Recapturing Corporate Asia’s Dynamism

WSJ has an article by W. Chan Kim which urges Asian companies to focus on capturing new market spaces and value pioneering:

Asian companies would do well to understand what led to their meteoric rise in the past. How is it that Japanese companies rapidly came to dominate global markets? Think of the greatest successes — Sony’s Walkman, JVC’s VCRs, energy-efficient, high-quality smaller compact cars made by Honda, Toyota and Nissan. What is common here? And what has allowed Korea’s Samsung recently to emerge as a driving force in the global cell-phone industry, or for Japan’s DoCoMo to catapult the Japanese’s mobile Internet market ahead of all Western counterparts?

A close look reveals two overriding principles. First, the emphasis was not on competing in existing markets but on creating new market spaces. Sony’s Walkman, for example, created the new market of high-fidelity mobile stereos. The Walkman essentially combined the size and weight convenience of transistor radios with the acoustics and trendy image of “boom boxes” to unleash a whole new market space that allowed people to listen to their favorite music on trains or while walking down the street. Consumers the world over adored the emotional experience created by Sony and rewarded it with one of the greatest and most profitable runs in Sony’s history. But if Sony had benchmarked the competition and focused on incrementally building advantages over them, the insight for the Walkman would have never been born. Likewise, if Japanese automakers benchmarked the models coming down the production lines in Detroit, the mass market for compact, energy-efficient cars would not have been launched by the Japanese.

Second, the Sony Walkman was not the product of a race to provide leading-edge technology. Nor was JVC’s enormously successful VCRs or DoCoMo’s mobile Internet business or Honda, Toyota and Nissan’s high-quality compact cars. What united these companies in their drive to create new market space was a ruthless obsession with “value pioneering,” not technology pioneering. That is to say, offering buyers products and services that are radically more fun, simple, productive, convenient, easy to use and environmentally friendly, while pricing these products and services at affordable levels. Take DoCoMo. A month’s worth of Internet content cost only as much as a copy of a weekly magazine. By creating the “I-mode” button that allows cell-phone users to be continuously on-line and offering strategically priced Internet content that is easy to access, the mass market for DoCoMo’s services exploded. DoCoMo was not a technology pioneer, but it was a value pioneer.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.