PowerPoint

S P R I N G 2 0 1 6

Srivardhini K. Jha Ishwardutt Parulkar

Rishikesha T. Krishnan Charles Dhanaraj

Developing New Products in Emerging Markets How can multinational companies turn ideas from their emerging-market subsidiaries into global products? A successful innovation developed by Cisco’s R&D unit in India offers practical insights into how to make that process work effectively.

Vol. 57, No. 3 Reprint #57313 http://mitsmr.com/1SPzF4f

SPRING 2016 MIT SLOAN MANAGEMENT REVIEW 55

FOR MORE THAN a decade, multinational enterprises from developed countries have been moving a substantial part of their

research and development (R&D) activity to emerging markets

such as India and China. While the location of R&D centers in

other developed countries has been driven by lucrative markets or

specific expertise available in the local ecosystems of those coun-

tries, the location of R&D in developing countries has been driven

largely by the availability of skilled manpower at low cost. At first,

these R&D centers in emerging markets operated largely as ex-

tended arms of R&D in the home country, executing well-defined

projects under close supervision from headquarters.

However, the dynamics of multinationals’ R&D are rapidly

changing. Emerging markets are new growth drivers of the global

economy, and their unique bundle of opportunities and chal-

lenges can be a wellspring of innovation1 for a multinational

company. Simultaneously, many R&D centers in emerging mar-

kets have evolved to accumulate advanced technical capabilities,

leading their employees to clamor for higher-value-added work

and to seek responsibility for a complete product or technology.

This clamor gets louder when the R&D subsidiary is located in a

country with a large local market, such as India or China.

Given these trends, R&D subsidiaries in emerging markets are

uniquely positioned to play an important role in multinational

companies’ innovation strategies. However, this thinking is often at

odds with the dominant innovation mindset, structures, and pro-

cesses within multinational companies based in developed

countries. Also, the fact that the product-leadership capabilities of

THE LEADING QUESTION What factors facilitate innovation by subsidiaries in emerging markets?

FINDINGS �Three key enablers are well-developed R&D capabilities, market opportunity, and executive champions.

�In some cases, the subsidiary may need to “bootstrap” by creatively mobiliz- ing local resources to develop a product prototype.

Developing New Products in Emerging Markets How can multinational companies turn ideas from their emerging-market subsidiaries into global products? A successful innovation developed by Cisco’s R&D unit in India offers practical insights into how to make that process work effectively. BY SRIVARDHINI K. JHA, ISHWARDUTT PARULKAR, RISHIKESHA T. KRISHNAN, AND CHARLES DHANARAJ

N E W P R O D U C T D E V E L O P M E N T : G L O B A L S T R A T E G I E S

PLEASE NOTE THAT GRAY AREAS REFLECT ARTWORK THAT HAS BEEN INTENTIONALLY REMOVED. THE SUBSTANTIVE CONTENT OF THE ARTICLE APPEARS AS ORIGINALLY PUBLISHED.

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R&D centers in emerging markets are often not

well established within the multinational enter-

prise creates a higher hurdle. Against this backdrop,

we explore several questions: When is the subsid-

iary ready to take on such responsibilities? What

kinds of products or technology should the subsid-

iary work on? How should this be developed? While

many companies have struggled with these issues,

a successful innovation from Cisco Systems Inc.’s

R&D unit in India — a family of mobile backhaul

routers, named ASR 901 aggregation services rout-

ers2 — offers insights into these questions. (See

“About the Research.”)

The ASR 901 family of routers acts as the entry

point for consumer voice and data into the mobile

telecommunication network and sits in what is re-

ferred to as the “last mile” of the network. (See “How

a Telecom Network Is Structured.”) ASR 901 was

conceptualized and developed by Cisco’s R&D center

in India to serve the unique needs of emerging-

market customers. However, the product also found

traction in developed markets, making it a global

product. The decisions taken with respect to the

choice of ASR 901 as the product to be developed in

India, its technological features, and its resourcing

strategy provide valuable lessons for multinational

managers both at headquarters and at subsidiaries

on how to turn the company’s emerging-market

presence into a source of innovation.

