What can we learn from successful examples of innovations in emerging markets? This was the key question Liz Tinkham and Adi Alon, Accenture senior executives, posed to eight panelists during a breakout session at the Accenture Global Convergence Forum.
Lessons learned from innovation in emerging markets provide some guideposts for companies everywhere as they struggle in their ability to execute innovation initiatives effectively
What Emerging Markets Can Teach?
Tinkham emphasized that we have a lot to learn from innovators in emerging markets. Survival in emerging markets highly depends on the players’ ability to help their markets leapfrog technology generations, bring out the right products and services, at a very low price point, with innovative business models and through innovative channels. The challenges are daunting but the rewards are huge.
Tinkham said examples of this innovation abound, citing the “Village phone” launched by GrameenPhone and Telenor in Bangladesh, where micro-loans are given to women in rural villages. The loan enables them to buy a mobile handset, an antenna and a large battery so they can sell calls to other villagers. These phones account for a third of all GrameenPhone calls because they are used by so many people. Another example is the Tata Nano, the most inexpensive car in the world, which was launched in India in 2008.
Other illustrations reveal some of the key traits of innovation in emerging markets:
Hunger for innovation. Most panelists agreed: players in emerging markets are very innovative because they have a strong appetite for learning and success, which seems to be lacking in most developed markets.
Arvind Rao, CEO of onMobile believes that companies need to create hunger for innovation. He said that launching innovative ideas to market requires thinking out of the box and getting out of your comfort zone. Tim Sefton, head of brand strategy & development for O2 UK agreed: “Clearly hunger to learn and an appetite to change is what we need to imitate more in mature markets.”
For Rao, it is also important to provide incentives to your management appropriately, and give them a clear and aggressive challenge. The variable pay of onMobile’s management team depends on whether at least 25 percent of the company’s revenues come from new products.
Adding to the discussion, Apurv Nagpal criticized the current practice of “putting too many control ‘gates’ around innovation, He said that companies should keep the process as lean and simple as possible.
Ability to Reinvent and Challenge New Approaches. Exploring uncharted territories is the name of the game, and no one can read the future. More than anywhere else, emerging market players cannot rely on a lot of market data, or read too much into their customer’s current usage habits, as those habits evolve too quickly. The majority of users are under the age of 30 and hungry for new and better things.
Developing new products is a two step process, said Dennis Yie, CEO of Unison. First, you need to think out of the box. In the absence of reliable market data, and little or no data mining capabilities, companies have to rely on basic service and product testing and their instinct as to what will push customers to buy and at what price point.
Second, it is also important to challenge your ideas regularly: you need to have a process around testing your innovation in the market all the time and tweak them if needed. And you need clear criteria for success, for example, adoption rate at a given date, said Rao.
Gaby Koren, vice president and head of enterprise business in Asia-Pacific, Nice, said the key is for carriers, banks or retailers to understand what customers feel and want in real time, and push information and action recommendations back to the marketing team.