How MNC's Tap Indian Talent and Innovation to succeed

Here is an Article on how MNC's Tap Indian Talent and Innovation and succeed

You might think that emerging country companies are more ready to address the needs of and win customers in other emerging markets. Indeed, India's Godrej Consumer Products Ltd. is expanding rapidly via acquisitions of Issue Group and Cosmetica Nacional in Latin America, while China's Huawei has a large direct presence in India's telecom market. But we believe that multinationals from rich countries who are already developing products for one emerging market possess unique advantages that can help them win in other emerging markets too.
For example, In August 2011, consumers in Mexico's fifth largest urban area, Toluca, were offered a new product, PureIt, a home water purifier that enabled them to not have to lug 40-pound garrafones (bottles) of drinking water to their homes from the grocery store. Consumers in many developing countries don't trust the quality of the municipal water supply; some boil their own water, others buy bottled water and yet others purify the water in their own homes. Mexican consumers traditionally did not install home water purifiers, so Unilever was building a new category. PureIt, sold by Anglo-Dutch giant Unilever was not designed in Mexico or in Europe however. A Unilever R&D team in India first developed and introduced the countertop product, which includes innovative four-stage germ kill technology, in Chennai, India in early 2005. PureIt became a grand market success in India, winning a Golden Peacock Innovative Product/Service Award and acclaim in UNESCO's Water Digest. Unilever now sells the PureIt family of products in Brazil, Indonesia and Nigeria in addition to India.
Similarly, California-based Cisco Systems launched an entire new global business unit called Smart+Connected Communities from its Bangalore, India location, dubbed Cisco East. The smart building router was the first product developed by the team in Bangalore first for the Indian market but is now available globally. Wim Elfrink who led Cisco East for five years was quoted in the Economic Times of India "The ideas and concepts are coming from our Bangalore center. So it's not that we do things in India for India, we are doing for the Asia Pacific, for the US. This is not something I had anticipated three years ago."
Panasonic of Japan is designing air-conditioners in India that address the unique requirements of tropical climates and customers accustomed to an air blast from swamp coolers. Indian engineers working for Panasonic and its outsourced partners are now designing products for other tropical emerging countries. Yamaha, another Japanese company has found a huge market for its headquarters-designed motorcycles in India where they are used for primary commuting, not just for recreation. This year, it decided to develop a $500 motorcycle in India and will use the design to address emerging markets, according to Yamaha India CEO Hiroyuki Suzuki. Conglomerate Siemens of Germany is designing innovative medical scanners using a distributed team of engineering in Europe and in Goa, India. Peter Löscher, Siemens chief executive, says: "A good idea or product from, for instance, India can be plugged into a global system of sales and manufacturing."
The takeaway from Unilever, Cisco, Panasonic, Yamaha and Siemens is that innovative thinking from low-cost countries combined with rapid action can benefit rich country companies disproportionately.
Four factors make it possible for American, European and Japanese multinationals to use globally distributed product development and engineering capabilities to leapfrog local firms from emerging markets:

• Techniques such as Design for Six Sigma (DFSS) have enabled leading companies to become more disciplined about the engineering and R&D process. This enables large initiatives to be parsed and subdivided across time zones and cultural boundaries more readily than in the past.


• Low cost three-dimensional printers enable near-simultaneous creation of physical prototypes on multiple continents. So a new design file from Beijing can be transmitted in minutes to the test center in Mumbai, to the corporate lab in Chicago and to the potential market in Cape Town and teams can have physical prototypes ready in a day without having to wait for shipping, customs and other delays.


• The extremely low cost for video conferencing using services such as Skype or GoToMeeting enables participants separated by 11 or 12 hours of time zones to collaborate in real time.


• Companies from rich countries often already own a reservoir of intellectual property that can be combined with the innovative ideas from the low-cost country innovators to produce a winning combination.

Seizing this missed opportunity for reverse innovation should be on the agenda of every multinational already succeeding in one emerging market.

 by Vijay Govindarajan and Gunjan Bagla

Frugal Innovation with Jugaad Mindset

Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, famously coined the term "frugal engineering" in 2006. He was impressed by Indian engineers' ability to innovate cost-effectively and quickly under severe resource constraints. And under Ghosn's leadership , Renault-Nissan has proactively embraced frugal engineering and become one of the world's leading producers of both electric cars as well as low-cost vehicles — two of the fastest growing and most promising market segments in the global automotive sector.
Recently, in New York, we participated in a panel discussion organized by the Asia Society called "Jugaad Innovation: Reigniting American Ingenuity" (you can watch a video here). We were honored to have Ghosn as our key panelist. During the panel discussion, Ghosn explained that Western automakers must sacrifice the "bigger is better" R&D model and adapt to frugal engineering.

