New Business Models in Emerging Markets
Raw Text
Navigation Menu
Subscribe
Sign In
Account Menu Account Menu Hi, Â Guest
Search Menu
Close menu
CLEAR
SUGGESTED TOPICS
Explore HBR
Latest
The Magazine
Ascend
Podcasts
Video
Store
Webinars
Newsletters
Popular Topics
Managing Yourself
Leadership
Strategy
Managing Teams
Gender
Innovation
Work-life Balance
All Topics
For Subscribers
The Big Idea
Data & Visuals
Reading Lists
Case Selections
HBR Learning
Subscribe
My Account
My Library
Topic Feeds
Orders
Account Settings
Email Preferences
Log Out
Sign In
Subscribe
Latest
Podcasts
Video
The Magazine
Ascend
Store
Webinars
Newsletters
All Topics
The Big Idea
Data & Visuals
Reading Lists
Case Selections
HBR Learning
My Library
Account Settings
Log Out
Sign In
Your Cart
Visit Our Store
My Library
Topic Feeds
Orders
Account Settings
Email Preferences
Log Out
Reading Lists
1 free
s
last free article
Subscribe
Create an account
Disruptive innovation
by
Matthew Eyring,
Mark W. Johnson,
and
Hari Nair
by
Matthew Eyring,
Mark W. Johnson,
and
Hari Nair
From the Magazine (January–February 2011)
Tweet
Post
Share
Annotate
Save
Get PDF
Buy Copies
Summary.
Reprint: R1101E Many Western multinationals expect to find most of their future growth in emerging economies. But they have frequently struggled to exploit the opportunity, relentlessly cutting costs and accepting profit margins close to zero. The problem, say the authors, who are all with the innovation consultancy Innosight, is not that those companies can’t create viable offerings but that simply transplanting their domestic business models to the new markets won’t work. They must devise fundamentally new models—by identifying an important unmet job that consumers need to do; performing that job profitably at a price the customer will pay; and carefully implementing and evolving the model by constantly testing assumptions and making adjustments. Drawing on their experience with investing in, incubating, and consulting for companies that have created 20 new business models in developing markets, the authors describe the vast potential demand represented by the “middle market” in emerging economies—the millions of people who have the desire and wherewithal to pay for goods and services, from refrigeration to clothes washing to money transfers, that will help them do the jobs better than any other current offerings.
Tweet
Post
Share
Annotate
Save
Get PDF
Buy Copies
The Idea in Brief
Multinationals are looking to emerging markets for future growth. But in trying to transplant their domestic business models, they end up slashing margins or confining themselves to the higher-income tiers, which aren’t big enough to generate sufficient returns.
They are overlooking a vast opportunity: the underserved “middle market” of people who struggle to meet basic needs such as refrigeration and clothes washing with low-end options because high-end alternatives are beyond their reach.
To exploit this market, companies must identify important unsatisfied needs, devise fundamentally new business models that can meet them profitably and affordably, and carefully implement and evolve the models by continually testing assumptions and adjusting them.
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 the obstacles 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 profit margins close to zero.”
January–February 2011
New!
Start Course
Learn More & See All Courses
Read more on Disruptive innovation or related topics Experimentation , International business , Emerging markets , Business models and Growth strategy
ME Matthew Eyring is the managing partner of the strategy and innovation consulting firm Innosight.
Mark W. Johnson is co-founder and senior partner of the strategy consulting firm Innosight and author of Lead from the Future  (HBR Press, 2020).
HN Hari Nair ( hnair@innosight.com ) is a venture partner in India at Innosight’s business-building arm, Innosight Labs.
Tweet
Post
Share
Annotate
Save
Get PDF
Buy Copies
New!
