A major shift in the way global businesses operate is occurring due to the increasing demand for new innovations. Rapidly developing economies such as Brazil, India, China, Russia and Mexico are now competing on the world’s stage and companies are beginning to realize that in order to penetrate world markets, we must learn from them. In “How companies win in the Knowledge Economy”, the authors suggest that companies will succeed by sensing that the knowledge about emerging market needs are dispersed throughout the world. Similarly for established multinationals, success will lie in harnessing knowledge from outside their subsidiaries. By searching for ideas and innovation with a global perspective, companies will be able to sense and mobilize new information and be better positioned to compete. Doz, Santos and Williamson go on to illustrate three levels of competition facing a multinational company. The first comes in the form of sensing, or identifying new resources. Next is the integration of these new opportunities followed by the optimization of operations. The article cites the two major advantages of multinationals as: 1) the ability to leverage alternative distribution channels, and 2) the ability to gain access to cheap labor and raw materials. I would also like to add that multinationals may benefit by creating a global brand, obtaining and commoditizing natural resources as well as infusing new business models. This new model of open innovation and collaboration is a sigh of relief as it is a leap away from the ego-driven principle that all great ideas are generated at home.
With these concepts in mind, we must next look at who will be served by these new metanational conglomerates. According to C.K. Prahalad, two-thirds of the world’s population (4 billion people) lives on less than $2 per day. This “long tail” group serves as both an unsaturated market as well as a source for new innovations and growth opportunities. More-so, companies must begin to realize their obligation to social consciousness. Providing basic needs like power and communication to developing countries can create a disruption in many business models. This was evident when Honda began producing motorized bicycles and served the population of consumers that typical motorcycle companies found unattractive. Will we soon see the day of the $3,000 – $5,000 car that enables less privileged consumers to afford practical transportation? In “The Great Leap”, the authors cite that more than half of the world’s population does not have reliable telecommunications service. The subsequent story of the Grameen Telecom Company is a brilliant example of how a creative approach and willingness to “pay it forward” can result in a brand new market. When a company like this can add such great value to a given community it then is able to exploit its first mover advantage, learn from the new culture and act as a local hero.
These efforts will shape the macroeconomic landscape as we know it by creating a more level playing field for emerging markets. It only makes sense that companies venture out into the world in search of new ideas and use their global reach to create entirely new markets. So, let’s take this one step farther and include the realm of digital worlds. Just recently, the American Cancer Society raised over $40,000 in a virtual walk-a-thon featured on secondlife.com, a user created on-line world. Is this the evolution of opportunities for metanationals? Will we eventually need to venture into these worlds to experience the latest innovations?
