Nuevo Modelos De Negocios

SPOTLIGHT ON BUSINESS MODEL INNOVATION

Spotlight

ARTWORK Damián Ortega Stone—Constructive failures II, 2005 wooden structure, 158 x 80 x 162 cm

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Matthew J. Eyring (meyring@innosight.com) is the president of Innosight, a strategic innovation consulting and investment firm with offices in Boston, Singapore, and India.

Mark W. Johnson (mjohnson@innosight. com) is thechairman of Innosight and the author of Seizing the White Space: Business Model Innovation for Growth and Renewal (Harvard Business Review Press, 2010).

Hari Nair (hnair@innosight. com) is a venture partner in India at Innosight's business-building arm, Innosight Labs.

New Business Models In Emerging Markets
Targeting the middle market can be lucrative— but companies won’t be able to deliverunless they start from scratch. by Matthew J. Eyring, Mark W. Johnson, and Hari Nair

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PHOTOGRAPHY: STEPHEN WHITE, COURTESY WHITE CUBE

RIGHT NOW more than 20,000 multinationals are operating in emerging economies. According to the Economist, Western multinationals expect to find 70% of their future growth there—40% of it in China and India alone. But if the opportunity is huge, so are theobstacles to seizing it. On its 2010 Ease of Doing Business Index, the World Bank ranked China 89th, Brazil 129th, and India 133rd out of 183 countries. Summarizing the bank’s conclusions, the Economist wrote, “The only way that companies can prosper in these markets is to cut costs relentlessly and accept pro t margins close to zero.” Yes, the challenges are signi cant. But we couldn’t disagree morewith that opinion. We have seen the opportunities of the future on a street corner in Bangalore, in a small city in central India, in a village in Kenya—and they don’t require companies to forgo pro ts. On the surface, nothing could be more prosaic: a laundry, a compact fridge, a money-transfer service. But look closely at the businesses behind these o erings and you will nd the frontiers of busi-ness model innovation. These novel ventures reveal a way to help companies escape stagnant demand at home, create new and pro table revenue streams, and nd competitive advantage. That may sound overly optimistic, given the di culty Western companies have had entering emerging markets to date. But we believe they’ve struggled not because they can’t create viable o erings but because they gettheir business models wrong. Many multinationals simply import their domestic models into emerging markets. They may tinker at the edges, lowering prices—perhaps by selling smaller sizes or by using lower-cost labor, materials, or other resources. Sometimes they even design and manufacture their products locally and hire local country managers. But their fundamental pro t formulas and operating modelsremain unchanged, consigning these companies to selling largely in the highest income tiers, which in most emerging markets aren’t big enough to generate sufficient returns.
January–February 2011 Harvard Business Review 89

SPOTLIGHT ON BUSINESS MODEL INNOVATION

What’s often missing from even the savviest of these e orts is a systematic process for reconceiving the business model. For morethan a decade, through research and our work in both mature and emerging markets, we have been developing our business model innovation and implementation process (see “Reinventing Your Business Model,” HBR December 2008, and “Beating the Odds When You Launch a New Venture,” HBR May 2010). At its most basic level, the process consists of three steps: Identify an important unmet job a targetcustomer needs done; blueprint a model that can accomplish that job profitably for a price the customer is willing to pay; and carefully implement and evolve the model by testing essential assumptions and adjusting as you learn.

Emerging markets teem with “jobs to be done.” Even the basic needs of their large populations may still be unmet.

Established companies entering emerging markets should...