A recent segment on BBC’s Business Today reports that Japanese cell companies, e.g. DoCoMo, have failed to make headway in emerging markets, simply because they design and innovate state-of-the-art complex and expensive cell phones for the demanding and lucrative high-end Japanese markets, which insist on the absolute latest in features and technology, and hence fail to compete in emerging markets, where customers seek cheaper, simpler cell phones.

According to Michael Porter’s model of global competitiveness, companies first learn to compete in their domestic markets, then seek markets abroad.  But for Japan, at least for cell phones, this has failed. The focus on high-end at home has cost Japanese firms the low-end markets abroad.

This is somewhat surprising. Nissan (which began as Datsun), Toyota, Honda and other automobile and motorcycle companies began with low-end products sold in America,  to younger people, who loved them, then moved up the value chain and sold increasingly higher-end products as their markets matured and grew wealthy.   

Sometimes, “There’s no place like home” can be a fierce enemy of innovation, when local markets demand products unsuitable for foreign markets.  

The solution: Separate company divisions, with independence and agility, whose bottom line comes solely from emerging-markets sales. Ensure that knowledge travels between home and foreign divisions, by doing many horizontal shifts of engineers and managers, but make the emerging-markets division highly customer-centric and focused on foreign markets’ needs.

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