Of Reverse Innovation

Once in a while you come across a concept or idea that is simple yet is so starkly beautiful in its potential to influence positive change that you can't help but share it with others. Today, that new concept for me was called Reverse Innovation.

Traditionally, innovation was seen to originate mainly from developed nations. The products that came out of such innovations were targeted at consumers who were generally in those developed nations. Hence, corporations and managers tended to avoid expanding into emerging nations because the majority of the their population was thought, rightly, to have been too poor or too remote to purchase that corporation's products and services.

Reverse innovation challenges this mindset and mode of operation, asserting that they are vastly outdated and unsustainable in today's rapidly changing global landscape. Much like C. K. Prahalad's revival of the concept of the Fortune at the Bottom of the Pyramid, proponents of reverse innovation cite that today's corporations' biggest opportunity to reap great rewards lies with the vast number of people who have yet been tapped into: the majority of people in emerging nations. In other words, rough 5 billion people.

So how can this be done? Corporations need to innovate in order to bring to emerging markets products and services that are ultra-low cost, durable, transportable and that have impact on the lives of the multitude of people who are living below their means. Scott Anthony, of global innovation consulting firm Innosight, gives the example of ChotuKool, an India based appliance manufacturer that introduced a battery-powered and transportable cooler that has converted non-consumers of refrigerators into consumers of a much more suitable and affordable alternative. 

By innovating in emerging markets, corporations can then apply the lessons learned into bringing those innovations back to their own developed markets, reinventing themselves and staying on the cutting-edge of competition. Innovation expert, Vijay Govindarajan of Tuck School of Business, gives the example of Maggi noodles; developed by Nestle primarily in and for the Indian subcontinent, it has provided huge returns for the company in developed nations as well (I should know - Maggi noodles form more of a part of my paltry student diet than I care to admit!).

Do take a moment to view Govindarajan's highly illuminating talk here:

In closing, I want to transcribe some words from the above talk that resonated strongly with me and should also resonate strongly with the inner innovator and entrepreneur in you:

"Keep the cost of failure cheap - then you can fail more often. Failure is nothing more than converting assumptions into knowledge. Fail early, fail fast, fail cheap, so that you can galvanize behind a workable business model."