Western tech companies are turning inward again, now that the geopolitical situation has become so uncertain. This newfound ignorance is a big mistake, because the future lies in the global South, where 90 percent of the world’s youth live. It is bursting with innovative power.
Companies have become inward looking again, after a decade of pivoting their digital products and services toward the Global South. They are afraid of the downturn in the economy and the unknown in these precarious and volatile geopolitical times. We witnessed this sentiment play out through the tech layoffs in early 2023, with projects around the Global South impacted the most.
This is a move in the wrong direction.
Far from the “rest of world” being a high-risk venture, organizations should view engagement with these regions as the only viable option to build innovative and sustainable technologies.
Next billion user labs
Around when my ‘Next Billion Users’ book was released in end 2019, I headed to Stockholm to engage with Spotify’s Next Billion User (NBU) lab, launched to study users outside the West. Google grew their NBU team exponentially in 2020 from a few dozen members to hundreds, in search for their next “blockbuster product.” Meta’s emerging markets group got rebranded as the next product experimentation team. Launched in 2019, this team intended to test the new hypothesis, “that the next big idea may come from a market outside the U.S.”
Tech companies’ interest in the Global South in the last decade is no surprise. In 2017, The Economist published a story that asserted “the world’s most valuable resource is no longer oil, but data.” Various market analysis reports suggest that the “next big trend” in digital won’t emerge from a Western market. Companies have witnessed how millions of users, primarily from the Global South, are coming online for the first time due to access to affordable mobile phones and data plans. India and China alone are home to most users today, and neither market is anywhere close to saturation.
Despite these global opportunities, fear has set in due to the current state of geopolitics and uncertain user markets. This is part of a broader global market reserve and retreat, triggered by institutions like Wall Street warning global investors of the end of globalization. Fortress gates are up again among European companies and their governments, where EU based policies like the Green Deal double down on “European values” instead of universal values for future digital innovations. Some companies dip their toes into this “rest of world” adventure, only to retreat them quickly, seeing no clear business model.
Going “local” is back in fashion, viewed as a pathway to resilience. Instead, it is the pathway of least resistance to status quo.
The myth of the local
Companies rarely build for the “local.” With scalability at the heart of digital innovation, the local is often a launching pad for the global. For decades, this has translated into typically Western contexts and concerns becoming universal templates. The prototype user for the designs of our everyday lives has long been “WEIRD”—Western, Educated, Industrialized, Rich, and Democratic. The rest of the world has had to contend with customizing and indigenizing these imposed models to make these products work for them. In essence, “local” is that which is familiar, proximate, and known.
Times have changed. In recent years, companies have been under pressure to mitigate entrenched biases in their training data for more inclusive digital products. For example, Adobe expanded their equity team to address the barriers to understanding and access, especially on communities that have been chronically underinvested and marginalized by them. Timothy Bardlavens, their director champions this effort as a “business imperative,” one that is committed to reversing the historical trend where “product innovation has focused on the majority, often leaving many behind.” While the intent is commendable, we need to recognize that the majority have long been outside the West.
Today, the Global South contributes 80 percent to global growth. Close to 90 percent of the world’s young population reside in these regions. The Global South is not a mere demographic advantage or a source of data harvesting for AI hungry tools as one might assume. It has become a vital space for innovation. These next billion users are deeply aspirational users, highly driven to shape tech spaces, not just as consumers but as creators of the future digital economy. They are eager to leave the past behind. Weak legacy infrastructures and systems inherited from their colonial aftermath has propelled the Global South to leapfrog across sectors, fueling the reinventing of their nations and societies. It is time for organizations to take note.
Imitator nations reconsidered.
In 2015, former Hewlett Packard CEO Carly Fiorina described China as an imitator nation in her interview with TIME, “I have been doing business in China for decades, and I will tell you that yeah, the Chinese can take a test, but what they can’t do is innovate…they are not terribly imaginative.”
Fast forward to 2023, where even Fiorina would not agree with her former self. China has earned the reputation as a global hub of innovation in tech and renewables among other vital sectors. In 2018, China entered the global innovation index rankings as one of the top twenty most innovative countries in the world. They have pioneered the world’s first quantum-enabled satellite, the world’s fastest supercomputer, the world’s largest and fastest radio telescope, the world’s first solar-powered expressway, the world’s largest floating solar power plant, and the world’s thinnest keyboard.
It should give us pause when Elon Musk, still perceived by many as the epitome of Western innovation, sees the future of X to be the next WeChat- China’s “everything app” or super-app, which was released a decade ago. Amazon launched livestreaming for retail in 2019. By then China’s Taobao livestreaming network was already operating profitably, with its top influencers generating 15 million dollars in sales. Meta has earned the reputation as a copycat in the last years, as they race to “borrow” features from the likes of China’s TikTok. China Daily concludes confidently that, “no matter how much the country’s creativity may differ from the West, China will lead the world as a global leader in science and technology by 2030.”
Beyond Chinese “exceptionalism”
The rhetoric of exceptionalism has long served as a way for nations like the United States and more recently China to signal their unique role as leaders on a global stage. Employing exceptionalism is a double-edged sword though. While it can be a powerful tool to foster national pride and legitimate controversial decisions, it also brings to question how and why these nation’s values and models should be emulated and scaled.
As Western companies see the rise of China across sectors, they also have bought into the rhetoric of their exceptionalism. They separate China’s innovative capacities from other nations in the Global South. On the contrary, China, while impressive in their strides in digital innovations, is no exception. While European and American regulators discuss how to curtail the tech titans and get the market working again, India has gone ahead and set up their “tech stack,” the largest open source, interoperable, and public digital infrastructure in the world. This is enabling entrepreneurs to build their various products and services away from the Apple and Google duopoly that constrains competition and choice. As creators struggle for fair value from Spotify, Abu Dhabi has become a global hub for music-streaming apps. By 2028, 70 percent of global subscriber growth for music- streaming services is estimated to take place in the Middle East, Latin America, Asia Pacific, and Africa.
If you want to assess the future of crypto, you need to look at India, Nigeria, Vietnam. The Central & Southern Asia and Oceania region dominates the top of the 2023 Global Crypto Adoption Index, with six of the top ten countries located in this region. This should not be a surprise. The volatility of many Global South currencies, and few recourses to protect your savings, as well as the youth’s appetite to embrace innovation has led to quick adoption of these financial alternatives.
Inclusion as innovation
Despite the Global South demonstrating their innovative prowess, the imitator label remains a sticky factor. This perception often translates to Western companies treating these countries as beneficiaries and not as partners and leaders in global innovation. This cognitive dissonance leads companies to view their own international teams as disposable, have little patience for a business model to emerge in these contexts, and under-utilize their regional teams for thinking out-of-the-box.
Many multinationals I have engaged with over these years continue to treat the Global South as back offices for cheap labour and rote tasks instead of being part of ideation and execution in their own contexts. Venture capitalists give far shorter timelines for Southern entrepreneurs to yield profits compared to their Northern counterparts. Templates of innovation are imposed upon these entrepreneurs, demanding they innovate within conventional constraints. This only guarantees more of the same.
It is time we stop underestimating the Global South. Instead, companies should channel their energies by looking at how different business cultures, contexts, and consumers can help to rethink opportunity, safeguards, and creative futures with the world’s majority. Inclusion is not an altruistic act. It is an essential element in the revival of a genuinely free and global market to generate solutions for the wicked problems we face today as a humanity.
Payal Arora 