Decision #1: Key Enablers of Emerging- Market Innovation Managers in emerging-country R&D outfits need

to consider three key factors before they embark on

innovation for local and similar markets. These en-

ablers are the R&D capability of the unit, the size

and uniqueness of the market opportunity, and the

presence of executive champions, both at head-

quarters and at the subsidiary.

R&D Capability First and foremost, the R&D unit needs to have well-developed R&D capabilities.

This means the unit should have the breadth and

depth of technical knowledge required to under-

take complete product development. Without this

capability, the unit will remain reliant on head-

quarters and other units within the company,

which might unnecessarily prolong the process or

end the project prematurely.

Leading up to ASR 901, Cisco India had built

these capabilities to a large extent. In 1996, Cisco

set up an R&D center in Bangalore, India. The

center started with a handful of engineers work-

ing as an off shore, extende d team of Cisco

headquarters, executing specific tasks for one or

two business units. The primary driver for setting

up the center was the availability of a large pool

of English-speaking engineering talent and low

operating costs.

In the years following its establishment, the

India center consistently met delivery and quality

targets, attracting more investment from head-

quarters and increasing the scale of its R&D. At the

same time, the center enhanced the depth and

breadth of its technical capability, and by 2009, the

center had filed more than 170 patents. The India

center was given development ownership for cer-

tain product components, although product

innovation continued to be driven by headquar-

ters and oriented to the needs of the developed

markets.

As the India R&D center matured, the R&D

managers and staff aspired to innovate rather than

simply execute; a culture of innovation and entre-

preneurship emerged. More importantly, the center

had accumulated most of the capabilities required

to deliver on that aspiration.

ABOUT THE RESEARCH The research method employed for this study was a combination of quasi-participatory action research and the case study method. One of the authors, Ishwardutt Parulkar, was a core member of the ASR 901 project, intimately involved in every aspect of the project from conceptualization to commercialization. This author is also trained in the research tradition. Through the duration of the project, he took detailed notes about the project’s challenges, dilemmas, and key decisions. At the end of the project, he authored a white paper to capture the important takeaways from the project.

We complemented this rich firsthand knowledge with an in-depth case study of the project. For the case study, we gathered data from multiple sources — key respon- dent interviews, company documents, and secondary data from external sources — in order to understand the evolution of Cisco India R&D from the time of its establish- ment to the initiation of the ASR 901 project, as well as the activities during the project itself. We conducted 10 semistructured interviews encompassing all the key mem- bers of the ASR 901 team, the executives at the India R&D center, and the product champions at Cisco headquarters. This helped us gain multiple perspectives on the development of the product.

We wrote a detailed case study based on the information gathered from multiple sources of data. We had several extensive discussions with our practitioner author to ensure that the emerging framework accurately captured the innovation process, and we refined it as appropriate. We then distilled the important takeaways for managers.

SLOANREVIEW.MIT.EDU SPRING 2016 MIT SLOAN MANAGEMENT REVIEW 57

Market Opportunity As Cisco India’s R&D matured, the Indian economy saw a major trans-

formation in the telecom sector. As a result of

deregulation in the 1990s, a number of telecom ser-

vice providers (both domestic and foreign) entered

the Indian market. The free-market forces triggered

above-average growth, and the telecom subscriber

base grew more than 20-fold in a decade, from

under 28.5 million subscribers in 2000 to over 621

million in 2010.3 To keep pace with this growth, tele-

com service provider investments in network

infrastructure also grew sharply in India, going from

$60.8 billion in 2007 to $89.6 billion in 2010, at a

time when capital investments stayed fairly flat in

developed markets.4 The market opportunity in

India and other emerging markets was clearly big,

and it was reflected in Cisco’s strategy. In 2006,

Cisco’s then-CEO, John Chambers, announced that

Bangalore would be developed as Cisco’s Globaliza-

tion Center East. The goal was to grow the Bangalore

site to reach an equal technical footing with the com-

pany’s headquarters in San Jose, California, to

support Cisco’s globalization strategy. To execute

this ambitious goal, Cisco senior vice president of

customer advocacy Wim Elfrink was appointed the

company’s chief globalization officer and relocated

to Bangalore in 2007. As a result, the footprint of the

India center, which had been predominantly an

R&D organization, expanded. Cisco services — both

technical and advanced — gained a strong presence

in India. Sales, marketing, and supply chain manage-

ment also grew.

