The committed innovator: A conversation with board director Ireena Vittal

March 24, 2021

Here is an excerpt from an interview of Ireena Vittal by Erik Roth for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.

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Ireena Vittal is a global innovation expert on solving the puzzle of growth in emerging markets.She has spent 30 years helping both multinationals and start-ups grow their businesses, especially in emerging economies. Today, she is one of India’s top advisers on innovation and growth, serving on the boards of some of the country’s largest institutions and assisting governments on issues related to urbanization and agriculture. As part of an ongoing series of interviews with leading innovators, this episode of the Inside the Strategy Room podcast features Vittal and Erik Roth, who leads McKinsey’s innovation work globally, discussing what it really takes to grow profitably in developing countries. This is an edited transcript of the podcast. For more conversations on the strategy issues that matter, subscribe to the series on Apple Podcasts or Google Podcasts.
Erik Roth: Ireena, tell us first a little about your background.
Ireena Vittal: I started out working with Nestlé, then moved to Max Touch, now Vodafone India. When I joined McKinsey, I worked across the world—in the US, Europe, Israel, Pakistan, and across the emerging markets. In 1999, a group of us decided that McKinsey needed to better understand emerging markets, so we created a concept called “how half the world shops.” For the next 12 years we had a blast working with colleagues in Brazil, Russia, India, China, South Africa, and Mexico to see what ideas travel well from developed markets and what is unique about growing in these emerging countries. I have continued on that journey ever since. When you study emerging markets, you realize how different their structures are—government structures, city structures—and you realize that understanding the whole is as important as understanding categories.Roth: Were there pivotal moments that shaped your view of growth and innovation?

Vittal: One was the realization that growth is an issue of mindset, not the state of market. The second was that margins come from the investing structure. You can have an amazing mindset about growth, but if the industry structure is off-kilter, you have to be very patient. The third thing was that consumers do not think about categories or brands, they think about their lives. Companies that consistently grow focus on continuously improving the intersection of their products and services with consumers’ lives without asking the consumers what they want—because consumers don’t really know. If you understand the lives of consumers, you are able to keep reimagining how to serve them.

Roth: What are some of the biggest differences between growth mindsets in developing and developed nations?

Vittal: The differences are more about the stage of the country’s evolution than fundamental consumer differences. Beyond that, market depth in most emerging economies is very shallow. You need to be in these markets for tomorrow, not necessarily for today. Great growth companies get granular about growth early in the game.

If you want to win in India, you need to define the many Indias that exist. Think of India as Europe, not as America. You need to treat Indian states as Germany and France and Italy rather than as Michigan, Ohio, or New York, because they are very different markets. Leaders who are paranoid about consistent growth quickly break up India into many Indias. The key is to go deeper with the customers you have, which requires focus on retention and raising the share of wallet, as well as acquiring new customers. It also requires small, continuous inorganic moves to get into adjacencies, sometimes to acquire talent or the right product or market fit. It’s a game of juggling balls: retention, going deep, remaining relevant, and continuously making small acquisitions.

Also, many developed markets have been shaped by supply, with large retailers aggregating assortments and standardizing demand. In emerging markets, where retail categories themselves are still evolving, it’s critical to continuously reinterpret categories and not be wedded to formats.

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Here is a direct link to the complete article.

 

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