Capturing the Asian (Innovation) Opportunity

From s+b

See Strategy+Business article

“One thing Asian companies are not reducing is their interest in innovation. (See “Profits Down, Spending Steady: The Global Innovation 1000,” by Barry Jaruzelski and Kevin Dehoff, s+b, Winter 2009.) Asia’s emerging economies, particularly India and China, are following the pattern originally set by Japan and Korea. They, too, were once known for low-cost manufacturing and mimicry of Western design. Over the years, Japanese and Korean executives deliberately built up their companies’ design and manufacturing skills and became global innovation leaders in everything from cars to mobile phones to plasma televisions. Now, the Chinese government’s five-year plan includes a similarly deliberate emphasis on creating an innovation-oriented economy. India’s innovators, although they have less government support, are active in such fields as health care, finance, agriculture, and public–private partnerships. (See “The Innovation Sandbox,” by C.K. Prahalad, s+b, Autumn 2006, and “Not Just for Profit,” by Marjorie Kelly, s+b, Spring 2009.)

Innovation is usually born of need and opportunity. And Asia has some of the greatest unmet customer markets and societal challenges in the world, with its vast rural areas, huge demands for natural resources, significant environmental problems, and aging populations. Many Asian governments will rely on private-sector innovation to help meet these challenges. For example, after paying little attention to air quality during its initial burst of industrial development, China has announced a plan to become the leading producer of hybrid and all-electric vehicles by 2012. Companies whose capabilities dovetail with this green strategy could find a lucrative welcome. Meanwhile, Toyota is developing personal-care robots that can perform housekeeping and nursing chores, which it intends to target to Japan’s growing senior citizen population. For the same reason, the Japanese pharmaceutical firm Kowa has set up a joint venture with Teva, an innovative Israeli drugmaker, to bring 200 new drugs to market by 2015. If such innovations succeed, other companies may follow.”


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