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CRACKING FRONTIER MARKETS - Coggle Diagram
CRACKING FRONTIER MARKETS
Market-Creating Innovation
Benefit
Catalyzes industries that buoy frontier economies
Foster inclusive, sustainable development
Generates new growth for companies
Characteristics
Offer many people
access
to a product or service that was previously unaffordable or otherwise unattainable
Leverage business models and value chains that focus on
profitability before growth
Generated
by and for a local market
, or designed with a local market in mind
Generate
local jobs
, which fuel the local economy
Can be
scale up
Innovation
The process by which a society develops
Benefit
Funds infrastructure
Cultivates institution
Mitigates corruption
When a country’s prosperity stalls out despite a lot of activity within its borders, that country might not have a development problem. It might have an
innovation problem
.
Provide a strong economic foundation
Market-creating innovators
The ability to identify opportunities where there seem to be
no customers
The ability to create business model that upend the way things have always be done
Pull in the infrastructure to deliver their products
Products and services that speak to unmet local needs, create local jobs, and scale up quickly
Lesson Learn To Succeed In Economy (Frontier Markets) - Galanz Case
Not just making an inexpensive microwave oven; the company developed a business model that involved new forms of advertising, educating Chinese customers, and building retail and distribution capabilities
Did not invent technology or invest in R&D at the outset; it borrowed from other manufacturers
Saw the potential for a thriving microwave market in China (even though experts deemed the population too poor)
Patient in terms of growth but impatient for profits; ran its manufacturing plants at 100% capacity, grew its resources as it created a market in China, and didn’t build a global brand until it had comfortably and profitably dominated the local market.
Galanz developed local talent itself with no expense in training and hiring; Instead of waiting for the government to invest in the education
Corruption, Institutions, and Infrastructure
Infrastructure
Infrastructure that is pulled into a market as needed, might actually be the best, fastest, and most cost-effective strategy in the long run
Market-creating innovations can be a powerful catalyst for improvements to infrastructure and education
Corruption
Solution
Take an approach called
pushing
(have the thinking backward), prioritizes top-down, government- or NGO-led efforts as a necessary precondition
Ex: We can’t build factories until we have good roads on which to transport our products, We can’t attract international partners until we have reliable courts
Caused by
Dilapidated or nonexistent infrastructure
The lack of functioning institutions (institutional voids)
But in practice, it's opposite
Market-creating innovations don’t wait for such obstacles to be removed by resources that are pushed in
They essentially
pull
in the necessary resources— creating workarounds or funding the infrastructure and institutions needed to deliver their products—even if those efforts are not initially supported by the local government
Guiding Principles
A market-creating innovation is more than just a product or a service
Obstacles can be mitigated through innovation; innovation doesn’t have to wait for their elimination
Most existing products have the potential to create new growth markets if we make them more affordable
When innovations target non-consumption, scaling them up becomes inexpensive
Every nation has within it the potential for extraordinary growth
Conclusion
The key to cracking frontier economies lies in creating new markets that serve the billions of non-consumers unable to find a product or service to help them solve an important problem
Innovations that generate or connect to new markets that societies can create jobs, pay taxes, and build their infrastructure and institutions
The way to create something really powerful => strip away the layers of conventional thinking about what’s not possible and start to reimagine what is