Growth on multiple functional dimensions created

a better dialogue between R&D in India and customer-

facing teams. The R&D center started receiving

feedback on the lack of appropriate products for the

local market. It became increasingly evident that In-

dian and other emerging-market customers had

unique requirements with respect to price, network

scalability, subscriber monetization, and simultaneous

support for legacy (2G) and 3G/4G network deploy-

ments. This created an impetus to innovate.

In sum, a large market opportunity combined with

unique customer requirements is a key enabler of

innovation for emerging markets. While most emerg-

ing markets do present a sizable market opportunity,

it is the uniqueness of customer requirements that

creates a compelling need to innovate.

Executive Champions The third key prerequisite for innovation by subsidiaries in emerging markets

is the support of executive champions, both at the

subsidiary and at corporate headquarters. Leading

an innovation effort from an emerging-country

R&D center, especially one without an established

track record, goes against the dominant mindset of

many multinationals and presents many chal-

lenges. An executive champion who believes in the

center’s ability can mitigate these challenges.

Cisco India R&D had built credibility with key

executives at the company’s headquarters through

its consistent performance over the years. Pankaj

Patel, a senior vice president in Cisco R&D at the

time, was a strong believer in the emerging-market

opportunity and the capabilities of the India center.

Wim Elfrink, Cisco’s chief globalization officer,

who was located in India at that time, was also a

strong champion.

With support from these executive champions,

Cisco India’s R&D leadership in 2009 put up seed

funding to explore opportunities in emerging mar-

kets. The funds supported two key staff positions — a

chief technical architect and a product manager —

bridging the skill gaps at the India R&D center and

creating the core team for new initiatives.

In sum, Cisco India’s R&D had all three enablers of

innovation in place: a critical mass of end-to-end

product development capability, a growing market

with unique needs, and executive champions. It is

easy to see how an innovation initiative would falter

HOW A TELECOM NETWORK IS STRUCTURED In a modern telecom network, the core backbone network consists of large routers connecting cities over very high-speed links; that core network is fed by aggregation networks that aggregate network traffic from cell towers in a geographical area. Cisco India saw an opportunity to develop a mobile backhaul router (also known as a cell site router) to link cell towers to the core telecom network.

Mobile device

2G/3G/4G cell tower

Mobile backhaul

or cell site router

Aggregation router Core router

Mobile aggregation network

Core backbone network

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without any one of these three factors. Without ad-

vanced technical capabilities, it would be impossible to

architect and lead product development. Without a

unique market opportunity, there is no business case.

Without executive champions, it would be difficult to

mobilize resources and find traction within the com-

pany. Therefore, R&D managers need to evaluate

where they stand vis-à-vis these factors before em-

barking on innovation in and for emerging markets.

Decision #2: What Product to Develop? Once the key enabling factors are in place, the next

step is to identify a suitable product to develop.

This demands careful consideration of market

needs and an assessment of both internal capabili-

ties and the overall fit of the chosen product and its

category with the company’s product portfolio.

While the actual product will vary depending on

the industry, attention to these three factors in-

creases the chance of success.

Market Need The product has to address an impor- tant need that customers in emerging markets have.

The core team at Cisco met with customers in emerg-

ing markets to understand their needs and pain points.

Cisco found that the mobile-subscriber explosion in

emerging markets was fueling rapid capacity expan-

sion by service providers. At one point in 2009, India

was adding about 15 million new mobile subscribers a

month. The number of cell sites was expected to grow

rapidly in such markets: The technology market intel-

ligence company ABI Research predicted that by 2014,

39% of all cell towers would be located in the Asia-

Pacific region. These trends indicated that there was an

opportunity to develop a mobile backhaul router5

(also known as a cell site router) that links cell towers to

the core telecom network.

