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CEO Daily Brief – Nov. 18, 2010

How U.S. Businesses Can Really Win in India President Obama recently visited India, on a visit that was presented to …

How U.S. Businesses Can Really Win in India

President Obama recently visited India, on a visit that was presented to the United States as a way to promote trade. For many U.S. businesses, India and other emerging nations present rich growth opportunities. In China, India, and elsewhere in the developing world, rising prosperity is expanding the market for consumer goods. But the traditional way of serving those markets suffers from flaws that eventually limit the growth potential.

Typically, companies create stripped-down versions of products developed for Western consumers. They then offer these products in the developing world at a reduced price. The prices such products command are often unaffordable by all but a small percentage of people at the economic top.

In this model, innovation flows in only one direction: downhill, from the headquarters of corporation out into the world. What works far better is “reverse innovation.” Reverse innovation harnesses the inventive power of local insight—people who understand life at street level. How can you create successful products if you don’t know how your customers live? That is why products meant for emerging markets are best developed in local regions, by local people who have the surest grasp of market needs and customer behavior. Moreover, emerging nations must deal with a variety of constraints. These include poverty, underdeveloped infrastructures, challenging geography, and a lack of natural resources. The silver lining in such constraints is that they produce a kind of resiliency and creative thinking that are relatively less needed in environments of greater abundance.

For more about reverse innovation from BusinessWeek, please click here.

Be More Critical of Management Choices

CEOs clearly realize that their organizations need proper management. But is the current approach adequate? Julian Birkinshaw, co-founder of the Management Lab (MLab), recommends developing a more comprehensive understanding of what management is really about to make better choices. Most companies have an implicit approach to defining their management model, by simply working with what they have inherited, or what they have seen in other companies. Birkinshaw suggests taking a more critical look at the choices. This involves four steps:

  1. Understanding: You need to be explicit about the management principles you are using to run your company.
  2. Evaluating: You need to assess whether your company’s management principles are suited to the business environment in which you are working.
  3. Envisioning: You need to seek out new ways of working, by looking at examples from different industries and from new contexts.
  4. Experimenting: You need to be prepared to try out these new practices in a low-risk way to see how they work.

For more from Birkinshaw in Fortune, please click here.

Why You Should Focus on ‘Worst Practices’

It’s popular for CEOs to want to bring change to their organizations. But Umair Haque, director of the Havas Media Lab, says that if you want to be disruptive, don’t start with best practices. Try, instead, find your industry’s worst practices and take tiny steps — or better yet, giant leaps — towards bettering them. When you learn how to see them, worst practices lurk everywhere — because they’re baked into the tired, toxic assumptions of business as usual. How do you find your worst practices? Here are four ways:

Ask your critics. The simplest way to uncover a worst practice is to ask your critics — the fiercer, the better. Spend a day in the trenches. Examine your past. Most forlorn, fading companies had a day in the sun — once. And a great way to look for worst practices is to get historical. Diet on your own dog food. What would happen if every CEO had a new clause inserted into his or her contract: you make it, you use it — exclusively.

For more from the Harvard Business Review, please click here.

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