Contributor Vijay Govindarajan is a Professor at the Tuck School at Dartmouth and Chief Innovation Consultant at GE.

Today, more than half of GE’s revenues come from outside the United States. The company’s more than 300,000 employees work in 160 counties. And GE’s globalization efforts have helped cement its reputation as one of the world’s most successful and innovative companies. But the rise of emerging markets, such as India and China, mark a new phase of globalization, and, to date, most multinational companies have targeted only the top of the pyramid in these markets — the wealthiest 10%. The real potential lies in unlocking the other 90%. That is easier said than done.


Globe-trotting: GE’s globalization playbook is being redefined as dynamic emerging markets such as China and India create vast new opportunities.

Emerging markets are the new mass markets of the world. They now generate half of global GDP and over 40 percent of world exports. Yet, the customers in these new mass markets are fundamentally different from those in developed markets. For example, the per capita income in the U.S. is $44,000 versus $1,000 in India. Emerging markets are a paradox: they are mega markets with micro customers.

So, just how do companies such as GE unlock that 90 percent of the market in these countries? Adapting global products created for the US customer in India, for example, simply will not work to capture the full opportunity in India.


Within reach: Professor Vijay Govindarajan, GE’s chief innovation consultant, is working with management teams in GE Healthcare and GE Energy to roll out new approaches to globalization challenges.

In GE’s first phase of globalization, the company achieved global scope by identifying existing products with global potential and taking them into markets throughout the world. In the second phase, GE globalized its resource base — for example, by establishing centers of excellence in R&D outside the United States. In the third, GE began to adapt global products to local needs — a phenomenon labeled “Glocalization.”

In a world where markets were broadly similar, these approaches to globalization made sense. A consumer in Japan wasn’t hugely different from a consumer in the US or Western Europe. This made selling them global products, with suitable local adaptation, both viable and attractive. But the world is changing.

GE is meeting this challenge with an initiative we call CSL, which stands for “Connected, Scalable, Localization.” At the heart of the CSL approach are three simple principles: first, it recognizes that GE’s competitive advantage resides in connecting the sum of its parts — by leveraging its technological and manufacturing excellence. That’s the “connected” part of the equation. Second, it requires developing products in and for emerging markets as a vital way to reach new customers. That’s being “localized.” Finally, it identifies potential opportunities to take those locally innovated products to other similar emerging markets as well as to markets in the developed world. That’s what it means to be “scalable.”

This Friday, GEreports.com will bring you an example of this initiative in action — a portable electrocardiogram called the MAC 800 that was developed in one emerging market and is now seizing opportunities in others.