Competing Through Joint Innovation
Manuel Hensmans (Solvay Brussels School of Economics and Management) pp. 26-33
Emerging markets such as China and India have become the growth drivers of corporate research and
development initiatives from all around the world. Although there is growing evidence that Chinese
companies are shifting their innovation focus from cost saving to knowledge-based research, the view
by many in the West remains that companies based in emerging markets are not ready to take over the
role of leading innovators from their Western competitors. As a result, Chinese multinationals have
been at a competitive disadvantage, particularly in strategic technology industries.
What can Chinese multinationals do to overcome Western barriers to entry in strategically important
technology industries in which “Made in China” or “Designed in China” are viewed as negatives? What
dynamic innovation capabilities — or, put another way, what culturally specific processes — should
companies focus on to gain acceptance in the competitive global marketplace?
To answer these questions, the author studied Huawei Technologies Co. Ltd., the Chinese telecommunications company that has recently made significant inroads in Europe’s mature and strategically
important telecommunications industry, making it a potential role model for companies in China and
other parts of Asia hoping to make a similar transition.
In Europe, the author notes, Huawei has typically relied on the same strategy it used to build its market
position in China. It has ( 1) offered customized technologies that meet the practical needs and resource
constraints of target customers; ( 2) built customer loyalty by enhancing practical innovation with longer-term joint innovation partnerships; and ( 3) enlisted the support of governments, universities, and other
industry stakeholders by customizing further innovation investments to their priorities.
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The Next Wave of Business Models in Asia
Asher Devang (Innosight), Christian Kruse (Innosight), Andy Parker (Innosight), and
Pontus Siren (Innosight) pp. 35-39
The global appetite for Korean entertainment — movies, TV shows, and music videos — has exploded in
recent years. For non-Korean-speaking viewers, subtitles are crucial to the experience. Enter Viki Inc., a
company that hosts content for streaming and provides subtitles and closed captions. Viki both eliminates
language barriers and introduces the content to an otherwise unserved audience.
Traditionally, subtitles are created by a bilingual translator hired by the producer or broadcaster. But
the process is expensive and slow to scale. To overcome these challenges, Viki developed a business
model leveraging a community of more than 150,000 volunteers. This model allows Viki to crowdsource
subtitles for Asian content in numerous languages. Viki rewards volunteers with gamified badges, the
ability to view videos not otherwise available in their region, early access to new shows, and an advertising-free, high-definition experience of the content.
The combination of rapidly increasing internet video adoption rates and a greater appetite for foreign
content — both in Asia and globally — has become a big opportunity for Viki, which was acquired by
Tokyo-based Rakuten Inc. for a reported price of $200 million in 2013.
The authors argue that Viki’s story exemplifies a larger trend playing out in Asia. They see Viki as
an archetype of a new generation of companies leveraging business model innovation to drive growth in
Asia. But to understand this type of business model innovation in its proper context, it’s important to
WINTER 2017 • VOLUME 58 • NUMBER 2