I talked in my first post about how emerging markets are changing innovation, and two publications this week focus attention on the same topic. The title of the latest edition of The Economist is “The new masters of management” and contains a 14 page special report on innovation in emerging markets. It points out that not only are companies from the developed world focusing increasingly on emerging markets for innovation, but also emerging market firms (eg Haier and Huawei from China) are moving in the other direction! They also talk about reverse innovation in terms of “frugal”, referencing the Tata Nano, the business model of Bharti Airtel and BYD’s ambition as not only a global supplier of batteries, but to be a global car company. Many of these innovations are not just about new products, but involve completely new business models.
A great way to start this learning log is to discuss how innovation practice is being disrupted by the emergence of new markets in Asia and other developing regions of the world. Truly disruptive innovation has always been based on finding new uses and new markets for new products rather than developing better and better delivery of existing products to existing customers (read Clayton Christensen for a detailed introduction to disruptive innovation). As emerging markets develop, they present huge new markets for products, but with consumers whose needs can be very different from those in existing developed markets. That is, they present a huge opportunity for disruptive innovation.