Medtronic ($MDT) CEO Omar Ishrak has long focused on growing his company's presence in emerging markets, but the world's largest devicemaker knows that simply porting what works out West won't cut it elsewhere on the globe. Instead, Medtronic is setting up a de facto incubator in Singapore, planning to design, test and scale new business models for the developing world.
Dubbed the Global Center of Excellence for Business Model Innovation, Medtronic's new shop will serve as a breeding ground for new commercial approaches that address market growth barriers in emerging markets like India and China, the company said. The center will operate from within Medtronic's Singapore headquarters, and the country's Economic Development Board has signed on as a partner.
"Emerging markets in Asia provide tremendous growth opportunities for companies, but also present new challenges," Kevin Lai, the board's director of biomedical sciences, said in a statement. "This Global Center of Excellence for Business Model Innovation will enable Medtronic to address market-specific needs and barriers more effectively through Singapore."
If all goes according to plan, the center's initiatives would be piloted in one country before being rolled out in others, and Singapore's business climate and geography make it an ideal hub, Medtronic Strategy Vice President Sundeep Lal said.
Ishrak has said he wants Medtronic to get 20% of its total revenue from emerging markets by 2016, a goal the company hopes to reach through M&A, novel pricing structures and a deeper dive into healthcare management. Last quarter, Medtronic pulled 12% of its total sales from emerging markets, a 15% jump over the same period last year, but still not where it needs to be, Ishrak said.
"We still have got a lot of work to do, to raise the game a little higher," he told investors on a conference call.
- read Medtronic's announcement