Thursday, August 30, 2007

From Design to Market: Commercializing Innovations for Emerging Markets

Sometimes, the most elegant solutions to a problem are also the simplest. Last week, Tapan Parikh from the University of Washington was named Innovator of the Year by MIT’s Technology Review for his small-business software applications designed for mobile phones. Parikh's solutions help farmers and women's self-help groups capture and store information, manage their finances and communicate with lenders.

Parikh's simple, easy-to-use applications buck the trend of faster, more powerful technology for an increasingly sophisticated world. Many leading multinational companies have invested heavily to establish research and development centers in emerging markets, but then question whether the investment is paying off. But perhaps the problem is closer to home than in far-off R&D labs. Advance word from the researchers and developers attending this week's Home-Oriented IT (HOIT) conference in Chennai, India is that developing technology for local markets is sometimes easier than convincing corporate business managers to commercialize them.

Overseas labs frequently produce solutions that, like Parikh’s, receive positive press coverage, awards, and broad recognition for their relevance and quality. Nevertheless, they are often released only regionally and reach a fraction of their potential market. Why? In part, because emerging-market solutions are often simpler and cheaper – giving mature-market business managers visions of declining margins and cannibalization of existing products.

Companies like Microsoft, Intel and Nokia (among others) have developed various strategies for ensuring that emerging-market solutions do not cannibalize existing product lines. And the fact is, many products conceived in overseas labs, or by entrepreneurs, would not find a ready market in North America or Europe anyway. Researchers who assess and articulate the financial and operational opportunities posed by their innovations are better equipped to validate or dissipate the fears of business managers. With accurate assessment of the market opportunity and a realistic view of threats to their existing products, companies will better capitalize on emerging-market trends that are essential to maintaining global market share.

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