> Innovating for growth: a spiral approach to business model innovation
Innovating for growth: a spiral approach to business model innovation
Take advantage of changes in the external environment
Companies can innovate themselves into a completely new industry.
Business conditions may not be favorable, but if your company is truly innovative, you will be able to turn a challenging situation to your advantage.
In most rapid-growth markets, innovation can be the solution to a fundamental problem. Companies can innovate themselves into a completely new industry.
Suzlon Energy, a wind turbine supplier based in India, was born out of a textile manufacturer. An unreliable and expensive power supply led the chairman to experiment with wind power. The resulting wind turbines are helping solve power supply problems across India and are meeting global needs. Suzlon is the world’s fifth largest supplier of wind turbines.
This is not a one-off case. Between 2005 and 2011, the number of companies in the Fortune 500 grew in emerging economies and decreased in developed economies, with a net gain in emerging economies of 13%.1
The internet and cloud services have radically changed the notion of size as an indicator of commercial potential. Thanks to a massive surge in intangible assets such as intellectual property (IP), companies of all sizes and from different markets can compete with traditional multinationals.
Virtual City is a systems integration and mobile solutions company based in Kenya. They tried to replicate Amazon and eBay in Africa but had limited success. However, thanks to its experience in containing airfreight costs, the company discovered new supply-chain strengths.
“We changed our entire company from being an internet service provider to a supply-chain automation company,” says John Waibochi, CEO of Virtual City. “This is now our business, thanks to a broad perspective, which enabled us to understand where our true strengths lie.”
Seize converging opportunities
US-based Boston-Power is a leader in energy storage. By capitalizing on ecological concerns, regulatory incentives and customer potential in China, they became a major energy supplier to the automotive industry.
Drivers in China could only buy Gasoline-powered cars by lottery and drive them half the week. However, they could purchase electric cars and drive them freely.
“Being an entrepreneur, a nation seeking to be less reliant on oil meant significant opportunity for me,” says Christina Lampe-Onnerud, CEO of Boston-Power. “Our insight suggested that China’s policy-makers had stimulated the customer base to enable a market in electric cars. In a sense, the government became a procuring body.
“An electric car is now a status symbol among high officials because it plays to the green agenda and involves state-of-the art technology.”
Turn regulation to your advantage
Government policies can help drive cross-border opportunities. “In North America, government incentives helped facilitate fantastic growth in the market for wind turbines,” says John O’Halloran, President – Technology of India-based Suzlon Energy.
A US telecom company follows a similar strategy in China. Their managing director for Greater China explains, “Government subsidies are aligned to the Five-Year Plan, so we maximize use of the cloud in education because this was an element of the technology initiatives in the Plan.”
Look for a universal customer base
E-commerce has opened up a wide range of online customers who are unrestricted by geography. For Alibaba Group, electronic business brought about a free flow of information that allowed companies and individuals to cooperate with and support one another.
1 World Economic Forum, Outlook on the Global Agenda 2012; International Monetary Fund, World Economic Outlook Database, September 2011.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.