1. ADAPTATION OF INNOVATION MODELS TO EMERGING MARKETS:
Maintaining status quo mayn’t be a sustainable long-term option for a lot of
companies, primarily due to competitive and in some instances, regulatory considerations.
This forces them to innovate, either incrementally or through disruptive technologies that
may help reduce costs, improve channels of distribution, improve access to both suppliers
and/or customers, and finally improve overall profitability and cash flow. However, the
traditional business concepts such as linear models of push v/s pull marketing strategies
are being put to test in the emerging markets and even in the western world due to
spread-out customer base, emerging technologies, and organizational evolutions.
Why Innovate?
1. Shock Therapy: Usually countries and companies are forced to innovate in times of
adversity.
2. Ideas Evolve: After making some mistakes, sometimes ideas take on a life of their
own, and take simultaneously multiple, divergent paths.
3. Board and Management Foresight: Companies like BMW, BASF, DuPont, Google,
Monsanto, and Apple have farsighted managements and/or culture that sponsor or
lead innovation.
4. Outside Intervention: A bankruptcy reorganization, regulatory intervention,
shareholder activism, and/or newly hired outside employees cause a company to
break out of the status quo, and on to the path of innovation.
5. Incremental innovation: Many times small, incremental and continuous innovations
lead to longer-lasting strategic and business competency and industry leadership.
Innovation is highly dependent on local natural resources, available talent pool, size of
the domestic market, entrepreneurial zeal of the population, and the stage of industrial and
economic development cycle of a particular society. There are several innovation models
that look at how businesses and countries adapt to change, and improve their competitive
advantage vis-à-vis competition.
Model Type: Main Principles: Adaptation of the Model
Principles to Emerging
Markets:
Push Model  Model of top-down research,  McDonalds’ may vary some
production and marketing menu items in local markets, for
that allocates resources to e.g. no hamburgers in India,
areas of expected demand. but largely the entire training
 Centralized system that and operation is consistent and
creates products, and then “pushed down” from the
sends the army of sales and headquarters.
marketing people to find  Local management and
customers. employees are trained at the
 Head office controls headquarters, or on local site or
resources and decisions to via various online media
create centralized planning solutions to create camaraderie,
and allocation for uniformity, uniform vision, but with local
responsibility, quality control, flavor and responsiveness.
and brand identity.
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2. Pull Model  Bottom-Up model that  Many of the innovations are
mobilizes and absorbs local, incremental rather than
resources according to disruptive or game-changing.
market needs. For e.g. Microsoft’s research lab
 Eliminates many fixed costs in Beijing has produced
and networks, and allows for programs that recognize
faster allocation and re- handwriting or convert
allocation of resources. photographs into cartoons.
 Many times solutions are  Instead of Nokia’s senior
found when problems create management getting paranoid
hurdles, “necessity becomes about the iPhone or iPad, its
mother of invention”. global customers need a $50
phone with long battery life that
can be used as a flashlight
during long periods of power
outages.
 GE’s Bangalore unit has
designed an $800 hand-held,
simplified ECG unit called Mac
400. This could provide GE’s
U.S. users with a significantly
reduced price option in the
future.
Coupling Model  Interaction between the  Companies like Renault, GE,
push and pull strategies Vodafone, and Cisco send their
creates a feedback loop top-level executives to India,
mechanism for creating more China and other emerging
customized and effective markets to learn low-cost
solutions. business models. This
 Innovation is usually messy combination of push and pull
with false starts, dead ends, innovation may create cutting
and evolution of ideas edge products and help
through experimentation. companies identify potentially
disruptive technologies.
 Consulting companies station
their staff at client sites to
identify customer problems, and
relay solutions to them either
from headquarters or through
local generation. Other non-
consulting companies should
emulate this coupling model for
global feed-back loop
mechanism.
Parallel Lines Model  When the company is  Companies like Zara (Spain)
efficiently well-integrated, it base their store manager’s total
can take advantage of compensation on store
upstreaming with key profitability, design
suppliers and downstreaming responsiveness and high
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3. with demanding customers to inventory turnover. It takes
improve cost, service, and advantage of its supplier and
operating margins. distribution network by even air-
shipping its goods to the stores
 Working efficiently on world-wide to bring in fresh
several parallel logistical and items to its shoppers.
distribution lines, emphasis is  Wal-Mart manages its entire
on building linkages and sourcing and distribution chain
alliances. keeping low prices for its
 Forward and Backward customers in mind. Its vendors
Integration is part of the and customers can expect that
Corporate and CEO level Wal-Mart will work on parallel
strategies. tracks to do whatever it takes to
reduce costs.
Polycentric  System integration,  Li & Fung and Dachangjiang
Innovation and extensive global innovation & both provide a great case study
Flexible Networks distribution networks, and of using the guanxi or personal
Model flexible response system are connections worldwide to tap
key elements. suppliers and resources as
 Consistent with Joseph needed.
Schumpeter’s original theory  Rather than simply outsource
of “creative destruction”, new only labor intensive, lower value
opportunities open up and manufacturing, suppliers
challenge existing players to become partners even in value-
be flexible and respond to added design and R&D
new ground realities. functions. For e.g. Kenya’s Child
 Many hubs and engines of and Family Wellness Shops
growth and ideas for best offers shares in the company to
practices and creativity. nurses who operate local clinics.
 The entire supply chain
becomes responsible for quality
control, innovation, and best
ideas from various locations are
adopted for best practices.
Source: Professor Joe Tidd, Imperial College London, Tanaka Business School,
Discussion Paper “A Review of Innovation Models”, 2006, pages 1-15.
CONCLUSION: Companies and countries innovate to improve solvency, comply with
regulatory requirements, and assure survival. However, innovation models change in
importance over time, and their adaptability to local market conditions is extremely critical,
not just to gain acceptability as a model, but also for forecasting how a given economy or
company may evolve into a truly global player. The key point is that regardless of how
sound a model is, its relative strength and durability lies in the competency of management
and employees, adoption of local customs and culture, and availability of resources. On
each count, the above five (5) models have been blended and adapted by both western and
emerging market companies to suit their own needs, existing market conditions, and
evolving technologies.
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