Tuesday, June 1, 2010

Innovation in Emerging Market: Dilemma Managent vs. Problem Solving

In Economist's recent report on innovation in emerging markets here, the article "Easier said than done" talks about differentiated and unique approaches to putting economically profitable business ideas into practice. An exceptional example is from Kenya:

"East African Breweries, a division of Diageo, launched a cut-price beer, Senator Keg, to help reduce demand for illicit alcohol, which is cheap but is frequently contaminated with methanol, fertilisers and battery acid. The company reduced the cost of the beer by negotiating a tax waiver with the government and by distributing it in kegs rather than bottles. The company made use of the shadow economy to get the beer delivered to the outlets. It also trained bar staff to understand the importance of rotating kegs to make sure the beer was fresh, and of washing glasses. Senator Keg is now ubiquitous in Kenya, sold in every makeshift roadside bar, and is affectionately known as “Obama”."

This is 21st Century Dilemma management vs. 20th Century Problem Solving. Thinking beyond maximizing the shareholder value on a quarterly basis yields the above innovative solution.

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