In the world of Unicorn companies, privately held start-ups with valuations of $1 billion or more, global strategy is no longer what it used to be. In fact, the old, dated idea that one goes global only after securing its home market, and having cash flows to sustain far-flung operations, is as good as dead. Getting global fast, rather, is the thing to do, as the copy-and-catchup innovation, as popular in many fast-growing emerging markets, can alter the dynamic for a start-up quite dramatically by capturing large market share in foreign markets and becoming a threat almost instantly. Whatever we may think of them, copycats, imitators, etc., the copy-and-catchup ecosystem in India, China, Middle East and Africa, are made of very smart entrepreneurs, savvy technologists, and investors who are ready to back them either looking to exit in a global M&A or going global through acquisitions themselves. With this, right now, start-ups are usually born-global rather than not, and discussions about global strategy has to flip accordingly.
There are other structural changes that necessitate this too. First, the consumer demand is growing globally, and not just in the United States. In fact, the new demand growth in many a sector - automobile for example - is primarily in the emerging markets, or projected to be in the emerging market. A quarter of new college going students is supposed to be in India, followed by China. Healthcare markets would grow dramatically in the population-heavy parts of the world, not just in terms of service provisions but in revenues too. India is already the second largest market for Uber after the United States. So, the model, created only a few decades ago, of global workflows with cheap labour in emerging markets at one end, and rich consumers of Western countries at the other, is already flipping. The Copy-Catchup innovators often have access to bigger markets and cheaper labour at the same time, on a terrain native to them, creating a different set of strategic challenges to global start-ups. The models used by P&G to take soaps to Asia is no longer a template for strategy-making.
Second, if the transformation of consumption is not enough, the global models change innovation too. Indeed, one may read the above paragraphs thinking that all innovation is happening in the West whereas it is only copy-and-catchup elsewhere, but that would be mistaking what innovation really means. New product and service ideas are still being generated in the West, particularly in the consumer Internet space, because of its advantages with technology clusters, advanced education systems and wider penetration of broadband Internet. But it may not be equally efficient in terms of the last mile solution, where infrastructure and culture have a role to play, and here, there is a lot of innovation in the emerging markets. The emerging market companies often excel in copying the product ideas, and concentrating their innovation efforts on the last mile, dealing with payment issues, community building, service infrastructure etc. This is why M-Pesa originates in Kenya, and Uber is playing catch-up with Ola in offering cash payments for cab rides. And, indeed, frugal innovation, given the limited needs and service infrastructures, is often being pioneered in these markets, interrogating many of the unspoken assumptions about public infrastructure and value systems that underlie the Western business model. This creates a brave new world of strategy-making, where all the assumptions must be carefully validated, because almost nothing can be taken for granted in a global scale.
These changes are setting off great changes in global strategy among the great global corporations, inverting their business models and setting off the quest for reverse innovation. However, these changes create particular challenges for born-global start-ups, whose problems are seldom studied in the business schools. For them, changing global dynamic, and the threat of competition from emerging markets, create very peculiar challenges. For example, the homogeneity and single-mindedness of the founding teams that is usually the strength of a start-up becomes a handicap in handling the intricacies of last-mile innovation. And, it does not help that the quest for global strategy is only mixed up with the softer subject of cross-cultural competence, that nineteenth century game of stereotypes and prescriptive manners, which hinders, rather than helping, development of global mindset.
What are the elements of a global strategy for a born-global start-up? Following a model developed at Thunderbird, this may need, at the competence level, intellectual, psychological and social capital to deal with globality. This means that the start-up should seek to have a native view of the global marketplace, not just by choosing information to fit its assumptions, but by letting its assumptions evolve with global context. In this, diversity of the founding team is an important factor, and one could perhaps comment that most, if not all, successful born-global start-ups have at least a few key executives or founders who came from a different background. It is also important to note that iterative models like Business Model Canvass becomes crucial here, though it perhaps need a different level of sophistication, as any assumption can be proved and disproved simultaneously when tested in a global scale. Market selections, usually opportunistic in start-ups, become even more crucial in this context, as like the founders, first few market-places define the strategy more profoundly than the influence that home markets used to have on earlier generation of companies, because the openness to make the leap is greater when one is going from domestic to global than when it is trying to fit a business model established abroad into another market (because, for many, there are only two kinds of market, home and overseas).