Portfolio Fit The product should also fill a gap in the company’s product portfolio. This will generate new

revenue streams and increase the chance of internal

support for the product. A modern telecom network

is hierarchical, with the core backbone network of

large routers connecting cities over very high-speed

links; the core network is fed by networks that aggre-

gate traffic from cell towers in a geographical area

such as a metropolitan zone. In 2009, Cisco was a

strong player in the “core” and “aggregation” layers of

the service-provider network, but it was less domi-

nant in the mobile backhaul router segment, which

had a few strong competitors. Therefore, a product for

this segment seemed to be complementary to the

company’s existing portfolio.

Further, the pattern of network evolution in

India and other emerging markets imposed some

unique requirements on the product. Mobile back-

haul was moving from the prevalent 2G technology

for voice to 3G/4G technologies for data and broad-

band. However, even with the deployment of

3G/4G, legacy (2G) systems persisted, as voice was

still a large source of revenue for telecoms in India.

Therefore, the proposed router had to be versatile

enough to support existing 2G services as well as to

handle rapid scalability to the next-generation

3G/4G mobile backhaul technology.

Product-Capability Fit The product should ide- ally be one that is reasonably complex, but also one

that builds on the capabilities of the subsidiary and

that can be developed within a relatively short pe-

riod. A product of low complexity would not work

as a compelling proof point to demonstrate the

subsidiary’s product-development capability. At

the same time, a very complex product would take

too long, which would test the patience of head-

quarters. The project might even run out of steam

before the R&D center could develop a working

prototype and validate demand.

The aforementioned attributes helped the core

team arrive at a product that could be developed

from the India R&D center. Cisco India decided to

develop a family of routers, the ASR 901, for last-mile

access in mobile backhaul of telecom networks. Es-

sentially, these routers would be the entry point for

consumer mobile voice and data from the cell towers

into the telecom network. For Cisco India, a product

for last-mile access in mobile backhaul was some-

thing that could be developed in 12 to 18 months and

also filled a critical product portfolio need.

Decision #3: How to Develop the Product? Once a suitable product has been identified, the

next step is to develop a working prototype, fol-

lowed by the end product, which is fully functional,

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is extensively tested and qualified, and can be man-

ufactured in volume. Product development is a

resource-intensive activity, requiring head count,

equipment, and other infrastructure. At this stage,

there are generally two options that subsidiary

managers can pursue.

The first option is to present the business case for

the identified product to headquarters and secure

necessary resources to undertake prototype and

product development. In this approach, the devel-

opment of the product will have the full support of

the organization. However, with multiple proposals

for products in different market segments compet-

ing for resources, there is a chance that the proposal

may not be supported. This is especially true in the

case of unproven product-development capability

and an untested emerging market. The second

approach is to develop the prototype with locally

available resources and demonstrate product-

development capability and commercial viability.

In this approach, garnering the necessary level of

resources may be a challenge. Furthermore, any un-

foreseen challenges and delays may compromise the

viability of the project due to its limited resources

and acceptance within the company.

The Decision Matrix We have developed a deci- sion matrix to provide a general framework for

choosing one approach over the other. (See “A

Decision Matrix for Product Development by a

Subsidiary.”) The horizontal axis captures the rela-

tive strategic importance of a given geographic

market to the company vis-à-vis other markets,

which could be high or low. The vertical axis is

project specific and captures the nature of the busi-

ness case for the proposed product.

The business case may have a strong quantitative

orientation, which means it would include hard

metrics such as investment dollars, total addressable

market, estimated market share, estimated revenue

for one to three years, and return on investment. A

qualitative business case, on the other hand, would

stress factors such as mind share in a new market,

gaining early-entrant status, countering growing

competitor dominance in an emerging market, and

the total addressable market over a longer period. Of

course, every business case will have both quantita-

tive and qualitative elements, but this dimension

identifies which one predominates. When the busi-

ness case is quantitatively oriented, it is easier to

communicate and garner support than when it is

qualitatively oriented.

