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Innovating for emerging markets
 

Innovating for emerging markets

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Emerging markets (popularly known as BRIC countries) will play more significant role, going forward. However the context for innovation is way different from developed economies. Innovating for ...

Emerging markets (popularly known as BRIC countries) will play more significant role, going forward. However the context for innovation is way different from developed economies. Innovating for emerging markets is been one of my favorite topics, made quite some study in this area. Most of my findings are available in the presentation below.

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    Innovating for emerging markets Innovating for emerging markets Presentation Transcript

    • Innovating for Emerging Markets Economics, Framework and examples Jayakumar Balasubramanian [b.jayakumar@gmail.com]
    • Introducing Suppandi!
      • Suppandi is a nice guy
      • He is my good friend 
      • Will keep disturbing us in between the presentation
      • Very curious, likes to ask questions
      • Sometimes gives out answers also
      • Sometimes get philosophical
      • Without answering him we can’t go forward
    • Emerging Markets defined
      • Emerging Markets are countries that are restructuring their economies along market-oriented lines and offer a wealth of opportunities in trade, technology transfers, and foreign direct investment
      • The term “Emerging Markets" was coined by Antoine van Agtmael and dates back to 1981
      • Emerging market economies - "BRIC" economies or the economies of Brazil, Russia, India, and China
    • Let us understand some terms
      • GDP: Gross Domestic Product
        • Equal to the sum of the income generated by production in the country in the period
      • PPP: Purchasing Power Parity
        • Long-term equilibrium exchange rate of two currencies to equalize their purchasing power
    • Why there is so much of buzz ? There is money honey!
    • Here are the stats…
      • According to Goldman Sachs:
      • By 2050, the combined economies of the BRIC could eclipse the combined economies of the current richest countries of the world
      • These countries encompass over 25% of the world's land coverage, 40% of the world's population and hold a combined GDP (PPP) of 15.435 trillion dollars
      • These 4 countries are among the biggest and fastest growing Emerging Markets
    • The world economic pyramid BRIC Low Per Capita High Volume
    • Why economics?
      • Very key to understand nature of consumers, markets and spending patterns
      • Understand the importance of this market
      • Can’t afford to ignore anymore 
      • Radically different compared with developed countries
        • Low Volume Vs High Cost (Developed economies)
        • High Volume Vs Low Cost (Emerging economies)
      • Innovation has a different “context”
      • Market dynamics are unique
    • Emerging Markets Research
      • “ The Fortune at the Bottom of the Pyramid” by C.K.Prahalad in the year 2004
      • Ruth McCracken Distinguished University Professor of Corporate Strategy at the University of Michigan Ross School of Business
      • Case studies and research for a decade in countries like India, Brazil, Peru, Mexico and Venezuela
      • Results have shown that there is a significant market opportunity, which demands MNCs to radically re-think about Innovation
      • Framework for Innovating in Emerging Markets
      • Difference between Emerging Markets and Bottom of the Pyramid (BOP)
    • Myths and nature of BOP
      • There is money at the BOP
        • The dominant assumption is that the BOP market have no purchasing power
        • Breaking into new markets by “creating” them
      • Access to BOP markets
        • Dumped as “media dark” for years together
        • HLL is one of the early entrants in FMCG industry
      • The BOP markets are Brand-Conscious
        • Value (Brand) conscious
        • Building trust is the key
    • Contd..
      • The BOP Market is connected
        • Mobility
        • Word-of-mouth and relationship oriented
      • BOP Consumers Accept Advanced Technology Readily
        • Provided they see a value
        • “ Nothing-to-forget”
    • Innovation – Aravind Eye care
      • Volume (2600 Vs 400 operations/year/doctor)
      • Pricing (50$ for operation)
      • Creating a P-P community (Paying Vs Non paying)
      • Systematic approach (Process)
      • Technology (Intraocular lenses at 5$)
      • Training and recruiting (No attrition worries)
      • Go-to-market (Eye camps, Awareness, WOM)
    • Adaptation (=Innovation)
      • Vegetarian selections to suit Indians (40% Veg)
      • Maharaja Mac replaced Big Mac
      • No beef or pork items (respect for local culture)
      • Bring more “connectedness” by introducing McAloo, McMasala
