We know innovation is hard. We know innovation in China can be even harder than in many other nations. As if the vastness of the country and diversity of the population weren’t enough of a challenge, the politics (or lack thereof) of intellectual property, the pace of competition, and the opacity of local business ecosystems can make meaningful innovation—as defined outside of China—seem impossible to accomplish.
Most Chinese companies are so preoccupied with trying to make “innovation” in China work that the notion of shifting their focus to other markets around the world seems ludicrous. The predominant corporate strategy of almost all global firms is to regionalize the world: A China team focuses on China, an India team focuses on India, and a Europe team focuses on Europe. This model ensures local teams develop and apply deep local knowledge to solve the local challenges of their respective markets. This could be based on a “glocalized” approach, in which a centrally generated innovation is localized for different markets, or on fully localized approach, in which all local innovation initiatives are managed independently.
Though logically sound, this model can be quite wasteful. Looking for commonalities across markets is a proven way to reduce redundancy in innovation efforts. In particular, grouping countries by socioeconomic status is a popular strategy: Combine the BRIC countries, or Africa and Southeast Asia, or the U.S. and Europe. Develop innovations that can be leveraged across other markets. This approach includes some notion of directionality: one or more primary markets are starting points, from which innovations later spread to secondary markets.
The phenomenon of “reverse innovation”—or bringing innovations from developing markets to developed markets—shows a different take on directional innovation. It is currently the trendy way to talk about the capabilities of true global innovators (e.g, GE, the poster-child of reverse innovation, and their iconic EKG machine made for rural Indian and Chinese hospitals, later brought with great success to the U.S.).
The problem with reverse innovation (other than its awful, misguided, pejorative name) is that it often seems to be the result of a fortuitous accident, like a company struggling to come up with new innovations one day realizing that something they had done in an emerging market a while back could actually be useful in their home market.
Rather than stumbling into innovation by accident a year later, planning a global innovation strategy with the premise that characteristics of certain markets around the world are ideal for inspiring innovations for other markets with similar characteristics. Identifying these quintessentially archetypical markets and characteristics, and explicitly planning to generate and spread innovations from them to other markets, is a wiser use of limited innovation budgets than studying several global markets separately. This model does not rely on finished products that are later exported or localized. Instead, it seeks to uncover behavioral insights from archetypical markets that can be used to inspire innovation in comparable markets.
For example, at frog, we have had a number of conversations with one of our consumer packaged goods (CPG) clients about how products we’ve come up with for the home in Japan, the ultimate global archetype for dense, space-constrained living, are relevant to any place in the world. Similarly, Australian homes are the ultimate global archetypes for indoor/outdoor lifestyles (and all the cleaning challenges that come with them), making them relevant to markets as diverse as South Africa and American suburbs. We conducted a study on financial inclusion in Afghanistan, the ultimate archetype for lack of trust in formal (corporate and governmental) institutions, that offered insights into how trust can be built from scratch with brands anywhere in the world. Studying one of these archetypical markets and planning in advance to extend ideas to other markets is easier, faster, and cheaper than studying all the markets separately.
What about China? Despite its unique innovation climate, which may not seem like an ideal source for easily exportable innovations, China abounds with archetypes from which much of the world can draw inspiration.
Chinese behavioral archetypes are the most obvious examples. The lack of belief or interest in paying for media is more fundamental and entrenched in China than anywhere in the world. Innovative solutions to this problem could very well be relevant to other markets faced with declining entertainment and media spend. For example, the degree to which Chinese digital natives adapt and even invent vocabulary on Weibo (the Twitter of China) to circumvent censorship of hot, politically sensitive topics is impressively accelerated and creative—a learning in behavioral evolution relevant to social networks and any online platform with persistent casual user engagement. The “Little Emperor” phenomenon is the ultimate archetype for parental protection and child safety. Traditional Chinese medicine is the ultimate archetype for overcoming customary practices in favor of the new. The list goes on...
But what’s truly compelling about China in terms of global innovation inspiration becomes apparent when extending the notion of innovation beyond behavioral archetypes. The insights into business strategies and business models that emerge from those who are successful in China can be interpreted as archetypes for business innovation in other markets.
Consider the relatively frequent occurrence of Western brands bringing new innovation to market in China. Within a few months (if not weeks in some cases), thanks to Shanzhai-speed and -style product development and lack of strong IP protection, cheaper competitive products appear on the market.
In the West, such occurrences would almost always result in litigation (the recent Apple-Samsung verdict makes this a potentially very lucrative response, if you’re on the right side of the litigation). Litigation rarely works in China, so what can the aspiring Chinese innovator do in response?
The only truly viable solution is to be ready with the next iteration of the product when competition begins to appear. Given the pace of competitive product development, this means planning 10, rather than three, iterations ahead. Moreover, given how quickly competitors adapt, this means more than just roadmapping product iterations, but roadmapping entire platforms, and then scenario-planning around evolutions, shifts, and risks in these platforms and modeling the resulting product iterations.
Few companies truly know how to create a roadmap this robust, although many try and ultimately seem resigned to the idea that this is the only way, difficult as it is, to succeed in China.
But rather than being resigned to this challenging reality, what if we look at this situation in China as the ultimate archetype for rapid competitive response, with the expectation that it could be a model for archetypical innovation relevant to many other markets? Imagine the competitive edge a company could have in the West if it were able to import this flavor of strategic roadmapping and operate with the same speed, foresight, agility, and risk management, rather than go through litigation.
This represents a compelling ideal for the global innovator. More than innovating in many regions across the world (localization), more than directing innovations from one market to another (reverse innovation), archetypical innovation seeks inspiration from those markets most likely to offer it, and explicitly plans for broad extension. As we move beyond behaviors to the fundamental business strategies and models required to be successful, such innovation has the potential to be truly disruptive—on a very large, truly international scale.
The Insights series from frog consists of a bi-annual print publication, related online content, and global events and conferences. Insights offers direct, in-the-field discoveries of consumers’ habits and aspirations, combined with deep, data-driven analyses of contemporary trends. To create these analyses, frog deploys a combination of in-depth interviews, design research, and an original quantitative survey.