Reverse Innovation: Create Far From Home, Win Everywhere

 Reverse Innovation: Create Far From Home, Win Everywhere

Tuck School of Business professor explains how the developing world is key to breakthrough inventions


April 2012 — In Reverse Innovation: Create Far From Home, Win Everywhere, one of the world’s most influential thinkers, Vijay Govindarjan, a professor of International Business at the Tuck School of Business at Dartmouth, and Tuck colleague, Chris Trimble, make a compelling case for how innovation in emerging countries can supply the breakthrough technologies to unlock new markets in the industrialized world.

“Most global companies recognize that emerging markets have become today’s last source of growth. But all these companies do is modify and export products that they developed in their home country,” said Govindarjan. “To capitalize on the full potential of emerging markets, they must head in the opposite direction—by innovating specifically for and in developing countries to create breakthroughs that will be adopted next at home and around the globe.”
The book originated in 2008, when Govindarajan was chosen by CEO Jeffrey Immelt to advise GE on innovation as their first Professor-in-Residence and Chief Innovation Consultant. The book gives an inside account of how reverse innovation is transforming GE’s strategy.


It also includes additional case studies of innovation flowing uphill or products designed for use in emerging economies such as India, China and Mexico, with high potential for use in developed countries. For example:  
 

  • Pepsico drew upon local teams and global resources to develop Aliva, <http://pepsicoindia.co.in/brands/aliva.html>  a new savory cracker created with the Indian palate in mind (four distinct chatpate flavours are available) for the Indian market, but with high global potential.

  • Before employing reverse innovation, Logitech almost lost leadership of computer mice in China to an unexpected Chinese rival with a better understanding of local needs.

  • Procter & Gamble developed a globally successful feminine care product called Naturella in Mexico after discovering that its American product, Always, was losing market share to rivals there because it failed to consider cultural cues.

  • In China and India, Harman designed from scratch a completely new infotainment system for emerging markets with functionality similar to their high-end products at half the price and one-third the cost.  It has generated more than $3 billion in new business.

“As these examples show, the biggest hurdles to reverse innovation are not scientific, technical, or budgetary. They are managerial and organizational, and with the right mindset and tools can be overcome by any manager,” said Govindarjan.  “Better yet, the evidence shows that companies can earn the same or even better margins and return on investment for a low-cost product designed for China or India than for a higher cost current product at home. The result is a win-win at home and abroad.”

Recent Issues