Foreword vii
John Quelch

Preface xi

Acknowledgments xv

Introduction xvii

1 AN OVERVIEW 1

2 THE FOUR Cs OF HIGH PERFORMANCE 21

3 CAPITALIZING ON LATE DEVELOPMENT 31

4 CREATING INCLUSIVE MARKET SEGMENTS AND NICHES 47

5 CRAFTING OPERATIONAL EXCELLENCE 65

6 CULTIVATING PROFITABLE GROWTH 87

7 HOW ROUGH DIAMONDS AVOID THE GROWTH FETISH 109

8 HYPERGROWTH: CAN IT BE SUSTAINED? 133

9 NATIONAL DIFFERENCES: A TALE OF FOUR COUNTRIES 149

10 RESPONDING TO ROUGH DIAMONDS: IMPLICATIONS AND RECOMMENDATIONS 167

Appendix: Methodology 181

Notes 199

The Authors 205

Index 207

Praise for Rough Diamonds

"BRIC markets have spawned a diverse set of progressive and innovative companies that have identified opportunities and capitalized on them. Rough Diamonds offers critical insights for multinationals moving into or seeking to expand in these growth markets."

—Ruben Vardanian, co-head of Sberbank CIB, Russia

"The compelling stories of these rough diamonds have gone overlooked for way too long. The authors not only peel back the layers to reveal the core strategies that lead to sustained growth, [but also] bring those successes to life through a rich array of anecdotes."

—Yuanqing Yang, chairman and CEO, Lenovo Group, China

"A must-read for any company looking to build success in an emerging market. The lessons learned from the success of rough diamonds provide a roadmap for how to compete with established companies, consolidate markets, and build on their success as they grow."

—Shiv Vikram Khemka, vice chairman, SUN Group, India

"If the rough diamond companies are fueling the ongoing and potential growth of emerging markets—and I believe they are—this book provides one of the most penetrating looks at the very heart of global economic development."

—Keun Hee Park, president and CEO, Samsung Life Insurance, Korea

"A common set of fundamental strategies has helped an up-and-coming tier of remarkable companies build long-term growth in emerging markets. Rough Diamonds identifies those four primary strategies and provides vital lessons for companies that want to compete and partner with this thriving sector."

—Kairat N. Kelimbetov, deputy prime minister, Kazakhstan

"Shines light on underappreciated and dynamic entrepreneurs from the emerging markets. These organizations might well be tomorrow's household names."

—Tarun Khanna, Harvard Business School and director of South Asia Institute

"Offers a refreshing perspective on emerging-market multinationals centered on the novel concept of the "rough diamond." These firms will become major global players much earlier than you think. And their strengths hold lessons for all firms."

—Mauro F. Guillén, Wharton School and director of the Lauder Institute

Building a market around specialized coat-hooks in trains . . . a beauty contest to build brand awareness for cosmetics . . . catering to local tastes for specialty sausages. Although these examples don't represent innovative products or strategies, the companies behind them are revolutionizing the global marketplace. Rough diamonds are companies that embrace dynamic new business models and development strategies that are defining the next generation of flourishing firms in the fast-growing BRIC economies.

Rough diamonds rank among the top twenty-five manufacturing firms in their own countries as well as comparable firms worldwide—often exceeding them in terms of sales growth, profit margins, and return on assets over time. This groundbreaking book explores who these rough diamond firms are, shows how they achieved extraordinary levels of performance, and reveals what it will take for them to sustain these advantages in the future.

These remarkable firms craft profitable growth through entrepreneurial ventures and core competencies specific to their markets and operations. Through four interrelated and interlocked development processes—the four Cs—these companies whose origins may have been in the creation of new markets evolve into firms whose success lies in the cultivation of long-term, sustainable, and profitable growth.

The success and future growth of rough diamonds foreshadow the new rules of the game for firms in both developing and developed markets. With insight and a wealth of illustrative examples, Rough Diamonds reveals some of the most-important changes occurring within the BRIC markets—from trends in institutional and industrial development, to the impact of new government policies, to the shifting balance of competitive position between incumbent and upstart companies. Ultimately, Rough Diamonds shows what it will take to produce a continual stream of rough diamonds into the future.