A large automaker designed, developed, and – with appropriate fanfare – launched a commercial truck in India’s burgeoning and highly competitive market. The vehicle was engineered to let owners in a range of emerging markets run the trucks longer and faster, and at a relatively low operating cost. Higher asset utilisation, company leaders believed, would improve profits for truck owners and, ultimately, the automaker.

The truck was a disappointment. The company hadn’t adequately accounted for India’s poor roads and infrastructure, which often prevent vehicles from maintaining the most efficient operating speeds. Even though the truck’s price was competitive against local offerings – and half that of a comparable vehicle in developed markets – in the buyers’ eyes the potentially higher utilisation wasn’t worth the expense.

Think this was a ham-fisted multinational dabbling in a market it didn’t fully understand? Think again: the automaker was based in India. To be sure, multinationals tend to suffer such setbacks more often than local players do, but this company’s example underscores the difficulty of understanding customer needs in fast-changing emerging markets.

Indeed, around the same time, another domestic competitor suffered a similar fate. That company’s commercial vehicle, offered at an even lower price, was also tailored for India; it featured a lower-capacity, low-cost engine well-suited to run efficiently on the country’s grid-locked roads. Yet it too proved a letdown. The cause: an unfairly earned reputation for unreliability that the company ultimately attributed to owner-operators who, to maximise profits, overloaded the trucks far beyond recommended weight limits. Within a couple of years, the overloaded engines began to malfunction, customers became angry, and the vehicle’s sales plummeted.

Such cases underscore the challenges of designing, developing, and manufacturing products for fast-changing emerging markets – environments where customers are both extremely price conscious and demanding. Against this backdrop, a growing number of companies find that they must reexamine their traditional approaches to product development and tailor them to these realities. We call this process “design to value”. In some cases, designing to value means applying traditional tools in new ways, in others adopting a new mind-set about what customers want and how to deliver it.

It’s still early days in this space, and no organisation has yet mastered the challenges. But a look at the practices that leading product developers use offers at least three lessons for companies wrestling with the extremes of competition in emerging markets. The urgency to adapt will only increase as consumption in these markets contributes a growing share of global economic growth in the decade ahead.

1. Shake up your thinking

The combination of rapid change and heightened competition in emerging markets puts a premium on useful customer insights, even as they become harder to get. Indeed, poor infrastructure, vast distances, and fast-changing customer segments make traditional fact-gathering approaches (such as ethnographic research or even focus groups) expensive and time-consuming. Therefore, top companies don’t pass up any opportunity, however modest, to sharpen their understanding of customer needs.

Collision workshops – which might include customers but primarily convene suppliers, marketers, product engineers, and other company representatives – can help. They offer a low-tech way of quickly generating and discussing customer insights and a forum to identify hypotheses that companies can later test more traditionally. To some extent, these meetings represent a cheaper and more flexible way of generating the kinds of insights that R&D pioneers such as Bell Labs and IBM’s Watson Research Group achieved through formal, multidisciplinary R&D labs. As with these venerable examples, an important goal of collision workshops is to challenge ingrained habits of thought by pulling together representatives from functional groups that normally don’t interact.

The resulting insights can be quite useful. An automotive-parts manufacturer in a fast-growing Asian market used a collision workshop to identify a new niche in its wheel business. During a discussion about products for passenger vehicles, a marketer mentioned that the company’s wheels were heavy – an observation he’d heard from a customer. This comment, made in passing, intrigued the engineers in the room, who went on to sketch out a counterintuitive proposal that the company ultimately refined and adopted: using a slightly higher grade of steel to make wheels lighter and more fuel efficient. Even though the new steel was more expensive, the company lowered its total costs because the wheels now required less steel than they had before.

A large telecommunications and data-services provider used a collision workshop to discuss how B2B customers in smaller, tier-two and -three cities differed from those in the largest urban areas. The “aha moment” came when marketing and pricing experts teamed up with product engineers to ask whether the company might offer price discounts to some customers in smaller cities in exchange for slightly lower network uptime than the near-100% guaranteed to commercial customers in major metropolitan areas. The company ultimately found it could lower its price for some customers in tier-two cities, making its offer highly competitive there, while slashing the cost to serve by a factor of four through the use of a different network architecture and a simpler, redesigned version of its standard network-switching equipment.

Another way companies shake up their thinking is to look beyond traditional competitors for design ideas. A low-cost appliance maker learned of a more high-tech approach for coating its fans by studying painting techniques developed in the automotive industry. The fan maker’s executives had always resisted technological solutions, preferring to substitute labour for capital because of low workforce costs. But after studying the automakers’ approach, which kept the thickness of each coat of paint to specified levels, the executives changed their minds. Ultimately, a 4% savings in paint costs more than offset the expense of new equipment.

Similarly, a global farm-equipment manufacturer looked to an adjacent vehicle category in which it didn’t compete to create a simpler, cheaper design for the claw mechanism in a new low-cost rice-transplanting machine. By applying this thinking to other products, the company also identified comparable improvements in a different low cost product line.

2. Start from scratch

By now, most companies recognise that trying to interest discerning emerging-market consumers in stripped-down, low-cost versions of the products they sell globally is a recipe for letdown. Yet many companies still aren’t fully aware of how far they must go to differentiate their products for these customers. Top companies, by contrast, are highly disciplined, even relentless, about setting priorities and putting aside existing assumptions. Leaders start by identifying the most important feature or two and focusing heavily on them. This approach is quite different from the one that many companies tend to have: regarding all features as equally valuable and preferring more rather than fewer of them – an attitude deeply ingrained in some engineering cultures.