Global Innovators from Emerging Markets

There's never been a better time for innovators from emerging markets. Whether you're an agribusiness giant in Brazil, a software entrepreneur in Mumbai, or a contract manufacturer in Taiwan, the need-and opportunityfor emerging-market innovators has never been greater. Both macro- and microeconomic forces have conspired to make innovation a top-of-mind strategic aspiration for every export-minded BRIC executive. The schwerpunkt of global competitiveness is rapidly shifting away from "low cost" to "new value" as the organizing principle for success. From my on-the-ground observations of BRIC enterprises (and a few in Chile, Colombia, and Taiwan, as well), it's clear that the senior leadership of these companies wants innovation to be at the hard core of their business models. Two unambiguous structural shifts are driving this growing ambition. The fi rst is the rise of commodity and labor costs. As the emerging markets have grown, their raw materials and human resources have grown signifi - cantly more expensive. Delivering on the "low-cost supplier" promise has become much more diffi cult. Pincered between a slower-growth West and their own expansion imperatives, emerging-market fi rms are looking for new ways to create new value. Simple diversifi cation isn't enough; they need to innovate. The other structural shift comes from the demand side: customers and clients who once told emerging market fi rms to "build to spec" or "conform to requirements" at the lowest possible price-a.k.a. the China price-are now looking for novel value and new features, as well. Where Walmart once facilitated China's transformation into a low-cost manufacturer capable of delivering enormous quantities of good-enough products to its supply chain, the Hewlett-Packards, IBMs, Vodaphones, and Apples are now looking to partner with suppliers who can deliver provocative novelty as well as low-cost quality. And emerging-market fi rms are responding. Taiwan's HTC, for example, is an emerging-market innovator whose products neither look nor feel like "me, too" or "me, three" knock-offs of American or Japanese design. Indeed, a look at Samsung's or SK Telecom's product portfolio suggests that while South Korea may be an emerging market, its innovation efforts are world class. Of the two transformations, the demand-side shift is the most signifi cant because innovation isn't what innovators do, it's what customers and clients adopt. The conceptual revolution that is sweeping through emerging-market enterprises worldwide is the recognition that customersnot currency or human capital or technology-are their most important asset. The single variable most responsible for the acceleration of emerging-market innovation is the intensifying relationship of emerging-market fi rms with innovative customers and clients. To put it another way, Walmart and its customers demand a different kind of innovation than Accenture and its clients do. The gradual global broadening of the innovative customer portfolio has expanded both the need and the opportunity for emerging market entrepreneurs and enterprises alike to become more sensitive to innovation opportunism. Post-fi nancial crisis access to global capital, brains, digital networks, and markets has made that easier in 2011 than it was in 2001. The relative robustness of the BRIC economies has made them more attractive to institutions with money to lend or invest. Immigration-the relatively free fl ow of human capitalhas rivaled investment-the relatively free fl ow of fi nan-cial capital-as the critical enabler for innovation capability. …