Julian Lighton on the Cisco Strategy for Emerging Markets and the Trends other Regions Should Note
May 26, 2009
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Julian Lighton, Cisco Vice President of Strategy and Business Development for Emerging Markets
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Julian Lighton Talks about the Role of Cisco and Technology in the World's Emerging Markets
How do you put together a strategy to deal with countries as diverse as Russia, Saudi Arabia or Brazil?
That is the task facing Julian Lighton, Cisco's Vice President of Strategy and Business Development for Emerging Markets, a theater that covers Eastern Europe, Western Asia, Latin America, the Gulf, Saudi Arabia, Africa, Levant and Russia.
This is Cisco's most extensive theater of operations, covering two-thirds of the world's territory, 23 time zones, 21 official languages and more than 130 countries.
It is a grouping of nations which encompasses a significant amount of diversity, but also with many common features, such as rapid economic growth rates, impressive infrastructure build-outs and a thirst for public and private-sector innovation.
In this Q&A, Julian Lighton talks to News@Cisco about how Cisco sees this vast conglomeration of territories—and what other regions may be able to learn from them.
What is your strategy for Emerging Markets?
Julian Lighton: From a corporate perspective, I think that before you can answer this question you have to have a clear definition of what you mean by 'emerging markets'.
A lot of companies have just thrown together a bunch of countries as a 'rest of world' offering, but at Cisco we have taken a comprehensive approach of looking at the stages of economic and infrastructure development that these nations are in.
We have adopted a three-part strategy: coverage, replicable business models and country transformation. This is succeeding extremely well, with Cisco seeing significant growth in its emerging markets business over the last three years.
How is Cisco adapting its business to suit the major vertical sectors in Emerging Markets?
Julian Lighton: At Cisco we have always been very conscious of the need to tailor our offering to vertical markets and in this respect our approach in Emerging Markets is no different to what we do in our other theaters.
We have structured out business teams to help Emerging Markets public sector, service provider and enterprise customers take advantage of the transitions that are taking place.
We have put a lot of effort into coming up with offers, business models and funding arrangements applicable to the companies operating in these markets, to ensure that we can deliver value.
One of the characteristics of many of the large businesses operating in Emerging Markets is that they are multinational but not global, so we need to make sure that we operate on an appropriate scale for them.
What will happen to countries in this theater if they no longer qualify as 'emerging' in a few years' time?
Julian Lighton: I fully expect that some of the countries we currently serve will no longer need to be looked upon as emerging in the future. We review our theater classification on an annual basis.
What trends do you see in Emerging Markets which could be of interest to other regions?
Julian Lighton: The first is the potential of citizen-centered services.
In Brazil, for example, two thirds of government revenue is spent on social services to citizens. If you could create an efficiency of just 10 percent through the use of IT, you would be freeing up a lot of money that could be used for infrastructure investment.
"Watch out, developed world."
You could have an enormous productivity increase. Governments recognize this and are jumping on the opportunity to use Web 2.0 metaphors to provide access to services, whether it is in terms of downloading forms, finding a doctor or paying your taxes.
Increasingly you have this concept not of administering government but of delivering value.
Secondly, there is a substantial lesson around business models. What has happened with many Emerging Markets businesses is that they have figured out simple business models. Mittal Steel, for example, can look at steel operations and get efficiencies out of them very quickly.
Western businesses are based on building products. Emerging Markets businesses, such as Dubai Ports or Grupo Carso, are not thinking about how to build products, but how to run a business.
They act much more like private equity players, using business concepts to do with taking companies over and running them more efficiently.
A third interesting trend is that over the last 20 years we have seen an enormous economic transfer from north to south, west to east. Now we are seeing that flow reversed and new trading hubs being created.
For example, Brazil's largest trading partner is not the United States, but China.
The credit crunch has had little impact on emerging nations, and the only possible explanation is that these countries are not only developing healthy economies, but trading amongst themselves so they do not need to trade with places like the United States or Europe.
What all this means is essentially: "Watch out, developed world. In 20 years' time the world may no longer belong to you, but to the economies which are now emerging…."
