Page 179 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

In addition to serving as markets, these rapidly developing
economies will host a new generation of competitors—the so-
called global challengers. Even before the Great Recession, com-
panies from the developing economies had built a powerful
international presence. In the wake of the crisis, though, these
companies are emerging more powerful than before. They have
the advantage of being based in comparatively fast-growing
markets that have not suffered the same kind of damage as mar-
kets in the developed countries. Building on their cost advan-
tage and their increasingly comparable technological compe-
tence, these companies will add to the competitive pressure
experienced by companies of the established order.
Traditional multinational companies from the industrialized
countries should not underestimate this intensified competi-
tion. And, indeed, smart companies are already taking action.
Just look at General Electric. A role model from the Great
Depression, GE has already started to take account of the new
globalization model.
Jeff Immelt, GE’s chairman and CEO, in an article he co -
authored in Harvard Business Review, explains how GE is
focusing on what he calls reverse innovation—a process led by
GE units located in emerging markets and then disseminated
1
to other markets. This is in contrast to globalization (or “glo-
calization,” as GE calls it), in which innovation is driven by GE
units in the developed markets and then distributed worldwide
with some degree of localization for specific markets.
GE argues that the “glocalization” model belongs to an era
when developing countries did not offer much, either as innova-
tors or as consumers. But, with rapid growth in countries such as
China and India and slowing growth in developed nations, they
see things changing fast. So GE is therefore redefining global-

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