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Innovating for the next three billion - Our innovation capabilities model - EY - Global

Innovating for the next three billion

Our innovation capabilities model

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The innovation capabilities model

EY - The innovation capabilities model

Use analytics and technology to gather information about specific markets and turn this into actionable insight.

To succeed in this new environment, companies need to execute a strategy based on expanding into new markets, finding new ways to innovate, and implementing new approaches to talent management to grow faster than their local and, increasingly, international competition.

Innovating for the next three billion requires that companies address four key capabilities, including customer insight; people and culture; research and development; and operations and business model to be successful, relevant and globally expansive.

The key to success will be for companies to combine these local and global components to ensure that their products and services will be relevant to local customers, while still enabling the company to leverage global resources, capabilities and scale.


EY - The innovation capabilities model The innovation
capabilities model

Customer insight

Understanding customer needs requires resources on the ground in local markets. Companies must:

At a local level

  • Have resources available to observe potential customers and assess where their unmet needs lie.
  • Develop the capability to conduct in-depth research, including extensive ethnographic research and qualitative fieldwork.
  • Engage customers and treat them as partners and collaborators in the innovation process.

At a global level

  • Use analytics and technology to gather information about specific markets and turn this into actionable insight.
  • Conduct quantitative research and build a rigorous understanding of market size and expected customer behavior. This allows companies to spot linkages across markets and derive economies of scale from reapplying knowledge about customer needs.

Research and development

Meeting the needs of the next three billion will require companies to:

At a local level

  • Carry out an increasing proportion of their R&D activities close to where these customers are located — in rapid-growth markets.
  • Develop a “reverse engineering” approach, where affordability forms the baseline from which to develop entirely new products and services.
  • Make sure that local R&D centers have the autonomy to make their own decisions about which projects to pursue.
  • Put in place mechanisms for new ideas to reach decision-makers, regardless of where in the organization they originate.

At a global level

  • Set up global innovation networks that link R&D centers across both developed and rapid-growth markets to share relevant intellectual property.
  • Think about “platform technologies” that are globally relevant and that can be combined with local components at the point of delivery.
  • Make decisions about how to allocate R&D resources around the globe — and move them from one location to another as the need arises.

People and culture

Talent and expertise are critical to successfully innovating for the next three billion. Companies should:

At a local level

  • Delegate decision-making responsibility to local teams in rapid growth markets.
  • Ensure that local managers have the ability to make recruitment decisions.
  • Be able to take forward new product or service ideas to meet local needs.
  • Embed local profit and loss (P&L) responsibility to ensure that managers have accountability. Have the capability to set pay and reward structures for local teams to ensure that they are appropriate for the pace and growth rate of the market.

At a global level

  • Manage talent globally so that managers can be rotated among key markets and gain experience across diverse business environments.
  • Work to build a culture and set of values that are global in scope.
  • Develop a global mindset and the ability to tolerate ambiguity and integrate multiple perspectives.
  • Understand the interdependencies among different regions and how decisions made in one region will affect another.

Operations and business model

At a local level

  • Select local partners carefully across every stage of the value chain.
  • Ensure that operations are as efficient as possible to bring down cost and maintain margins.
  • Take into account the needs of local customers and ensure that pricing and other aspects of the business model are appropriate.

At a global level

  • Establish clear policies, including risk management and compliance frameworks, to ensure accountability and ethical behavior across the value chain.
  • Use global supply chain and customer relationship management (CRM) systems to optimize the value chain globally and ensure that it is both efficient and resilient.
  • Make decisions about which aspects of the value chain to localize and which to maintain at a global level.

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