The good news for the world economy is that, with economic development occurring in a more dispersed fashion, experiments are underway in more diverse institutional settings than ever before. So, with the right attitude and mindset Western economies should expect to see the emergence of viable models from all over the world, not just their backyards.
Just restricting myself to some of the countries on the Presidential tour, I am thinking, for example, of Megastudy's education model in South Korea, Narayana Hospitals' methods of pediatric cardiac surgery in India, and Wilmar's Southeast Asian agribusiness empire. These are not household names in the West yet — and might never be — but they already have something to teach us in education, healthcare and the like, areas where we have no monopoly on wisdom.
Let's look at two of the examples above in more detail.
From Megastudy in Seoul we can rethink the provision of incentives to our teachers, so that the better ones get more attention and the underperforming ones understand how they must improve. Megastudy's core idea is that good teachers are videotaped, and then others can pay to subscribe to their lectures, via online access to the videos. Good teachers keep a substantial share of incremental revenues, and the best are compensated at superstar Wall-Street levels, while mediocrity is penalized (the poorest performers earn less than the median Korean college graduate). Measurement is taken seriously, so that the effort does not inadvertently rewarding only rote learning. And relatively simple online technology magnifies these incentive effects.
Of course, Megastudy's is not the only solution to poor incentives. The charter school model underway in the US is another interesting experiment, but no reason not to let several proverbial flowers bloom on this front. And one doesn't need to support the details of Megastudy's model to appreciate the principle of rewarding results. Education in the West deserves introspection.
Why did this originate in Seoul, and not elsewhere? Two reasons suggest themselves immediately and suggest a broader point, that innovation is context-specific. Koreans are fanatic about education, so there is receptive demand for experiments. And Korea is among the most wired societies in the world, so technological multiplier effects are easier to access than elsewhere.
Another example of non-Western innovation from a country included in Obama's visit is the surgery advances at the Narayana Hospitals in Bangalore, India. Some of the best pediatric cardiac surgery in the world has emerged there, at the hands of Devi Shetty. Shetty has done for cutting-edge surgery what mass production did for everyday manufactured items decades ago — think Henry Ford and the mass produced automobile. Shetty's insight builds on the power of economies of scale — a staggering number of Indians are predisposed to heart disease thanks to an unfortunate draw of the genetic lottery — and on so-called economies of learning, jargon for the idea that you just get better at things through repetition and incremental improvements over tens of thousands of tries. Now this model is coming to the Cayman Islands, Africa, Southeast Asia, in an attempt to Walmart-ize health care — the reference is to making this service super-affordable — in even the most healthcare-reform-resistant locales, such as, one could argue, the U.S.
Even some companies that receive bad press on occasion are worth learning from. Wilmar is one of the world's biggest palm oil producers, vertically integrated from plantations in Malaysia, Indonesia and elsewhere. Western firms are tempted to write off Wilmar's success as something to do with the idiosyncratic Asian context, a view exacerbated by the complaints made by environmentalists about Wilmar degrading the environment. The latter might well be true, but it is unlikely that there are no lessons to be learned from Wilmar's aggressively entrepreneurial slant.
It's an irony that poorer locales are being asked to make up for growth slowdowns in the rich world. But the longer term boost that can come from these locales isn't what President Obama was selling on his recent trip. It's not too late for Western business leaders to shine a light on these ideas emanating from the world's newfound economic petri-dishes. A good start would be to abandon shibboleths regarding emerging markets and recognize the expanding areas of innovation emanating from them.
Tarun Khanna is Director of the South Asia Initiative and Jorge Paulo Lemann Professor at Harvard University and the co-author of Winning in Emerging Markets: A Road Map for Strategy and Execution.