A Whole New World: Enterprise Innovation in Emerging Economies

Filed Under Innovation

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Arwen Heredia

January 27, 2014

A lot of the time, when we talk about business innovation and market relevance, we’re collectively referring to major markets like the United States and Europe. And while it’s unlikely that these regions will be eclipsed by smaller sectors any time soon, forward-thinking leaders recognize the necessity of focusing some energy on innovation in emerging markets.

Creating successful, sustainable innovation programs in these locales, however, is quite a bit different from what’s being done in dominant economies.

The Mobile Juncture

As technology shrinks the world and makes global collaboration possible, the role of mobile technology is critical to driving enterprise innovation in emerging markets. From a previous blog: “According to KCPB partner Mary Meeker’s 2012 Internet Trends presentation, there are now 1.1 billion mobile 3G subscribers worldwide, representing a 37% annual growth rate…Additionally, one of the most cited stats from Meeker’s report shows that in 2014, use of mobile devices will surpass desktop and laptop use for both personal and work-related online activities.” And that was over a year ago.

To provide some perspective, this recent report from Upstream on 2013 mobile behavior in non-dominant economies shows that just shy of 45% of mobile users in Nigeria utilize smartphones to access the internet. And, 36% are prepared to spend over $200 on devices and services per month. More importantly, about 80% of those consumers use their phones for business. What this means for companies focused on innovation is that there’s a (time-sensitive) opportunity to enter these markets through an existing channel, identify needs and gaps specific to these regions, and drive innovation efforts in areas where growth is happening and competition is less impacted.

Diving In, Rolling Out

Says The Guardian’s Christopher Sveen, “It is both internet and mobile technologies that are revolutionising rural areas and helping to build local markets…emerging economies are potentially leapfrogging their own industrial revolution by deploying state-of-the-art transformational technologies, adapting solutions to a local context of specific challenges directly to the end-consumer.”

Additionally, companies that are truly capitalizing on innovation opportunities in emerging markets are extremely quick to collaborate, implement new technologies and adapt them to the unique needs of these regions.

“In other words,” says Forbes’ Haydn Shaughnessy, “they typically seem far more ready to adopt radical adjacency strategies, a factor that I’ve pointed to a few times as a source of Amazon and Apple’s success. Emerging market champions seems less hide-bound by MBA theory.” The focus on R&D spending is also quite considerable comparatively to major markets, Shaughnessy warns leaders in established markets — American especially — to avoid complacency in a post-iPhone era where innovation drivers are more about outshining competitors than tapping into unclaimed territory.

As markets shift and evolve, it’s clear that enterprise innovation efforts will need to be consistently flexible. As change spawns innovation and innovation births competition, decision-makers will need to make the choice to redirect strategies towards rapidly developing markets and ideally, welcome a new generation of international competitors.