A Revolutionary Masterpiece Providing the Blueprint for Organizational and Economic Growth in the Emerging Global Landscape
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us.”
This classic Dickens quote from A Tale of Two Cities reflected the disparity between the haves and the have nots, the establishment vs. the underprivileged leading up to the French Revolution. It also describes the opportunity at hand for global organizations to reverse the established patterns of innovation that have oppressed desired growth, avoid the fatal operational mistakes that lead to poor returns and missed expectations, and become our economic leaders of the future.
The newly released #1 best-selling book Reverse Innovation: Create Far From Home, Win Everywhere (Harvard Business Review Press) is the latest work by Vijay Govindarajan (widely regarded as one of the world’s leading experts on strategy and innovation) and Chris Trimble at the Tuck School of Business at Dartmouth College. The books describes the “season of Light” upon us.
A Tale of Two Countries
Innovations typically originate in rich countries and later flows downhill to the developing world. Quite simply, a reverse innovation is any innovation that is adopted first in the developing world. Surprisingly often, these innovations defy gravity and flow uphill.
Historically, reverse innovations have been rare. Indeed, the logic for innovations flowing downhill, not uphill, is intuitive. Rich customers in rich countries can afford — and indeed they demand — the latest and the greatest. Demand pushes technology forward. In due course, its benefits trickle down across the globe. You can do the innovation math: The United States and Germany have well over three hundred Nobel Prize winners in science and technology. Meanwhile, India and China, with six times the combined population, have fewer than ten. Consequently, people — especially in the West — expect the future to be invented in Silicon Valley or Houston or Munich, but not in Bangladesh.
Thus, it is natural to suppose that developing nations are engaged in a slow and evolutionary process of catching up with the rich world, both economically and technologically. They do not need innovation. They will simply import what they desire from the rich world, just as soon as they can afford it.
Under that set of assumptions, a strategy known as glocalization makes perfect sense. As practiced by multinational businesses, glocalization posits that the work of innovation has already occurred. Emerging markets can be tapped simply by exporting lightly modified versions of global products developed for rich-world customers – mainly de-featured lower-end models. But the assumptions are misguided. What works in the rich world won’t achieve wide acceptance in emerging markets, where customer needs are starkly different.
On the surface, reverse innovation seems to be a counterintuitive phenomenon. It is easy, after all, to understand why a poor man would want a rich man’s product. But why would a rich man ever want a poor man’s product? The answer is that, under certain circumstances, it offers new, unexpected, or long-overlooked value.
A Reversal of Fortune
The new reality is that the future is far from home. If rich nations and established multinationals are to continue to thrive, the next generation of leaders and innovators must be just as curious about needs and opportunities in the developing world as they are about those in their own backyard. Reverse innovation has the potential to redistribute power and wealth to countries and companies that understand it — and to diminish those that do not. Conceivably, it could accelerate the rise of poor countries and the decline of rich ones. But it doesn’t have to turn out that way. Indeed, reverse innovation is an opportunity that is open to anyone, anywhere, with the ambition to go after it.
The stakes are high. Ignoring reverse innovation can cost many companies, especially today’s world-class multinationals, much more than a missed opportunity abroad. It can open the door for the so called emerging giants, the rising generation of multinationals headquartered in the developing world, to inflict pain or even severe damage even in your well-established home markets.
Adopting Clean Slate Innovation
Simply put, a new management model is necessary to effectively implement reverse innovation. At the core of its implementation, local growth teams must be commissioned for each reverse innovation opportunity, acting as brand new companies. These teams must conduct clean slate needs assessments, develop clean slate solutions, and practice clean slate organizational design. Further, a carefully managed partnership must develop between the local growth team and the corporation. The resulting initiatives should be reviewed as disciplined experiments with a focus on resolving unknowns quickly at least cost. Only then can innovation in emerging markets fulfill its potential to transform companies and in the process transform the world.
To support organizations successfully solving the execution challenge including Reverse Innovation, Leading Innovation™ an interactive leadership workshop was developed and is exclusively provided by International Thought Leader Network in association with the authors.
Leading Innovation™ includes a turnkey workshop, implementation support and online resources. Customized training programs are also available to organizations worldwide.
For more information please contact me at 919.618.9955 or visit our website at www.ithoughtleader.com.
Written for TrainingIndustry.com