there is widespread aversion torisk and a ailure to learn rompast mistakes in innovating.There are bright spots, to be sure.In recent years, Western businesseshave begun to uncouple their over-all R&D eorts rom the in-houseresources available or those eorts.Companies as large as Procter &Gamble and Eli Lilly & Co. havemoved assertively toward “openinnovation” models. Those modelstranscend straightorward out-sourcing o R&D activities; theyuse systematic Web–based “seek-ersolver” idea exchanges and“crowdsourcing” techniques to tapideas rom ar beyond the company’swalls. They also actively involvediverse university aculty andellows at research institutionsaround the globe.But as many corporations continueto struggle to reignite growth, theneed or a reenergized approachto innovation couldn’t be moreurgent. This is especially importantas more organizations expandglobally, increasingly workingwith customers, employees, fnan-ciers, suppliers, inrastructure,legal rameworks and competitorswhose outlooks and experiencescan be a world away rom whattheir leaders are accustomed to.Indeed, many developed-worldcorporations, wedded to approachesand behaviors that have workedcloser to home, appear not tohave ully grasped the dierentapproaches needed to properlyaddress emerging markets.
Out of touch?
Ask any emerging-market businessunit manager at a Western multina-tional, and there is a good chanceshe’ll tell you the global leaders inher organization have only limitedunderstanding o, let alone directexperience with, the complex ma-neuvering and multitasking requiredo operators in Latin America, Asiaor the Middle East as they seek tomeet world-class business standardswhile operating with minimalhuman and fnancial resources.That is especially true when itcomes to serving the “bottom o the pyramid” market segmentsthat tend to be highly ragmented,hard to categorize and out o rangeo conventional services, bothgeographically and fnancially. Yet such challenges are taken instride by businesses that grew upin those markets.Mexico’s Grupo Bimbo—the world’slargest bread-maker —provides acompelling example. Emphasizingthe reshness o its products andserving a vast, complex and widelydispersed system o traditionalgrocery stores and
, or small shops, Bimbo has developed ad- vanced systems or everything romsales and distribution to paymentsand inventory management. (Thecompany’s frst packages o breadwere transported by public bus toMexican grocery stores in 1947.)Bimbo invests heavily to controlits delivery chain to the pointo sale. Its capabilities in Mexicoand Latin America, born o endlessworkarounds as it turned to un-orthodox solutions to commonproblems, allowed it to rapidlydevelop an efcient distribu-tion network when it expanded toChina a ew years ago.This kind o heterodoxy can beattributed in considerable measure tothe entrepreneurship that is our-ishing in many emerging economies.Entrepreneurs are risk takers, andrisk taking is oten the enabler o in-novation. By contrast, there is at leastanecdotal evidence to suggest thatin recent years, multinationals romthe developed world are more reliant,not less, on practices and protocolspromulgated at “headquarters.”