When the relative importance of the geographic

market for a company is high, it can be assumed that

the company is well attuned to the market’s trends

and requirements. Therefore, any such product with

a quantitatively strong business case (top-right quad-

rant) is likely to be on headquarters’ radar and to get

into the development pipeline.6 In this case, the local

R&D center has to compete with other R&D centers

in the company to take ownership for developing the

product. If there is a quantitatively strong business

case for a product, the local R&D unit has a good

chance of convincing headquarters to invest. There-

fore, initiating the standard product-approval

process with headquarters would be the preferred

option (top-left quadrant). However, it is possible

that the business case has a qualitative orientation be-

cause the opportunity is still nascent. In this case,

even if the market is important for the company, the

opportunity may not be immediately apparent. The

local R&D unit, by virtue of its proximity to the mar-

ket, is more likely to be in tune with such emergent

requirements. But the qualitative orientation of the

business case makes it difficult to quantify the return

on investment and get product development ap-

proved by headquarters. In such cases (bottom-right),

the R&D center needs to creatively mobilize resources

to develop a working prototype. We refer to this as

A DECISION MATRIX FOR PRODUCT DEVELOPMENT BY A SUBSIDIARY When deciding how to best proceed with an idea for a new product, managers at subsidiaries of multinational companies should consider two important factors: (1) whether the business case for the new product is primarily quantitative or qualitative; and (2) the relative importance of the geographic market to the parent company.

Business case for the

product

Relative importance of market for the company

Qualitative orientation

Low

Quantitative orientation

High

Local R&D to initiate product- approval process with headquarters

Headquarters initiates product development; local R&D to lobby for

mandate

No action Bootstrap

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“bootstrapping.” Finally, if the relative importance of

the geographic market is low and the business case is

qualitative (bottom-left), it is better to wait until there

is a more quantitative business case or there is a strate-

gic shift toward the market within the company.

Cisco India’s mobile backhaul router for last-mile

access mapped onto the bottom-right quadrant of

the decision matrix. Even though India was an im-

portant market for Cisco, as evidenced by the

establishment of the globalization center in India, the

business case for the proposed router would not have

met some of the quantitative thresholds typically

needed to successfully get through Cisco’s company-

wide R&D project-commit process. However, the

router project presented a qualitatively strong busi-

ness case: The product addressed a pressing customer

need, filled a critical gap in the company’s portfolio,

and aspired to open up a segment where competitors

were rapidly gaining a foothold in an important mar-

ket. Therefore, the core team in India decided to take

a bootstrapping approach (bottom-right in the ma-

trix) to develop the prototype. This novel approach

to product development provides an alternative to

the more common structured product development

process within companies.

Bootstrapping The core team, comprising the chief technical architect and the product manager,

realized that it would be difficult to start the devel-

opment of ASR 901 through Cisco’s structured

R&D project-commit process. They needed to

bootstrap by cobbling together the limited re-

sources at their disposal to build a prototype and

successively work their way toward broader accep-

tance within the company. This strategy had to be

executed on multiple fronts to mobilize the key re-

sources required for development.

In addition to the chief technical architect, the

team needed a few senior technologists with exper-

tise in specific domains to design state-of-the-art,

complex features and provide general technical

direction to the rest of the engineering team.

However, there was a shortage of domain experts,

especially in some of the advanced networking pro-

tocols, and hiring from outside was difficult and

expensive. The team instead bridged the domain

expertise gap by borrowing a handful of senior engi-

neers handpicked from other business units in India.

This was possible because several groups had devel-

oped advanced technical capabilities in specific

technology areas over the years. Further, since the

success of the project was important for establishing

the product-development capabilities of the India

R&D center, other engineering organizations within

the company’s operations in India were forthcoming

in offering resources to help the project get off the

ground. This arrangement also kept the costs down

and stretched the modest seed funding the team was

given. However, the technology implemented was

cutting edge and adhered to global standards.

