Innovation: what we can learn from emerging market success
As the Eurozone’s economy faces a rocky road ahead and politicians seem unable to find a solution, maybe it’s time that businesses took it into their own hands to find ways to ride out the downturn rather than pinning all their hopes on a political solution.
Even the most successful economies can’t wholly avoid the impact of a global downturn. But those economies that we know as ‘emerging markets’ have fared better than most during the downturn, and have proved to be far more dynamic than the more mature markets of the Eurozone.
Innovation = challenging the status quo
There is a natural pioneering spirit endemic in emerging market businesses. Perhaps that’s because, at this stage in their development, they have everything to gain, a lot less to lose, and are already well accustomed to overcoming huge problems on a daily basis: problems, for instance of poor infrastructure and communications, and a hard to reach or low income populus in their home markets.
So, as the mood in mature markets, for most of us anyway, moves away from ‘affluence’ to and closer to‘austerity’, perhaps now is the right time for business in Europe to look at what the best of emerging market businesses are doing, and to try to apply those principles to their own situation.
Innovation is vital for any start-up companies hoping to make their mark.
It’s what will get you noticed – and if the market and media start talking about your products and services, they’ll be doing your marketing and promotion for you, free of charge. But innovation needs to take account of the current economic environment – and that’s something that emerging market business do very well, because they’ve always had to.
Here are two contrasting examples that make the point. The British company Dyson produces household vacuum cleaners that retail for as much as €500.
4000 miles away inIndia, students are being equipped with a new tablet computer, the Aakash, costing the equivalent of just €16. While the products themselves aren’t comparable, what is interesting are the drivers for their development.
For Dyson, it’s upselling to a select and already established market segment, while for Quad, the Indian producer of the Aakash, it’s creating a whole new market where none existed before: simply because, for millions of Indian people, the cost of a tablet pc would normally be way outside their reach.
The Aakash may well turn out to be what has been called ‘disruptive innovation’, a term coined by Harvard professor Clayton Christensen to describe the way in which a product is designed primarily as a simple ‘no frills’ offering to the bottom of the market pyramid but is then adopted further up the pyramid, displacing more established competitors. It may not have the sophistication of an Apple iPad – which can sell for as much as €600 – but in these straitened times, many consumer choices are driven by austerity not affluence.
The lessons to be learned? Innovation needn’t mean expensive upgrading of products to appeal to an existing – and often overcrowded – market. Create a new market to meet an unsatisfied need, create noise around your products, challenge the status quo.[Photo: Bangalore commute, Peter Rivera, Flickr]
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