      • Garlic free sauces etc..
      • Localization of menu items (Adaptation):
      • 75% in India
      • 33% in Asia
      • < 5% in rest of the world
    • Adaptation contd..
      • “ Listening” to what customer wants and adapting to it would result in innovation.
      • Innovation need not be end-to-end; Can be applied to any phase, across businesses
    • Context (=Innovation)
      • Understanding the “context” is key for innovation,
      • It is all the more true for “Value conscious” BOP customers
      • When businesses fail to understand the context it takes a nosedive
      • Nine out of Ten startups/entrepreneurial ventures fail because of this
      • Let us learn from some failures
    • iPhone : Not India Phone
      • Great innovation success story in developed countries
      • Hardly sold 1500 handsets in India as of Dec 2008
      • Cost, Cost and Cost (31,000 INR, Not affordable )
      • No 3G infrastructure ( Apps are of no use )
      • Mobile ecosystem in India
        • More than 85% of customers use pre-paid
        • ~8$ ARPU (India) Vs ~50$ ARPU (France)
      • Too much of hype around pricing (8000 INR)
    • Suppandi again.. What is this? I have seen it somewhere *&^!@~@
    • The S (ad) imputer story
      • Great technology innovation
        • Text-to-speech software
        • GNU/Linux
        • Gesture based
        • Handwriting recognition
      • Priced about 12,500 INR (Amida)
      • Hardly sold 4000 units, Very few deployments
      • Failed to understand Mobile, PDA ecosystem
    • Suppandi’s philosophy about Innovation Doing Innovation is much easier than understanding “Cosmic energy coupled with atomic energy in evolution of mankind with the program of Java”
    • Framework for BOP Innovation
      • Price Performance : Value conscious
      • Innovation : Hybrids
      • Scale of Operations : For a business value proposition
      • Sustainable Development : Eco-Friendly
      • Identifying Functionally : Is the BOP Different from Developed Markets?
      • Process Innovation : Cannot think of ignoring it
      • Deskilling of Work
      • Education of Customers
      • Designing for Hostile Infrastructure
      • Interfaces
      • Distribution : Accessing the Customer
      • BOP Markets Essentially Allow Us to Challenge the Conventional Wisdom in Delivery of Products and Services.
    • The Long Tail
      • Coined by Chris Anderson in the year 2004
      • Niche strategy in business
      • To sell large number of unique items in small quantities
      • Freedom of choice
      • Applies to all successful online businesses
        • Amazon, Google, iTunes
      • The concept of
        • Micro-producer
        • Micro-consumer
        • Micro-payment
    • The ‘Emerging’ Long Tail Literally no end to the tail (Emerging Markets) Developed Markets
    • Concluding examples
      • Supply Chain
      • Entrepreneurship
      • Co-operative society
      • Milk power
      • Process
      • Product portfolio
      • Kiosks
      • “ White revolution”
      • Microfinance
      • The Long Tail
      • Biz-model
      • 99% loan recovery
      • Mobile booths
      • Sustainable revenue
      • “ Nobel price”
      • ERP for SMBs
      • Training
      • No-piracy
      • Innovative GTM
      • Simple solution
      • Multi lingual
      • “ Products for emerging markets”
    • Examples contd..
      • Paid platform
      • Third largest
      • Integrated platform
      • Scalability
      • “ Mall” concept
      • Customer centric innovation
      • Tier – II cities
      • Total solution
      • Biz-model
      • Billing device
      • Backbone infra
      • Connecting people
      • Robustness
      • Scalability
      • Integrated platform
      • Most number of marriages
      • Trust platform
      • Innovative pricing
      • Scalable
      • Y! invested
      • “ Top 50 companies in India”
    • References (Blogs/Websites)
      • Emergic blog
        • Author : Rajesh Jain
        • URL: http://www.emergic.org
        • About: Emerging Markets, Mobility, Internet, Innovation, Business models
      • How to change the world?
        • Author : Guy Kawasaki
        • URL: http://blog.guykawasaki.com/
        • About: Web 2.0, Innovation, Tech trends, Loads of cool stuff
    • References (Books)
      • Fortune at the bottom of the pyramid
        • Author: C.K.Prahalad
        • About: Bottom of the pyramid Innovation
        • Click here for Amazon link
      • New Age of Innovation
        • Author: C.K.Prahalad and M.S.Krishnan
        • About: Co-creating Innovation with customers (N = 1, R = G)
        • Click here for Amazon link
      • The Long Tail
        • Author: Chris Anderson
        • About: Why the Future of Business is Selling Less of More
        • Click here for Amazon link
    • Thank you! Got comments/inputs about this presentation? Please send them to [email_address]