Reverse innovation: Difference between revisions
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- '''Procter & Gamble''' found that a honey-based cold remedy created for Mexico also had a profitable market in Europe and the United States. |
- '''Procter & Gamble''' found that a honey-based cold remedy created for Mexico also had a profitable market in Europe and the United States. |
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- '''Nestlé''' learned that it could sell its low-cost, low-fat dried noodles originally created for rural India |
- '''Nestlé''' learned that it could sell its low-cost, low-fat dried noodles originally created for rural India and position the same product as a healthy alternative in Australia and New Zealand. |
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Reverse innovations, it must be noted, are not always '''disruptive innovations'''.<ref>{{cite web |title=Is Reverse Innovation Like Disruptive Innovation? ''(Harvard Business Review Voices)'' |url=http://blogs.harvardbusiness.org/hbr/hbr-now/2009/09/is-reverse-innovation-like-dis.html |accessdate=21 October 2009 }}</ref> |
Reverse innovations, it must be noted, are not always '''disruptive innovations'''.<ref>{{cite web |title=Is Reverse Innovation Like Disruptive Innovation? ''(Harvard Business Review Voices)'' |url=http://blogs.harvardbusiness.org/hbr/hbr-now/2009/09/is-reverse-innovation-like-dis.html |accessdate=21 October 2009 }}</ref> |
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Revision as of 17:48, 24 October 2009
Introduced by Dartmouth professors Vijay Govindarajan and Chris Trimble and GE's Jeffrey R. Immelt, the term reverse innovation [1] [2] [3] [4] refers to any innovation likely to be adopted first in the developing world.
The process of reverse innovation begins by focusing on the needs and requirements for low-cost countries like India and China. Once products are developed for these markets, they are then sold elsewhere - even in the West - at low prices which creates new markets and uses for these innovations.
Typically, companies start their globalization efforts by removing expensive features from their established product, and attempt to sell these de-featured products in the developing world. This approach, unfortunately, is not very competitive, and targets only the most affluent segments of society in these developing countries. Reverse innovation, on the other hand, leads to products which are created locally in developing countries, tested in local markets, and, if successful, then upgraded for sale and delivery in the developed world.
C.K. Prahalad[5] explains that there are five ways in which resource-starved developing countries lead rich nations: 1) affordability, 2) leapfrog technologies, 3) service ecosystems, 4) robust systems, and 5) add-on applications. These very deprivations are catalysts for reverse innovation.
Examples of reverse innovation can be found across various industries and geographies:[6] [7] [8]
- Nokia is testing new business models for classified ads in Kenya; it has also created new features in its hand-held phones sold in the US, based on observations of how phones are shared in Ghana.
- Microsoft is creating new phone app services for "dumb" phones which allow users with existing, non-smartphone devices to access Web sites such as Twitter, Facebook. Built for markets in India and South Africa, there is surprising potential for these apps as a low-cost cloud computing platform.
- GE is now selling an ultra-portable electrocardiograph machine in the U.S. at an 80% markdown for similar products. The machine was originally built by GE Healthcare for doctors in India and China.
- Tata Motors is planning to sell an upgraded version of the Tata Nano in western markets; it's called Tata Europa.
- Procter & Gamble found that a honey-based cold remedy created for Mexico also had a profitable market in Europe and the United States.
- Nestlé learned that it could sell its low-cost, low-fat dried noodles originally created for rural India and position the same product as a healthy alternative in Australia and New Zealand.
Reverse innovations, it must be noted, are not always disruptive innovations.[9]
References
- ^ "How GE is Disrupting Itself. (Harvard Business Review)" (PDF). Retrieved 21 October 2009.
- ^ "What is Reverse Innovation?". Retrieved 21 October 2009.
- ^ "Emory Marketing Institute Interview with Vijay Govindarajan". Retrieved 22 October 2009.
- ^ "GE's Immelt Says 'Reverse Innovation' Needed for Global Growth (Bloomberg)". Retrieved 21 October 2009.
- ^ "5 Tips for Trickle-Up Innovation from C.K. Prahalad (BusinessWeek)". Retrieved 22 October 2009.
- ^ "How Innovations from Developing Nations Trickle-Up to the West (Fast Company)". Retrieved 22 October 2009.
- ^ "Innovation Trickles in a New Direction (BusinessWeek)". Retrieved 22 October 2009.
- ^ "Microsoft bets on making "dumb" phones smarter (BusinessWeek)". Retrieved 22 October 2009.
- ^ "Is Reverse Innovation Like Disruptive Innovation? (Harvard Business Review Voices)". Retrieved 21 October 2009.