Emerging Markets

Over 80% of the world's population of the world's population lives in developing countries, and these markets account for 40% of the world economy. While many multinational corporations have entered developing markets, all have not been met with success.

Traditionally, failed companies adopt one of two failed strategies: stamp and skimp.

Many companies are discovering that they cannot stamp out their existing models in these economies. Many companies feel that they can leverage their depth in experience and large scale and stamp out existing strategies in these new markets. Others, like many of the automotive companies who initially invested in China felt that they could use skimped or antiquated versions of their products for new markets.

In a recent article in Forbes by Clayton M. Christensen (of HBS and Innosight), he notes that multinational companies suffer because they are bound by a global business strategy and often operate under limited autonomy.

However, lessons can be learned from companies with humble origins native to the country. Like CK Prahalad outlines in his book, "The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits," companies who understand the unique cultural background of the developing country are more likely to be successful because they are open to new business models.

In the article, Christensen recommends four areas for focus for companies hoping to build disruptive growth in the poorest of countries:

1. Gain a deep understanding of the jobs that customers in developing countries need to get done
2. Develop blank-slate solutions that solve problems better or differently
3. Allow subsidiaries to operate freely
4. Be patient for growth, but impatient for profits

Read the entire article here.