The Secret to Building Products for the World

Markets are growing at twice the rate of some advanced economies and multinational corporations continually do fail when retooling their products for developing nations from stripping down premium features to micro sizing packaging, traditional approaches to EM entry are broken.

Now a new book from Harvard Business Review Press argues that the secret to global scaling is designing high performance, low cost products for both wealthy and.

Emerging markets from day one and here at the New York Stock Exchange to break down the architecture of global by design is Amos Winter, professor of mechanical engineering at MIT and also author of the book Global by Design.

Great to have you here.

Thank you so much for joining me.

Thank you, Roy.

Well, when we think about all the companies that are listed here at the New York Stock Exchange, plenty of multinationals.

So what actually is the secret sauce when it comes to success for innovation?

I think it's recognizing that when you want to move into emerging markets, the customers are different and the economic behaviors are different than kind of the status quo in wealthy countries.

Yes, and when we think about some of the case studies for multinational corporations, what's succeeded, what has failed, there are so many examples out there.

But in the modern age, especially in this day and age of social media, we know that news and information travels fast.

So give us your take on what the steps. should be for companies entering EMS.

I think that global awareness that you just mentioned is really important because people everywhere want a certain quality of products.

Nobody wants semi-clean water.

Nobody wants semi-functional healthcare or electricity.

And the challenge is how do you provide that quality and performance of product to a lower resourced community who may not be able to pay what we pay in the US and Europe.

And so that really forces you into a new necessity is the mother of invention situation.

Where you have to rethink how do we offer quality products, low cost products to these new markets that will appeal to them.

But if you can do that, then you can sell them globally because you can probably disrupt wealthy markets.

Yes, and you bring up an important point because sometimes when we're looking at opportunities from a management perspective, we might look at developing economies as the next target.

But in reality there are so many steps that are required.

So tell me about this 3 merit test.

Yeah, so in the book we talk about problem merit, innovation merit, and value merit.

So problem merit is knowing, are you solving a problem that's worth solving?

Is it going to impact a lot of people in, in a meaningful way?

And ideally is it gonna make money if it's solved?

Innovation merit is, is a gut check on whether or not you have to innovate or whether you can just adapt or use charity to disseminate a solution, but you want to convince yourself you really need to innovate.

And then value merit is all around aligning value propositions, so making sure people want to invest in your innovation, and also people are positioned to adopt your product because they derive value from it and people want to sell it because they make money from it.

So how do you actually go about engineering something that slashes costs dramatically without actually sacrificing that key component which is performance?

It all comes down to understanding how the requirements are different in the new market you want to move into.

So what are the price point differences, what are the behavioral differences, the cultural differences, how people allocate their resources.

So you don't just think, Oh, I can adapt what I have in the US to a poor market.

You actually often find that the requirements are a bit different, and if you know the requirements, you're much better likely to actually create a viable solution that satisfies them.

Yes, and for a viewing audience right now waiting at the nation's airport gates, because you co-authored this book, give us a take on some examples of success.

So I think one of the hallmark examples of the book is the Honda Super Cup.

So this is a motorcycle that actually launched in the late 1950s when Japan was really Emerging market and what Honda did so well is they read that people wanted a high powered device, one that could go on rough roads, one where you could carry cargo with one hand, and that was really low cost and reliable, so they launched it there.

But then they had the foresight to realize motorcycles had kind of a bad reputation in the US and Europe.

Ruffians, grease monkeys would use them.

And so by making a really reliable, nice looking device, they appealed to a whole new demographic and they had a brilliant ad campaign where they said you meet the nicest people on a Honda.

And so that made the product explode globally and it's actually the most widely vehicle sold ever in history with over 100 million units sold.

Yes, that is very interesting and of course when it comes to ad campaigns we all know how important it is that it translates to social media, but I do want to get your perspective when it comes to reverse innovation because sometimes the expectation might be that developed economies know more than.

Developing economies, but is that always the case?

Historically companies have thought they could trickle down innovation from rich countries to poor countries.

And so my co-author Vijay Govindarrajan from Dartmouth coined this term reverse innovation, which is all about looking first at poor economies.

Using their constraints to drive the innovation of high value, high performance, low cost products.

And if you're successful, you can sell them in emerging markets but also translate them back.

This is the reverse process to wealthy markets and disrupt wealthy markets.

And so our friendship and kinship came together because I was doing this as an engineer.

He had written about it from a business strategy perspective and so we brought those two perspectives together in Global by Design.

Before I let you go, we have about 60 seconds here, so I do want to get your perspective on bridging the scaling gap.

So what is the single biggest hurdle out there that keeps a brilliant prototype from actually reaching commercial scale?

Designs only fail and products only fail when they don't satisfy requirements.

So to make a global product, what you have to do is really understand what are the requirements in different markets and what is going.

Drive value and drive adoption.

And if you if you make yourself aware of those, you're much more likely to satisfy them and you can create a product that appeals to users both in poor countries and in wealthy countries because it delivers a certain core value that everybody appreciates.

But then you can customize features to make them really fit into each market segment.

A lot to keep in mind, especially as summer travel season wraps up.

So thank you so much for your time today and thank you so much for sharing your insights and perspective.

Thank you.

Thank you.