Apala Lahiri Chavan, expert in Contextual Innovation and Design for Emerging Markets talks about the importance of thinking locally when approaching global markets.
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Think global, lose local, does that sound a bit strange, how can one think globally and yet lose locally? Well take a look at what happened to Nokia in India where they lost market share in certain category of phones to a 2008 local Indian startup company called Micromax.
Or let's move to China. Take a look at Baidu, the Chinese search engine with about 99% market share, how did that happen, with major international competition right there? Do you know what the name Baidu means? I ask because there is a clue there about the success of Baidu. The word Baidu literally means hundreds of times, an allusion to a 12th century Chinese poem. It represents a persistent search for the ideal.
So you can see right from the name, there is a connection to the local context, a special significance that makes the Chinese user population resonate with Bidu, look at Baidu more than the just a search engine, and why not because Baidu has features such as the very popular Post Bar, the largest bulletin board of its kind in China, or the free online music content it provides.
It's Baidu ability to understand local needs and aspirations and to act on them that makes Bidu such a winner locally. And this is what I have been saying for a decade now as I've traveled the world and spoken at conferences but I will repeat it once again because it's so very important today.
If you are only thinking globally you won't win locally. Why is it so important today, why can you not afford to let this happen today? Three critical reasons.
Recent developments, number one, all the action is moving to the emerging markets. Consider this 57% of the nearly one billion households with more than $20,000 of annual income will be living in the emerging markets in the next 15 years. Or the fact that seven emerging economies, that is China, India, Brazil, Mexico, Russia, Indonesia, and Turkey are expected to contribute about 50% of the global GDP growth in the next decade.
With all this action moving to the emerging markets, how can you afford not to think locally? Second reason, the local population, the local user population in the emerging markets, they've changed a lot in the last decade, and how so, the local population today, is very articulate, very clear, and very demanding about the kinds of products and services that they won't to buy and use.
As Mckinsey quarterly pointed out in a very interesting article in April of 2011, long gone are the days when global corporations could charge emerging market customers a premium for products that were developed, designed, produced in completely different context.
Today the ability to succeed in emerging markets requires not only that you understand local preferences, local tastes but also that you can actually produce the products and services in the context of those cultures.
And third reason, the emerging markets are hot beds of entrepreneurship. So if you are not thinking locally about your potential emerging market customer be absolutely sure there is a local entrepreneur next to your local potential customer who is already thinking.
In fact, the emerging markets are very much like galaxies unto themselves and you have to aim your Hubble telescope of strategy at the emerging markets deep fields and understand the local laws of nature that will enable you come up with the most appropriate products, just like the Hubble telescope actually did, when it was aimed at an area of space which didn't seem to have anything in it and when the images were processed what the scientists found were 30,000 galaxies in that particular deep field of space.
So I recommend right now, get your Hubble telescopes out and aim them at the emerging markets. Remember the emerging markets have already aimed their strategy telescopes at the mature markets that developed market deep fields and are experiencing immense successes. So it's time that you start the other way around and start thinking locally. You will lose nothing but your apprehensions about not having the right products.
About Apala Lahiri Chavan, Chief Oracle and Innovator, Human Factors International, Inc.
Apala is a world-renowned expert on Contextual Innovation and Design for Emerging Markets—the discipline of creating breakthrough product concepts and adapting existing products, services, and technologies to new markets. HP Labs, adidas, Nokia, Sony Ericsson, NCR, and Intel are just a few of the companies that have benefited from Apala's innovative, pioneering techniques in this exciting and growing field.