Business, Featured - Written Monday, May 10, 2010 by Naumi Haque - 2 Comments

Hothouse innovation redux: The world “upside down”

Recently The Economist released a feature report on how innovation in emerging markets may be eclipsing innovation in North America. The report, The world turned upside down (click “Buy PDF” for a complimentary copy courtesy of BASF) reinforces the fact that globalization and disruptive innovation is no longer something that is “driven by the West and imposed on the rest.” The notion that we in the West are the harbingers of all things new and advanced and that “developing” markets are cheap sources of labor and less mature audiences for low-cost, dumbed-down versions of our products and services is false. In response to the question, “Why are countries that were until recently associated with cheap hands now becoming leaders in innovation?” The Economist answers, “The most obvious reason is that the local companies are dreaming bigger dreams.” Of course, the real answer is far more complex.

In 2007, nGenera Insight began writing about what we call “hothouse innovators”—a new breed of global enterprises in Asia, South America, and Eastern Europe that are being built under fertile conditions for accelerated growth, including: A vast pool of low-cost, and increasingly highly-skilled labor; a rapidly growing group of wage-earning domestic customers with few preexisting expectations or brand loyalties; active government involvement in the private sector; and greenfield IT infrastructures that lack legacy complexities.  By exploiting these conditions, global hothouse innovators are developing business models that allow them to move up the value chain, compete with firms in mature markets, and threaten the profit structure of incumbents in almost every industry.

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