In today's resource-constrained environment, Western firms are feeling the growing pressure to "do more with less" — that is, deliver more value to customers at less cost. CEOs of these firms can emulate four best practices initiated by Carlos Ghosn at Renault-Nissan:

1) Create "good enough" products that deliver high value for money: Over-engineering products is no longer sustainable — both for economical and environmental reasons. Rather, Western firms need to make simplicity a key tenet of their innovation process by developing "good enough" offerings that deliver significant value for money to cost-conscious consumers. For example, in 2004, Renault launched Logan, a small, no-frills family car. At a starting price of $10,000, the car is built with drastically simplified product architecture and minimal components. In addition to a stripped-down, modern design, Logan is reliable and energy efficient. As a result, it has become Renault's best-selling car across recession-weary European markets as well as in many emerging markets. Building on Logan's success, Renault has now developed an entire line of low-cost vehicles (under the brand Dacia) all modeled after Logan's technology platform.

2) Foster healthy rivalry among global R&D teams: CEOs may find it difficult to persuade R&D teams in the US and Europe — used to abundant resources and pushing the technology frontier for its own sake — to embrace frugal innovation. Yet engineers and scientists love challenges. Western CEOs can create challenges for global R&D teams by introducing artificial constraints that foster a sense of urgency and healthy rivalry that can lead to frugal solutions. In one instance, Ghosn requested three different R&D teams — one each from Japan, France, and India — to come up an engineering solution for the same technical problem. The teams came up with solutions of equal quality — yet the Indian engineers' solution cost only one-fifth of what the French and Japanese engineers' solutions cost.

3) Tap partners in emerging markets who excel at innovating more with less. Rather than relying exclusively on in-house R&D teams to develop frugal solutions, companies in developed economies need to connect with entrepreneurial organizations in emerging markets that have a knack for innovating on a shoestring. Recognizing that even its least-expensive pickup truck was five times costlier than the Indian market could afford, Nissan established an R&D and manufacturing joint venture with Ashok Leyland, an Indian commercial vehicle manufacturer. Ghosn recounts with humor how Dr. V. Sumantran, Non-Executive Vice-Chairman of Ashok Leyland, paid a visit to the basement of Nissan's technical center in Atsugi, Japan and pointed to a four-generation old Nissan pick-up truck. He told Nissan's baffled head of product planning: "Give us the design specs of this vehicle and our Indian engineers will use it as baseline to develop a great-looking yet affordable and robust pick-up truck fit for the tough Indian roads." And they did it. The result is DOST, an entry-level pick-up truck with a starting price of Rs 3.7 lakhs ($6,600). Since its launch in September 2011, DOST has garnered more than a third of India's hypercompetitive light commercial vehicles market. The Ashok Leyland-Nissan joint venture now plans to introduce DOST in other emerging markets in Southeast Asia and the Middle East.

4) Send your top executives to emerging markets to cultivate the jugaad mindset:
Ultimately frugal innovation is not just about doing more with less. It's about learning how to innovate under severe constraints and turn extreme adversity into an opportunity for growth. But it's hard for Western executives to cultivate this frugal, flexible and inclusive mindset — which we call jugaad — in resource-rich and relatively stable Western economies. That's why Ghosn dispatched Gérard Detourbet, a senior executive in Paris who was in charge of Renault-Nissan's entry-level cars, to India. From his new base in Chennai, Detourbet will be leading the development of a "global small car" — an entry-level car priced at around Rs 3 lakhs ($5,200) that will first be commercialized in India and then introduced in other emerging markets like Brazil, Indonesia, and South Africa. When Detourbet returns to Renault-Nissan's headquarters in Paris, he is poised to bring with him the jugaad mindset he honed in India. As Ghosn, a Brazilian-born French national of Lebanese descent, explains: "We don't go to emerging markets to just bring back a product, but to learn something — like new processes or a whole new mindset."

To win in today's resource-constrained global economy, Western CEOs must follow Ghosn's lead in embracing frugal innovation. By inculcating the jugaad mindset within their enterprise, Western CEOs will be able to build a resilient organization that can deliver significantly more value to customers using fewer resources.

Source
Harvard Business  Review