Thanks to IiEM blog

Rob Katz — Wed, 24 May 2006 08:07:26 -0400

I first heard of this article via one of JeannieY's posts at the excellent Innovations in Emerging Markets (IiEM) blog. Check out what they have to say: Emerging Market Companies Are Main Engines of Innovation.

Innovation Blowback

John Paul — Tue, 23 May 2006 17:54:18 -0400

In his 1997 book, The Innovator's Dilemma, Harvard Business School professor Clayton M. Christensen showed that an upstart with an innovation that disrupts existing business models can beat out the big guys nearly every time. What's more, he said, venerable companies seal their doom by doing just what they're supposed to do: pleasing their most valuable customers.

Nearly a decade later, this threat for established companies is larger than ever, but is coming from a direction most aren’t even looking towards: the base of the pyramid. That’s the focus of a new McKinsey report, Innovation blowback: Disruptive management practices from Asia, which posits that Western companies think too narrowly about the emerging world, and that they do so at their own peril.

Blowback, as defined in the report, describes the unexpected consequences of the investments that Western companies have made in emerging markets. For instance, the presence of foreign businesses and the competition they bring often forces local businesses to take their game up a level. In doing so, they become more competitive on a global scale, threatening the foreign companies' home markets.

More to the point, the report states that companies can gain key capabilities by serving low-income customers. In a market characterized by a lack of infrastructure, low education, and little disposable income, businesses must innovate to survive. These cost and management innovations become strong competitive advantages for a company, regardless of what market they are serving.

NextBillion.net - Development Through Enterprise - Innovation Blowback - Comments

Thanks to IiEM blog

Innovation Blowback