Is your emerging-market strategy local enough?

The diversity and dynamism of China, India, and Brazil defy any one-size-fits-all approach. But by targeting city clusters within them, companies can seize growth opportunities.

APRIL 2011 • Yuval Atsmon, Ari Kertesz, and Ireena Vittal

Source: Strategy Practice

https://www.mckinseyquarterly.com/Strategy/Growth/Is_your_emerging_market_strategy_local_enough_2790

The article highlights the importance of thinking local in formulating a global strategy. Remember, markets are local but industries that supply them can be considered global. What I mean is the final offering to any locale must be dictated by local norms and tastes. However, the development and delivery mechanism –or appropriate portions of it—can and should be globalized for leverage and efficiencies as appropriate.

Creating a powerful emerging-market strategy has moved to the top of the growth agendas of many multinational companies, and for good reason: in 15 years’ time, 57 percent of the nearly one billion households with earnings greater than $20,000¹ a year will live in the developing world….
…To accelerate growth in China, India, Brazil, and other large emerging markets, it isn’t enough, as many multinationals do, to develop a country-level strategy. Opportunities in these markets are also rapidly moving beyond the largest cities, often the focus of many of these companies….... To accelerate growth in China, India, Brazil, and other large emerging markets, it isn’t enough, as many multinationals do, to develop a country-level strategy. Opportunities in these markets are also rapidly moving beyond the largest cities, often the focus of many of these companies. For sure, the top cities are important: by 2030, Mumbai’s economy, for example, is expected to be larger than Malaysia’s is today. Even so, Mumbai would in that year represent only 5 percent of India’s economy and the country’s 14 largest cities, 24 percent. China has roughly 150 cities with at least one million inhabitants. Their population and income characteristics are so different and changing so rapidly that our forecasts for their consumption of a given product category, over the next five to ten years, can range from a drop in sales to growth five times the national average…
 …As developing economies become increasingly diverse and competitive, multinationals will need strategic approaches to understand such variance within countries and to concentrate resources on the most promising submarkets—perhaps 20, 30, or 40 different ones within a country

This article was taken from the May 2011 issue of Wired magazine

http://www.wired.co.uk/magazine/archive/2011/05/start/from-the-editor

The following was offered by Karl Krista based on my last posting of Strategies for Learning from Failure. It shows how important the underlying culture in a company or even country plays a very important role in the perception of risk/uncertainty.

Last July at TEDGlobal, I got into a late-night conversation with Mårten Mickos, who led the sale of software firm MySQL in 2008 for a neat $1 billion. The company -- set up by two Swedes and a Finn -- is celebrated alongside Skypeas an example of how Europe can build successful tech giants. So why, Mickos wondered, did so many of his new friends not want to know him when his earlier businesses had failed?

Failure, we agreed, was still too stigmatised in Europe to allow us to compete on equal terms with Silicon Valley. Outdated social attitudes were encouraging entrepreneurs to be risk-averse and limited in their ambitions, especially where bankruptcy carries heavy legal and cultural burdens (we're looking at you in particular, Berlin). If only fail…failure were more widely accepted as a standard part of an entrepreneur's journey, we declared, then Europe would take more of the leaps that would produce the next Facebooks and Apples. And so began the research that became Matt Cowan's inspiring cover story in this issue.At endless conferences since then, I've heard business founders from Reid Hoffman to Biz Stone urge European startups to be bolder in their approach. Sure, they may fail -- but if they fail fast and learn from it, they will be much more likely to win second time around. The personal experiences recounted here--from Alan Sugar, Jimmy Wales, Richard Moross and others -- are wonderfully honest, self-aware and direct. We hope they'll help change a few attitudes.

We have two cover stories this month: UK newsstand issues have a "Fail fast" theme, but overseas and subscriber copies tell the story of Badoo, the 120-million-member social network you probably don't yet know. Vote for your favourite cover in the poll below, or by downloading our new monthly iPadedition from the iTunes Store. It's not that we were indecisive -- we wanted twice as many chances to fail…..

 

Strategies for Learning from Failure

by Amy C. Edmondson

April, 2011

This edition HBR is dedicated to “failure”. Understanding how to fail is critical for success and the underpinning of a company being ambidextrous (see our blog site for summary of postings in this category)

"The wisdom of learning from failure is incontrovertible. Yet organizations that do it well are extraordinarily rare…….Most executives I’ve talked to believe that failure is bad (of course!). They also believe that learning from it is pretty straightforward: …
…These widely held beliefs are misguided. First, failure is not always bad. In organizational life it is sometimes bad, sometimes inevitable, and sometimes even good. Second, learning from organizational failures is anything but straightforward…..
….Failure and fault are virtually inseparable in most households, organizations, and cultures. Every child learns at some point that admitting failure means taking the blame. That is why so few organizations have shifted to a culture of psychological safety in which the rewards of learning from failure can be fully realized……
…..A sophisticated understanding of failure’s causes and contexts will help to avoid the blame game and institute an effective strategy for learning from failure" 

Five Industries Hit the Reset Button

As a prerequisite for growth in the post-crisis environment, leading companies in the consumer products, telecommunications, industrial goods, automotive, and financial-services industries are shifting their business models and operating practices.

by the Booz & Company industry teams; introduced and edited by s+b Senior Editor Karen Henrie

http://www.strategy-business.com/article/00060?pg=all

There are great insights for these markets and beyond

... The need to respond to the residual effects of the crisis (and the other trends) is forcing many companies to hit the reset button. With renewed discipline, senior leaders are examining their product and service portfolios, business and operating models, process fitness, and cost structure — all through a lens focused more closely on what truly creates value for their companies and their customers. They are figuring out where their companies can excel, based on their distinct capabilities: the things they do better than anyone else. They are using those capabilities to go after opportunities in areas where they know they can win, and scaling back the products and services in areas where they can’t. The best of them have invested, even during their leanest times, to bolster those capabilities that can be capitalized for renewal and growth.

The companies that succeed will also work vigilantly to identify and mitigate the risks — to their supply chains, sources of capital or credit, currency strategies, reputations, regulatory compliance, and so on — that could potentially derail their path forward. And they will proceed with a new, hard-earned understanding that their fortunes — and those of their employees, customers, investors, and other stakeholders — are irrevocably linked with those in other industries and around the globe.

The Global Innovation 1000: How the Top Innovators Keep Winning

Booz & Company’s annual study of the world’s biggest R&D spenders shows why highly innovative companies are able to consistently outperform. Their secret? They’re good at the right things, not at everything

http://www.strategy-business.com/article/10408?pg=all#authors

by Barry Jaruzelski and Kevin Dehoff

A definite read. Included in the posting is “a chart to wet your appetite”

Why are some companies able to consistently conceive of, create, and bring to market innovative and profitable new products and services while so many others struggle? It isn’t the amount of money they spend on research and development. After all, our annual Global Innovation 1000 study has shown time and again that there is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues.

What matters instead is the particular combination of talent, knowledge, team structures, tools, and processes — the capabilities — that successful companies put together to enable their innovation efforts, and thus create products and services they can successfully take to market

The major capabilities are: