A Heads Up! from Ruth Ann Hattori
There was a small blurb in Business Week (October 2009) mentioning the idea of “reverse innovation” which probably isn’t particularly descriptive of the concept—the process of adapting products which were originally created for emerging markets into goods for customers in more developed countries. You may know this concept as “trickle-up innovation” (which may be more apt) but a recent HBR article about GE’s “reverse innovation” will probably popularize the name.
The article co-authored by GE CEO Jeffrey R. Immelt, distinguishes “glocalization”—the historically common practice of developing products in rich countries then expanding distribution globally—with what they call reverse innovation, as exemplified by their development of a $1000 handheld electrocardiogram for rural India which is now distributed in the US.
In promoting the importance of reverse innovation to the health and vitality of developed countries, the authors challenge two basic assumptions that have seemed to support the prevailing model of glocalization: 1) that the evolution of emerging economies will be similar to the the evolution of today’s developed economies and 2) that customers in developed countries are not interested in products that were developed for needs of an emerging economy.
As GE has found, the opportunity for creating markets for these often low-priced products is huge. And, the authors stress the need for this strategy as a defense against the multitude of new, global competitors from emerging countries. Not only will those “emerging giants” develop products for their own needs, they will eventually find ways to market them to the “developed” world. Is it a stretch to imagine that those new products might replace our existing market-share?
However, the challenges of embracing the reverse innovation model are many as most established firms are structured for the glocalization model. GE has embarked on a new organizational format to address this clash, and you can read about their strategy, built around a concept called Local Growth Team (LGT), by clicking on the link below:
Is your organization looking for “trickle-up” or reverse innovations? Better hurry up.