As consultants, we have one thing in common regardless of the industry we serve or functional expertise we provide—we all have clients challenged with maximizing the value of their products and services. Doing so is increasingly a struggle due to the shifting balance of power in the world economy. The world is no longer dominated by the U.S., Western Europe and Japan. With the rise of developing countries, spearheaded by China and India, the world is moving from an era of geographically concentrated economic power to one characterized by multiple centers of economic and business activity—in short, a "multi-polar" world. Five mega-trends characterize the world in which our clients' products and services now compete:

Emerging consumers: With increasing employment and incomes in emerging markets, a billion new customers are entering the marketplace. B6 countries (Brazil, Russia, India, China, South Korea and Mexico) are shifting from being suppliers to being demanders of goods and services, fueling the rise of the middle class. As a result, clients need to think about how to target these new customers in new markets without adding complexity.
The new map of innovation: Emerging markets are no longer just sources of cheap labor for our clients. They are homes to clusters of R&D and technology centers, freed from legacy constraints, leading innovation in new markets. For example, R&D spending in China is growing at an annual rate of 17 percent, far higher than the 4 to 5 percent annual growth rates reported for the U.S., Japan and the European Union. Emerging countries are moving up the value chain quickly from being technological imitators to genuine innovators.
Winning talent: There have been significant improvements in education in emerging countries, with some governments investing heavily. For example, South Korea is producing the same number of engineers as the U.S., despite having one-sixth of the U.S.'s population. Consequently, there is a wider dispersion of talent pools across the globe and a greater extent of labor segmentation.
The flow of capital: While there is continued growth in foreign direct investment (FDI) into emerging economies, these same economies are becoming important sources of outward FDI, with the East buying assets in the West. For example, the number of cross-border merger and acquisition deals involving Indian companies has risen from 40 in 2002 to around 180 in 2006. This increase in multi-directional capital flows is spurring the shifts in asset ownership.
The battle for resources and sustainability: Emerging countries are growing at pace and so are their demands for natural resources. Meanwhile, the supply of resources is becoming constrained, and both developed and emerging countries are fighting fiercely in many regions for the best sources. The challenge for clients is how to balance economic growth, energy security and sustainability.

The multi-polar world mega-trends have significant consequences on the lifecycle of our clients' products and services. While doing nothing in the face of these trends is not a strategy, historical product lifecycle management approaches will no longer suffice. Typically, maximizing the value of a product or service is termed "Product Lifecycle Management" (PLM) and historically has been a phrase applied to R&D activities spanning product development, line extensions and packaging innovation. For consumer packaged goods, traditional PLM examples would include new laundry detergent scents and concentrated formulations. In pharmaceuticals, traditional PLM examples would include new indications for the same chemical compound or rapid dissolving tablets. In financial services, traditional examples would include reward programs that increase credit card switching costs.More progressive lifecycle management examples demonstrate how seemingly disparate industries have come together to identify differentiated, market-changing profit pools by either pursuing partnerships and linkages across industries, or by challenging conventional wisdom about the product. Some examples include:

Cell phone software that allows you to send in a photo of what you're about to eat and receive calorie and nutrition content before you do (telecommunications and retail industries)
Significantly increasing the number of qualified nurses in Kenya by leveraging distance learning and implementing e-learning solutions (government, healthcare and technology industries)
Devices that serve both as cell phones as well as blood glucose data transmitters for Type I diabetics (telecommunications and medical device industries)
Nike and the iPod running shoe (sports retail and high-tech industries)
"Reverse" engineering of developed market products for suitability in an emerging market (e.g., Procter & Gamble's simplification of Pampers diapers to cost the same as an egg in China)

To identify true product and service differentiation, our clients must advance from product lifecycle management to multi-polar lifecycle management. Taking a multi-polar perspective on lifecycle management forces us to consider the products and services within the context of the five mega-trends, and in particular, the impact of emerging consumers, the new map of innovation and winning talent on strategic options and business strategies that yield new profit pools.

Lifecycle Management in a Multi-Polar World

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