To build a prototype, the engineering team had to

be staffed up considerably. With minimal seed fund-

ing at its disposal, the team decided to engage with

an engineering-services partner. The service partner

would execute part of the development effort

through a new revenue-sharing model. Instead of

the traditional time and materials model, where pay-

ment is made at the time the services are provided,

the new model involved payment as a percentage of

revenue as the product started selling.

This new revenue-sharing model had several

advantages. First, it deferred the nonrecurring engi-

neering cost to a future date when the product had

wider acceptance within the company, thereby

stretching the minimal seed funds available. Second, it

helped develop deeper partnerships with local com-

panies and strengthen the local ecosystem through

technology transfer. Third, it was a much faster way of

staffing the team than hiring from the market. Fourth,

the services partner had “more skin in the game” and

They needed to bootstrap by cobbling together the limited resources at their disposal to build a prototype and successively work their way to broader acceptance within the company.

SLOANREVIEW.MIT.EDU SPRING 2016 MIT SLOAN MANAGEMENT REVIEW 61

worked as an integral part of the team, which was es-

sential for a new product development effort.

ASR 901 product development involved working

across the entire stack of technologies — silicon chips,

platform hardware, platform software, network oper-

ating system, and network management — and

having them closely interface with each other.

Many of these technologies were developed within

Cisco, some came from suppliers as off-the-shelf

components, and other portions were codeveloped

with partners.

For codevelopment, physical proximity and

constant engagement with the partners was ex-

tremely important. However, most of the partners

did not have a significant presence in India, and the

handful of people who were locally available did

not have the in-depth technical expertise to work

with Cisco on a complex, next-generation product

like ASR 901.

There were two particular touch points when

close interaction was critical. First was at the time

of architecting the product, when it was important

to understand the chip’s capabilities and all its

nuances, to be able to clearly define the hardware/

software interfaces. Second was the “bring-up”

phase, when the functionality of the prototype was

tested for the first time, and intimate understand-

ing of the silicon component and the hardware/

software interface was critical. Working with part-

ners halfway around the world was not viable.

To overcome this hurdle, the team leveraged

Cisco’s long-standing relationship with its suppliers.

The team, through its champions at headquarters,

was able to convince the key suppliers to staff up

in India in order to support the development of

ASR 901. The suppliers moved some key personnel

to India, and this essentially plugged the gap in

the hardware ecosystem for the development of

ASR 901.

In sum, the team creatively mobilized all types

of resources necessary for prototype development.

It worked like a startup within a large company.

The hierarchy was kept to a minimum, and all the

engineers — Cisco employees as well as engineers

from the partner organization — worked in a com-

mon workspace. This facilitated impromptu

whiteboard discussions and quick resolution of

questions and issues. The junior engineers were

guided by the senior engineers and received imme-

diate feedback on pieces of code and design. This

setup facilitated rapid learning and quick resolu-

tion of issues through joint problem-solving.

Further, close interactions with the partner organi-

zation gave the team ample exposure to technical

constraints and trade-offs. As the team members

designed and developed the product prototype,

they constantly challenged entrenched design

norms to meet the stringent product requirements

of emerging-market customers with respect to cost,

power, and form factor, while simultaneously

advancing the state of the art in mobile backhaul

technology. With this setup, the team was able to

build a working prototype within six months.

The effort shows that bootstrapping can be

a viable alternative to the standard corporate

prototy pe-development process that involves

getting up-front commitment to a concept. The

specific activities involved in bootstrapping will

depend on the industry in which the company

operates and the nature of the product being devel-

oped. However, the Cisco experience provides

some general guidelines to managers on the types

of organizational arrangements that can be struc-

tured to build a prototype on a shoestring budget.

Integration Into Mainstream Development Once a working prototype is in place, managers can

demonstrate the technical and commercial viabil-

ity of the product to all stakeholders within the

company. They can also showcase the prototype to

select customers for early feedback and assess the

Bootstrapping can be a viable alternative to the standard corporate prototype-development process that involves getting up-front commitment to a concept.

