Lessons from Emerging-Market Leaders

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You mention design as a strategy used by many emerging-market companies—how essential is it to invest in design to transform a flailing brand into a thriving one?

It's important to realize that [research and development], design, and branding are all later-stage phenomena. These factors are not so important for second-rate companies looking to remake themselves to become world-class corporations.

First, it's important to offer good quality products or services, then build the brand and differentiate, as Samsung did. Then they worked to stand out in terms of design. Design by itself with a lousy product won't do anything.

But it's not as if Samsung can just rely on the success of its winning design. Now it has competition from LG with its Chocolate phone. And of course with Motorola (MOT), which beat Samsung at the design game with the RAZR. Now Samsung is trying to fight back with its Blackjack smart phone. Design is a constant struggle.

Would you say that an advantage that many emerging-market powerhouses have is that their nations' educational systems produce students who excel in the sciences and math, two key factors in training future innovators?

India has been able to produce world-class schools and turn out huge numbers of graduates in disciplines such as engineering. The numbers count. That's why there are so many high-tech companies that are successful in India—Infosys, for example—versus in, say, other emerging markets such as Latin America. It's obvious that education has made a huge difference.

I hate to overstress the threat of emerging-market corporations and countries. We have a lot going for us in the United States. As Americans we often are too skeptical about our own educational system. I'd argue that there are two things that are good about the American educational system, even better than those of nations such as India and China: we teach problem-solving and value creative thinkers. I believe this is especially [true] at the university level in the United States, and even more so at the grad school level.

How would you advise an American company to compete with these companies on their local turf? Would you suggest forming a partnership instead, sort of, an if-you-can't-beat-them, join-them strategy?

These emerging-market companies not only [pose] a serious challenge, but also offer a gigantic opportunity for American corporations.

My hope is that the book is a wake-up call, not for the Googles (GOOG) and Microsofts (MSFT), but for other companies who do not quite take this threat seriously yet. American corporations could adapt north—south strategies. They could sell to these companies or work as a supplier. GE, for example, provides engines to Embraer.

The point of the book, and the strategies of learning from and working with emerging-market companies, is not theoretical, but practical.

Jana is the Innovation Dept. editor for BusinessWeek.