The challenging, unpredictable, and often cutthroat competition in emerging markets is literally a world away from the cushy workspaces many companies look to for entrepreneurial thinking, but VimpelCom — one of the top 10 largest mobile network operators — sees its presence in some of the planet’s most dynamic markets as the places to spur innovation.
Accoording to Yogesh Malik, VimpelCom’s CTO, in reference to the company’s activities in places like Pakistan, Uzbekistan, Georgia, and Algeria:
“If we make something work in an emerging market, it’s going to be a low-cost, low-price, potentially disruptive tool than we would see in a developed one, by definition.”
Malik’s corporate team hosts month and quarterly meetings to review business opportunities, at which they put three questions to any innovation idea: Can we scale it bigger in the same market, get used in similar markets, and can it become a global offering?
Its approach, which Malik calls instant innovation, starts with the premise that while mobile customer needs are much the same around the world, local conditions vary. So it devolves authority to its operating units to get as close to its customers as possible, whether that means inventing new approaches or testing ones that originate with the global team.
“We launched our first solution in 2008, called MobiGenie, but the market wasn’t ready for it, and it couldn’t scale because too many customers were unbanked,” explained Aniqa Afzal Sandhu, its director of MFS. “Then we developed a product with Citibank in 2010 that didn’t make it to market, so we decided to do the end-to-end solution ourselves.”
Then, VimpelCom acquired a license to do its own banking, and focused its rollout on facilitating bill payments, as its research revealed 60% or more of the Pakistani population relied on physical currency to settle commercial accounts. Another focus area was digitizing domestic money transfers, which were heavily dependent on physical currency. (Soldiers collected pay and literally handed it to family members when visiting home.)
When Mobicash launched in 2012, it found a ready market and, as it continues to roll out new services like loan disbursements & repayments, merchant payments, interoperable transfers and saving accounts. It handled over 52 million transactions, for a total value of USD $1.4 billion last year.
Instant innovation can also mean testing corporate ideas in local markets, as the company’s team did in Georgia when the group asked itself, “How can we break out of our position in the market?” according to Malik. The resulting digital sales initiative used already deployed third party physical terminals to reach customers (and an interface that is completed automated). The results were a 250% increase in bundle activation, and an increase of 114% in revenue, during the first year.
Sharing innovation between markets is also a core competency. A virtual data network environment first built in Uzbekistan can support other markets’ activities. Pakistan is looking at an insurance product introduced in Russia, according to Sandhu, and its MFS solution is getting adapted to Kazakhstan, Ukraine, and Algeria. A sales tracking tool developed in Uzbekistan is now used in Ukraine.
The opportunity for emerging markets to invent global solutions is the biggest potential payoff for VimpelCom’s innovation, as evidenced by recent plans to establish innovation-fostering centers across various locations.
“We studied the payment experience and role of trust in markets as diverse as Russia and Zimbabwe,” said Rob Reeve, COO, Mobile Financial Solutions. “Those experiences ranged for people spending their lunch hours waiting in line to pay a single utility bill, or trading mobile phone airtime because the local currency had lost so much value, to mobile payments that took dozens to keystrokes to complete.”
Reeve noted that he chairs a global forum that meets regularly to collaborate on those solutions, involving both its emerging and established country resources.
“Our global strategy is to simplify those experiences, engaging much closer and faster with local customer needs, and build their trust thereupon,” added Malik