BCG misses the mark with new study on emerging markets

Sensational headline, no? Thought I’d try and be a tabloid on Sunday rather than a blog. Jokes apart, an article on caught my eye. Yes, it’s originally from BusinessWeek but you try searching for the original on their site. Titled "What firms need to succeed in India and China", it’s an overview of the Boston Consulting Group’s study of companies and their activities and aims in these emerging markets. The article summarizes the survey findings and ends with these recommendations by BCG:

What should companies do to organize themselves to compete more effectively from Shanghai to Sao Paulo? BCG suggests six fundamentals. Companies need:

  • A deeply engaged leadership;
  • Continuous development of global talent;
  • The ability of multinational staff at all levels to collaborate;
  • Common business processes;
  • Shared technology platforms, and
  • Core corporate values that are shared by employees across the globe

What do you see missing from this "list of things to do to be successful in India and China"?

The customers, the users, the target audience, the consumer, the populace of these nations in which these companies wish to do business. Call them what you like, but where is the mention, in today’s so called ’empathy economy’ and ‘conceptual age’ of ‘social networking’ etc of the citizens of these emerging markets?

  • Where is the bullet point that emphasizes the importance of understanding your local market, its cultural and social values, its environmental and infrastructural constraints?

For argument’s sake, one can say that these recommendations are on "organize themselves to be more successful", i.e. internal reorganization, but organizational change can also be oriented towards the customer, becoming more user centered.

Understanding your end users is paramount in successfully creating products and services for new markets. This is a well battered dead horse. Now we just need to educate the survey designers in global management consultancies on the subject.

To be fair, there is a paragraph heading in the article "Local knowledge" but it discusses the lack of diversity in the corporate headquarters. Here’s the requisite snippet,

What’s more, there is a misalignment ‘in the seniority of managers and the quality of resources that companies put on the ground,’ the study argues. Of the 100 largest corporations in the U.S., 85% have sales abroad. Yet only one out of five has at least one foreign-based director on its board.

In short, this is not a portrait of a corporate America that is coming to grips with the competitive challenges ahead. "If you expect 30% sales growth, but 1% of your senior management and none of your directors [are] from emerging markets, that’s an issue," says Hal Sirkin, the head of BCG’s global operations practice. "You won’t be able to understand what is going on over there, and you will end up making the wrong decisions."

That is very important too, but methinks that when you’re a business trying to increase sales away from your home market, understanding your customers is far more important.

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6 Responses to BCG misses the mark with new study on emerging markets

  1. Arvind Lodaya says:

    Well put. This is all the more astonishing because in recent years, “understanding the market” of our “emerging economies” using “contextual research” seemed to be the pet obsession – and proud PRspeak – of US/Euro tech corps. Is this report then a Freudian slip? I know Indian firms unblushingly subscribe to these views because they don’t even bother to pay lip service to consumer understanding. For that matter, they hardly believe in innovation itself, as long as it comes in neat CKD “seconds” packs from the west.

  2. niblettes says:

    This is a typical supply-side mindset applied to product development. This mindset, Keynes says, holds that supply creates its own demand. In today’s language that means build it and they will come.
    And you can see BCG’s adherence to supply side thinking in their laundry list of things you need to succeed. The customer? The users? External. Demand side. Irrelevant.
    I also like (ha!) how BCG’s laundry list of things you need to succeed in global markets are so generic and inherently meaningless that they apply equally well to success in domestic or even local markets. I mean really, committed leadership is always a good thing. Since there are very very few cases where these points would not contribute to a company’s success, what’s the point of listing them? They should have included “Make money” as well, after all wouldn’t making money help a company succeed in global markets? I think it would!
    Their last point “[c]ore corporate values that are shared by employees across the globe” is troublesome. Ok, try to find some meaningful values folks from Texas, the Punjab, Bavaria and Sao Paulo can all agree on. Go on. I dare you. Maybe “integrity” or “collaboration” or other such dilbertian drivel you can find on posters, might fit—-but I think we can all feel how that stuff is just the sound and the fury.
    How much does BCG get paid for this kind of work?

  3. niti bhan says:

    Is that valid for all Indian firms? I’m curious because I’ve read about the investments in design and R&D that firms like Tata Motors and Bajaj are making. And would the Indian firms wake up when they see the difference it is making to Samsung’s sales in India or Nokia’s ? Both firms invest substantially in local user research and appropriate design, for example, and as more enter the market, would the pressure of competition force them to reconsider? Or is it a deeper issue than that?
    Oooh, that does make sense! It being supply side thinking, I mean. They probably did it internally and didn’t get paid for it, could that be the reason for the irrelevance? It’s almost like they have been working in a vacuum to have left out any kind of mention of the end users, yet they’re the ones who ‘advise’ the firms. Any wonder we get soggy cornflakes in hot milk?

  4. niblettes says:

    Here’s a PR bit from Intel about how they’re actaully including the Asian user/customer in the market conversation.

  5. niti bhan says:

    I take it Intel doesn’t listen to their management consultants? 🙂

  6. Perspective says:

    To do or not to do, user research

    With this flippant post title, I shall hold forth and pontificate on two companies in the news recently, Intel and Dell. Dell’s announcement that they were going to push their printer business in emerging markets in order to make up

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