Govindarajan, V., Trimble, C., Reverse Innovation: Create Far from Home, Win Everywhere, Harvard Business Review Press, 2012

Abstract

1 A Capsule Summary of the Book In their recent book, Reverse Innovation: Create Far from Home, Win Everywhere, Vijay Govindarajan and Chris Trimble discuss the importance of innovation for international markets. They stress the argument that the success and longtime survival of multinational companies from developed markets will depend heavily on their ability to reach the developing world. Nowadays, emerging economies account for the lion's share of world GDP growth and if companies are not growing in these markets, they are probably not growing much at all (p. 190). However, companies that aim at entering these markets must develop a deep understanding of the local conditions and unsatisfied needs as there are tremendous gaps between what consumers in the developed markets desire and what customers in emerging markets look for. In order to succeed in developing economies, multinational companies have to rethink their traditional way of doing business--following a glocalization approach--and implement reverse innovation--the ability to develop new products and strategies particularly for the developing world. Even though a reverse innovation approach appears more risky--as novel pricy alternatives might easily replace sales of premium products--the advantages described in the book are remarkable. Products that are invented in developing markets do not only enable companies to better tackle local markets with their restricted environmental conditions but might also become suitable alternatives in developed markets. In this book, Govindarajan and Trimble show in a very persuasive way, reinforced by many detailed examples, how multinational companies see the world and what changes are needed in order to cope with the challenges in the twenty-first century. 2 Objective and Target Audience According to the authors, the book's objective is twofold: First, the book should help the readers to understand the theoretical framework and basic principles of reverse innovation as well as the strategic value of its application. Second, the book should serve as a practical guideline on how to execute successful reverse innovation initiatives (p. 9). The authors broadly define reverse innovation as any innovation that is first adopted in the developing world, then flows uphill by penetrating marginalized markets in the rich world, and finally reaches mainstream markets in the developed world. While the authors state that the targeted audience of the book are corporate business leaders of multinational companies headquartered in developed markets, managers of emerging giants, and leaders of innovative start-ups, the book is equally valuable to academic researchers and business students as it vividly demonstrates a new thinking about innovation with powerful stories, beneficial practical implications, and recommendations for managers. Moreover, the authors' ideas correspond to other influencing books, such as Blue Ocean Strategy (Kim and Mauborgne 2004), Jugaad Innovation (Radjou et al. 2012), The India Way (Cappelli et al. 2010), as well as The Fortune at the Bottom of the Pyramid (Prahalad 2006). 3 Structure and Contents The book is organized in twelve chapters enclosed by a forward, preface, and appendices totaling 229 pages. In chapter 1, the authors present the memorable story of Gatorade's development in order to arouse the readers' interest in the phenomenon of reverse innovation, outline the purpose of the book, and provide a short overview of what readers can expect in the following chapters. Chapter 2 highlights the differences between developed and emerging markets by illustrating five need gaps: the performance gap, the infrastructure gap, the sustainability gap, the regulatory gap, and the preferences gap. Based on these five gaps, the authors articulate three simple but memorable messages. First, there are huge opportunities in the developing world. …