Innovate or Adapt?
If you don’t know the market, there are any number of hypotheses you have that may or may not pan out. When you’re new to a market, you need to go native to understand how a product will be received. When Gillette expanded into the global market, the company repackaged the same razor. The market penetration of the Gillette razor was only 30% in India, indicating a problem with the product. By spending thousands of hours living and shaving with the target user group, they learned that the target market doesn’t typically use running water. Their razor needed to be easier to rinse. Men often hold a mirror in one hand while shaving with the other, so the razor needed to be easier to grip. Finally, Indians go longer between shaving, so the razor needed to work well for longer hair. Gillette reworked its design and manufacturing process to meet its target market needs and increased its market share to 70%.
“India is only one or two percent of our company’s revenues but it’s growing. We’re going to put a world headquarters there so we can learn.” ~ Cisco Representative. Sometimes you need to develop products that offer 50% of the functionality for 15% of the price. But sometimes you have to leapfrog the infrastructure of the country. “When I drive to work in Silicon Valley, my cell phone drops in the same spot every time. When I visit my mother in rural India, my phone never drops. India has brand new cellular infrastructure.”
How do you provide a consistent product when you’re hyper-localized? At the same time, you have to look at what makes sense for each market. Chiclets are sold in packages of eight. They failed miserably in India because it was too expensive. No one eats eight pieces of gum at a time. You eat one or two, put the rest in your pocket and they melt. Chiclets failed in India because it was too warm. Think local act global is the new paradigm. Local entrepreneurs are out-innovating multinationals. Wants and needs in countries with lower per capita income are often the same but people have less purchasing power. Innovations need to be affordable, accessible, work with resource constraints, fuse cultures, extend learning from local markets to global markets, and consider the local climate. For scalable enterprises, think local, innovate local, produce local, consume local. If you go to digital technology, it’s all fixed cost. The first copy of Windows NT costs $600 million. The next copies were all free. For some products, you need economies of scale. You need to act fast and adapt to a global market.