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level of interest in the product. If the prototype is

well received by internal and external stakeholders,

the business case is made, which paves the way for

full-scale development.

The ASR 901 prototype started getting atten-

tion from customer-facing organizations in the

company. The active engagement of the core team

with customer-facing groups resulted in a slow but

sure realization that the product filled a gap in the

company’s portfolio. This provided market valida-

tion for ASR 901. Importantly, the product gained

excellent traction with some key customers in the

developed markets because it offered leading

technology features at attractive cost, power, and

form-factor-design points. For example, low power

consumption, which was critical to containing

operating expenses in emerging markets, found an

additional application in the developed markets,

where corporations have a social-responsibility

mandate to be “green” in addition to delivering

economic benefits.

The team now had a working prototype along

with a demonstrated business case, thanks to cus-

tomer interest in emerging and developed markets.

The validation of the concept cleared the way for

“execution commit” from the company. Headquar-

ters sanctioned the next round of funding, which

went toward staffing up the engineering teams and

building the large number of prototypes required

for full-fledged testing and qualification.

As a result of these developments, the product

became part of the mainstream engineering orga-

nization. With formal recognition and funding,

the team aligned itself with Cisco’s standard product-

development process and was able to leverage

domain expertise from other teams to complete

the development and qualification and enter trials

with early customers.

The Transformation of Cisco India ASR 901 was launched in October 2011. Over the next

year, several variants of ASR 901 were developed and

sold to more than 100 customers in 46 countries. The

product improved on the state of the art in some of

the key emerging mobile backhaul technology areas.

It achieved this with significant improvements in cost,

power, and footprint efficiencies, which met the strin-

gent requirements of emerging markets while greatly

appealing to developed markets. The success of the

project was one of the factors that contributed to the

formation of a new Cisco business unit, Provider

Access Business Unit (PABU), centered in India.

The market success, strengthening of product-

development capability, and organizational evolution

led to a string of new products from Cisco India over

the next few years. In December 2014, Cisco show-

cased three new communicat ions pro duc ts

conceptualized, architected, and designed in India.

In 2015, Pankaj Patel, executive vice president

and chief development officer at Cisco, summa-

rized the transformation of Cisco India: “We came

to India for the costs, we stayed for the quality, we

invested for innovation, and now we are creating a

new industry.”7

Srivardhini K. Jha is a visiting professor of entrepre- neurship at the Indian Institute of Management Bangalore in Bangalore, India. Ishwardutt Parulkar is a distinguished engineer at Cisco Systems Inc. in Bangalore, India. Rishikesha T. Krishnan is director and a professor of strategic management at the Indian Institute of Management Indore in Indore, India. Charles Dhanaraj is a professor of strategy and global leadership at IMD in Lausanne, Switzerland. Comment on this article at http://sloanreview.mit.edu/x/57313, or contact the authors at [email protected].

REFERENCES

1. “The World Turned Upside Down,” The Economist, April 15, 2010.

2. See www.cisco.com.

3. Telecom Regulatory Authority of India, “TRAI Annual Report 2009-2010” (New Delhi, India: Nov. 9, 2010).

4. KPMG and Federation of Indian Chambers of Commerce and Industry, “m-Powering India,” (New Delhi, India: Department of Telecommunication, December 2011).

5. Backhaul of a telecommunications network comprises the intermediate links between the core network and the small subnetworks at the edge of the entire hierarchical network. Definition from J. Salmelin and E. Metsälä, “Mobile Backhaul” (Chichester, U.K.: John Wiley & Sons, 2012).

6. V. Govindarajan and C. Trimble, “Reverse Innovation: Create Far From Home, Win Everywhere” (Boston, Massachusetts: Harvard Business Press, 2012).

7. “Bangalore R&D Unit Key to Us; Has Filed 800-Plus Patents: Cisco,” The Economic Times, February 8, 2015.

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