HBR Learning
Start Course
Learn More & See All Courses
Read more on Disruptive innovation or related topics Experimentation , International business , Emerging markets , Business models and Growth strategy
Partner Center
Latest
Magazine
Ascend
Topics
Podcasts
Video
Store
The Big Idea
Data & Visuals
Case Selections
HBR Learning
Subscribe
Explore HBR
The Latest
All Topics
Magazine Archive
The Big Idea
Reading Lists
Case Selections
Video
Podcasts
Webinars
Data & Visuals
My Library
Newsletters
HBR Press
HBR Ascend
HBR Store
Article Reprints
Books
Cases
Collections
Magazine Issues
HBR Guide Series
HBR 20-Minute Managers
HBR Emotional Intelligence Series
HBR Must Reads
Tools
About HBR
Contact Us
Advertise with Us
Information for Booksellers/Retailers
Masthead
Global Editions
Media Inquiries
Guidelines for Authors
HBR Analytic Services
Copyright Permissions
Manage My Account
My Library
Topic Feeds
Orders
Account Settings
Email Preferences
Account FAQ
Help Center
Contact Customer Service
Follow HBR
Your Newsreader
About Us
Careers
Privacy Policy
Cookie Policy
Copyright Information
Trademark Policy
Higher Education
Corporate Learning
Harvard Business Review
Harvard Business School
Single Line Text
Navigation Menu. Subscribe. Sign In. Account Menu Account Menu Hi,  Guest. Search Menu. Close menu. CLEAR. SUGGESTED TOPICS. Explore HBR. Latest. The Magazine. Ascend. Podcasts. Video. Store. Webinars. Newsletters. Popular Topics. Managing Yourself. Leadership. Strategy. Managing Teams. Gender. Innovation. Work-life Balance. All Topics. For Subscribers. The Big Idea. Data & Visuals. Reading Lists. Case Selections. HBR Learning. Subscribe. My Account. My Library. Topic Feeds. Orders. Account Settings. Email Preferences. Log Out. Sign In. Subscribe. Latest. Podcasts. Video. The Magazine. Ascend. Store. Webinars. Newsletters. All Topics. The Big Idea. Data & Visuals. Reading Lists. Case Selections. HBR Learning. My Library. Account Settings. Log Out. Sign In. Your Cart. Visit Our Store. My Library. Topic Feeds. Orders. Account Settings. Email Preferences. Log Out. Reading Lists. 1 free. s. last free article. Subscribe. Create an account. Disruptive innovation. by. Matthew Eyring, Mark W. Johnson, and. Hari Nair. by. Matthew Eyring, Mark W. Johnson, and. Hari Nair. From the Magazine (January–February 2011) Tweet. Post. Share. Annotate. Save. Get PDF. Buy Copies. Print. Summary. Reprint: R1101E Many Western multinationals expect to find most of their future growth in emerging economies. But they have frequently struggled to exploit the opportunity, relentlessly cutting costs and accepting profit margins close to zero. The problem, say the authors, who are all with the innovation consultancy Innosight, is not that those companies can’t create viable offerings but that simply transplanting their domestic business models to the new markets won’t work. They must devise fundamentally new models—by identifying an important unmet job that consumers need to do; performing that job profitably at a price the customer will pay; and carefully implementing and evolving the model by constantly testing assumptions and making adjustments. Drawing on their experience with investing in, incubating, and consulting for companies that have created 20 new business models in developing markets, the authors describe the vast potential demand represented by the “middle market” in emerging economies—the millions of people who have the desire and wherewithal to pay for goods and services, from refrigeration to clothes washing to money transfers, that will help them do the jobs better than any other current offerings. Tweet. Post. Share. Annotate. Save. Get PDF. Buy Copies. Print. The Idea in Brief. Multinationals are looking to emerging markets for future growth. But in trying to transplant their domestic business models, they end up slashing margins or confining themselves to the higher-income tiers, which aren’t big enough to generate sufficient returns. They are overlooking a vast opportunity: the underserved “middle market” of people who struggle to meet basic needs such as refrigeration and clothes washing with low-end options because high-end alternatives are beyond their reach. To exploit this market, companies must identify important unsatisfied needs, devise fundamentally new business models that can meet them profitably and affordably, and carefully implement and evolve the models by continually testing assumptions and adjusting them. 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 the obstacles 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 profit margins close to zero.” January–February 2011. New! Start Course. Learn More & See All Courses. Read more on Disruptive innovation or related topics Experimentation , International business , Emerging markets , Business models and Growth strategy. ME Matthew Eyring is the managing partner of the strategy and innovation consulting firm Innosight. Mark W. Johnson is co-founder and senior partner of the strategy consulting firm Innosight and author of Lead from the Future  (HBR Press, 2020). HN Hari Nair ( hnair@innosight.com ) is a venture partner in India at Innosight’s business-building arm, Innosight Labs. Tweet. Post. Share. Annotate. Save. Get PDF. Buy Copies. Print. New! HBR Learning. Start Course. Learn More & See All Courses. Read more on Disruptive innovation or related topics Experimentation , International business , Emerging markets , Business models and Growth strategy. Partner Center. Latest. Magazine. Ascend. Topics. Podcasts. Video. Store. The Big Idea. Data & Visuals. Case Selections. HBR Learning. Subscribe. Explore HBR. The Latest. All Topics. Magazine Archive. The Big Idea. Reading Lists. Case Selections. Video. Podcasts. Webinars. Data & Visuals. My Library. Newsletters. HBR Press. HBR Ascend. HBR Store. Article Reprints. Books. Cases. Collections. Magazine Issues. HBR Guide Series. HBR 20-Minute Managers. HBR Emotional Intelligence Series. HBR Must Reads. Tools. About HBR. Contact Us. Advertise with Us. Information for Booksellers/Retailers. Masthead. Global Editions. Media Inquiries. Guidelines for Authors. HBR Analytic Services. Copyright Permissions. Manage My Account. My Library. Topic Feeds. Orders. Account Settings. Email Preferences. Account FAQ. Help Center. Contact Customer Service. Follow HBR. Facebook. Twitter. LinkedIn. Instagram. Your Newsreader. About Us. Careers. Privacy Policy. Cookie Policy. Copyright Information. Trademark Policy. Higher Education. Corporate Learning. Harvard Business Review. Harvard Business School.