One of the biggest challenges for a global corporation is to strike the right balance between local responsiveness and global integration. Over centralization can make a good strategy go sour (see “Hope Vodafone Has Learnt Its Lessons (about Globalization Models)”). On the other hand a weak center can create its own chaos. In the last ten years the landscape has changed so much that the old maps for going global are no longer relevant. In fact, what used to work in the past is now becoming passé.
If at all one needed a reminder of this, it came in the form of News Corp. announcement yesterday that MySpace China will be an indigenous business using only the MySpace brand. Luo Chuan, a former senior executive in-charge of MSN Portal in China, will be the CEO of the new venture called MySpace China. This venture will have News Corp., IDG Ventures and China Broadband Capital as investors. Luo says he will have a free hand and will not be required to “follow the narrow dictates of executives based in US”.
Think about it… in effect, News Corp. has chosen to finance a Chinese startup rather than import its hugely successful MySpace.com unit. They have taken a path that would be unthinkable in many companies. No doubt what helps is that News Corp. is new to ‘new media’ and so very little legacy to worry about. Therefore they can question traditional wisdom.
I believe that this News Corp. decision is part of a larger trend. I see in-market incubation being critical to opening up the next wave of growth in emerging markets. So companies that unlearn their old ways and master the challenges of in-market incubation will be the ones that will be successful.
A few months back I wrote in a Sandhill.com column titled “Anatomy of New Growth in India” that…
Frankly the real challenge is not in the identification of… opportunities. The real challenge is in executing for success (isn’t that always the case!).
Success depends on doing some things differently. First, how do you move away from a sales-out mentality to incubating the right products and business models for emerging markets like India? This is not about money; it’s about mindset. It’s about breaking away from the old model of globalization.
Incubating a new product (and sometimes its business model) locally is the very anti-thesis of a traditional sales-out strategy. It’ll be interesting to see how many companies manage to make the transition.
Off the top of my mind…
The idea of in-market incubation is valid. But I don’t think Myspace is a bellweather example.
Myspace was started by a marketing firm that was involved in direct-mail campaigns. I have read that they did not have a clear vision of this product, and was just a try to get “online exposure”, and success “just happened”, mainly due to the scalability issues in the popular site at that time - friendster. When News Corp bought it, they had been trying for a couple of years without success to develop an online strategy.
So I would think Myspace knows they don’t have any clear vision, knowledge to pass to the china site. The best they can do is to provide a scalable tech infrastructure that could be used.