One of my teachers used to say, Start-ups do not do strategy, and there is an element of truth in this. There is very little breathing space to think and reflect in the breathless life of a start-up. However, the imperative to be born global and the complexities of global existence force the hand of the start-up founders to take up seriously the challenge of global strategy. In a world where the start-up ecosystems generate employment, create wealth and explore new possibilities, the issue of global strategy from the perspective of the start-ups is too important to be ignored.
Popular posts from this blog
A friend has recently forwarded me a quote from Lord Macaulay's speech in the British Parliament on 2nd February 1835. I reproduce the quote below: "I have traveled across the length and breadth of India and I have not seen one person who is a beggar, who is a thief. Such wealth I have seen in this country, such high moral values, people of such calibre, that I do not think we would ever conquer this country, unless we break the very backbone of this nation, which is her spiritual and cultural heritage, and, therefore, I propose that we replace her old and ancient education system, her culture, for if the Indians think that all that is foreign and English is good and greater than their own, they will lose their self-esteem, their native self-culture and they will become what we want them, a truly dominated nation." The email requested me to forward me to every indian I know. I was tempted, but there were two oddities about this quote. First, the language, which
Introduction : The Business of Gift Giving Business gift giving has always been common and contentious at the same time. Business gifts are usually seen as an ‘advertising, sales promotion and marketing communication medium’ (Cooper et al , 1991). Arunthanes et al (1994) points out that such gifting is practised usually for three reasons: (a) in appreciation for past client relationships, placing a new order, referrals to other clients, etc.; (b) in the hopes of creating a positive, first impression which might help to establish an initial business relationship; and (c) giving may be perceived as a quid Pro quo (i.e. returning a favour or expecting a favour in return for something). The practitioners of gift-giving generally argue that doing business is often an aggregation of personal interactions and relationships, and gift-giving should be seen as a natural way of maintaining and enhancing these relationships. ‘Business gifts, especially one given in the course of the festive s
Buzzwords have disadvantages. Right now, experiential learning is one, and that means we put the label on everything and it stops to mean anything. Also, this means reasonable conversation about experiential learning becomes difficult - at times such as this, either you preach experiential learning or you are traditional, antiquarian and hopelessly out of touch. But, overlooking the limitations of experiential learning can cause big problems. Experiential Learning does many things - putting practice at the heart of learning is an important paradigm shift - but not everything, and it is important to be aware what it does not do. Usually, we equate the terms Project-based Learning (the method) with Experiential Learning (the idea) and Learning from Experience (the ideal), treating them as one and the same and using the terms interchangeably. Any talk about distinctive meaning of these terms is usually seen as pedantic, but really represent very different ideas about education.
Today, Helen Goddard, 26, a highly popular music teacher of a City School for Girls, has been sentenced to 15 months in prison. Her crime was to carry out a year long lesbian affair with one of her pupils, who appeared in the court and admitted that the affair was consensual and it was she who pressured Helen into the affair. For Helen, a bright musician and a devout Chistian, this is an extraordinary lapse of judgement. Also, she was teaching in the £13,000 private girls only school in London. She was surely aware what the consequences of her action will be. The fact that she still could not stop herself tells us that lovers do not always act rationally, something we always knew. There is more in this affair than personal tragedies. For a start, this has all the dramatic elements: a bright, beautiful teacher more in Julia Roberts mould [as in Mona Lisa Smile], a stiff upper lip school [not unlike Wellesley] and a story like Notes On A Scandal with an added twist. Indeed, Helen
In most societies today, making profits are accepted as moral, if not especially praiseworthy. This was not as obvious as it appears today – people used to be embarrassed about making a profit not so long ago. Crazy as it seems today, it is worth thinking why it was so. Profits, as economists will put it, is the reward for risk-taking, for putting a business enterprise together in the pursuit of an objective. In this definition, remember, profits are not what it is commonly understood to be – the gross middle-line towards the bottom – but a figure net of entrepreneur’s earning [wages for his labour], dividends and interests on borrowed capital, and provisions for building and other physical assets [a sort of rent, offsetting what these assets could have earned if leased out]. This pure profit – surplus – accrues to a business as a reward to its organisation, for the act of entrepreneurship itself. Economists were divided on how this surplus comes about. The conventional wisdom was,
