lo& amount o! "om%uter inte)ration in

business# they &ere able to tae advanta)e o! the maret in India. Ho&ever# as

these marets be"ome more and more develo%ed they &ill lose their advanta)e#


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somethin) the boos mentions. hey need to "ontinuously ada%t to tae advanta)e

o! maret o%%ortunities and %rodu"e e>"ellent results

%he *"t"re of Innovation in emerging mar-ets : Dr Mar-o tor-elli

he author here ar)ues that the innovation o$ered in develo%in) "ountries "annot

be the same as o$ered in develo%ed "ountries. He ar)ues one "annot su""eed by

o$erin) -ust Vu%datedV or "hea%er versions o! "urrent %rodu"ts or servi"es# sin"e

there is a need to "reate )enuinely ne& %rodu"ts# servi"es and business models

based on lo"al "ustomer needs# as &ell as to develo% ne& inds o! value net&ors.

He says that in emer)in) marets# es%e"ially disru%tive innovations &ill be

im%ortant. his is be"ause the !o"us o! innovation a"tivities must be on dis"overin)

unmet needs or Vo%%ortunity )a%sV &here e>istin) %rodu"ts# servi"es do not !ul=ll

the needs o! their "ustomers. he author then "ites a )ood e>am%le o! this ind

%arti"i%atory a%%roa"h to innovation and "reatin) ne& marets "omes !rom ;oia.

hat is# =eld observations in 8)anda had demonstrated that %eo%le only rarely

"ould a$ord their o&n %ersonal mobile %hones# so that o!ten an entire !amily &ould

share one "ell%hone. here!ore# in res%onse# ;oia develo%ed a shared %hone

devi"e &hi"h %ermitted u% to =ve se%arate %ro=les# "onta"t dire"tories and other

%ersonaliation !eatures !or the sin)le %hone.

he bottom line is anti"i%atin) !uture needs and trends in emer)in) marets

reJuires "onsiderable e$orts !rom a "om%any. he "om%any must "are!ully observe

ho& %eo%le live and behave at the bottom o! the %yramid in order to identi!y the

V&ea si)nalsV. Snly throu)h shi!tin) the !o"us !rom eO"ien"y issues and

streamlinin) "osts "an a "om%any better understand users and their needs that

lead to the e$e"tive desi)n o! ne& %rodu"ts and servi"es.

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