Emerging markets may offer a tremendous opportunity for companies in more developed countries, but they have to think about their businesses in different models. So, for instance, Ford made a mistake when they tried to adapt an inexpensive car for the Indian market. To cut costs, they eliminated one set of power window options - the front seat would come with power windows, but the back would not. Problem: In India, if you can afford a $15K car, you are defined as wealthy. You have a chauffeur. So for its Indian-entry car, Ford gave the power window to the chauffeur.
Tata's Nano car, a $2000 vehicle, on the other hand, is for the none-car owner. This car is designed for the population of Indian customers who drive two-wheelers right now. Whole families go out on motor scooters in India, one scooter often carrying families of four or five people. Per capita income in India is $1000, compared to $50K in the US. You cannot adapt a US market to India. Just won't work.
So the question for Ford is not how can they transform the auto industry in India, but how can India help transform Ford's auto business around the world? Because Ford certainly has as much to learn from Tata as Tata has to learn from Ford!
Vijay used to collect corporate mission statements. But he's given up, because they tend to be all the same. (He joked that he would like to sneak into corporate headquarters and switch their mission statements around and see if anyone even would notice.)
Three important differences between a generic mission statement and a good one. A GOOD mission statement has:
1. Direction. A generic mission statement doesn't give good direction, no distinct point of view unique to your company. Let's go north, means we don't want to go east or west. It's a direction. And direction is about the big picture, so people can see it.
2. Motivation. Passion. Need a compelling reason for employees to wake up and get to work. Creating shareholder wealth is NOT that motivation.
3. Challenge. Good employees like challenge, they don't want to keep doing the same thing over and over.
Strategic intent is about thinking outrageously big, unrealistically big - having an absolutely unattainable goal. Tata wants to design a $2000 car? The sound system in a new BMW costs more than $2000!
Why this is transformative for developed market companies: Tata's Nano will have a tiny, miniscule margin at $2000 in India. But Tata could sell this same car in developed economies for, say, $8000, and it would be a runaway success. So BRIC companies have an enormous incentive to enter developed markets and disrupt them!
Vijay says all the barriers to entry won't be any help when someone re-invents your category. His parting words: "If you live by the sword, you will probably be shot by those who don't"