Introduction Erna Petri née Kürbs, a farmer’s daughter from Herressen in Thuringia, arrived in Ukraine with her three year old son to join her husband Horst in June 1942. Horst, an SS leader inspired by Nazi ideologue Dr Richard Walter Darré, settled in the plantation of Grzenda, just outside today’s Lviv, to become a German Gentleman-Farmer. Erna saw Horst beating and abusing the workers in the plantation within two days of arriving there, which was, as Horst explained, necessary for establishing authority. Erna joined in enthusiastically, settling into a combination of roles of ‘plantation mistress, prairie Madonna in apron-covered dress lording over slave labourers, infant-carrying, gun-wielding Hausfrau.’  However, there were clear rules in the plantation, and Erna was very much expected to play the woman’s role of being a Cake-and-Coffee hostess. When four Jews were caught in the estate while trying to escape from a transport to a death camp, Horst told Erna and her female
Introduction: Hastings in the history of Indian Education Whether or not one includes Warren Hastings in the history of Education in India is a matter of perspective. If writing the history of education means writing the history of schools, the impact of Hastings' administration would be quite limited. If anything, the rapid implosion of local rulers in Eastern, Southern and Northern India during Hastings' tenure had meant a bleak period for the indigenous education system, as patronage and funds would have dwindled away for many of them. The Company administration really concerned itself with the schooling of the natives only after 1813, as Nurullah and Naik rightly pointed out ( see my earlier post ) and one can legitimately start the story at this point. However, if history of Education in India is to encompass the transformation of Indian Scholarship, on which foundation the new, colonial, system of Education would be built, the story must start with Warren Hast
I wrote a note on Kolkata, the city I come from and would always belong to, in July 2010. Since then, the post attracted many visitors and comments, mostly critical, as most people, including those from Kolkata, couldn't see any future for the city. My current effort, some 18 months down the line, is also prompted by a recent article in The Economist, The City That Got Left Behind , which echo the pessimism somewhat. I, at least emotionally, disagree to all the pessimism: After all Kolkata is home and I live in the hope of an eventual return. Indeed, some change has happened since I wrote my earlier post: The geriatric Leftist government that ruled the state for more than 30 years was summarily dispatched, and was replaced by a lumpen-capitalist populist government. Kolkata looked without a future with the clueless leftists at the helm; it now looks without hope. However, apart from bad governance, there is no reason why Kolkata had to be poor and hopeless. It sits right
There is no other city like Kolkata for me: It is Home. The only city where I don't have to find a reason to go to, or to love. It is one city hardwired into my identity, and despite being away for a decade, that refuses to go away. People stay away from their homeland for a variety of reasons. But, as I have come to feel, no one can be completely happy to be away. One may find fame or fortune, love and learning, in another land, but they always live an incomplete life. They bring home broken bits of their homeland into their awkward daily existence, a cushion somewhere, a broken conversation in mother tongue some other time, always rediscovering the land they left behind for that brief moment of wanting to be themselves. The cruelest punishment, therefore, for a man who lives abroad is when his love for his land is denied. It is indeed often denied, because the pursuit of work, knowledge or love seemed to have gotten priority over the attraction of the land. This is particularly
The ‘Why’ Question? Adolf Hitler was appointed the German Chancellor by President Von Hindenburg on 30th January 1933. This was an extraordinary turn of events. Previously, President Von Hindenburg consistently refused to appoint Hitler the Chancellor, despite the impressive electoral performance of NSDAP in July 1932, Hitler’s uncompromising demand of the Chancellor’s post and a repeat election in November 1932 which failed to break the deadlock. Explaining his refusal, Hindenburg wrote in a letter on 24th November, “a presidential cabinet led by you would develop necessarily into a party dictatorship with all its consequences for an extraordinary accentuation of the conflicts in the German people.” The question ‘why’ Hitler was appointed Chancellor, despite the President being acutely aware of what might follow, is therefore a significant one. The NSDAP had election successes throughout 1932, and was already the biggest single party in the Reichstag and various Landtags acros
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.