Reverse Innovation Research Articles

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

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. …

Organising for reverse innovation in Western MNCs: the role of frugal product innovation capabilities

The burgeoning phenomenon of reverse innovation – i.e., innovations which are adopted first in the developing world – has attracted much academic and managerial attention. However, while existing literature has extensively discussed the risks and opportunities of reverse innovation for Western multinational companies (MNCs), there is little empirical insight into the question of how reverse innovation is organised in the firm. This article investigates how Western MNCs of the healthcare and electronics industries organise their international R&D for reverse innovation. Based on the insights of four case studies, we find that the location of the product mandate (i.e., at the headquarters or the subsidiary) is independent of the MNC’s ability to generate reverse innovation. In contrast, we find that the design and development of reverse product innovations are always located in the MNC’s subsidiary based in a resource-constrained environment. We argue that the development of frugal product innovation capabilities is a critical success factor in the development of reverse innovation. The article holds important implications for theory and management practice.

Reverse innovation as an inducer of centres of excellence in foreign subsidiaries of emerging markets

This paper aims to understand how autonomy and integration influence reverse innovation in foreign subsidiaries in Brazil. Furthermore, this paper supports the idea that reverse innovation is associated with the formation of centres of excellence in subsidiaries in emerging markets and that autonomy and integration are relevant for centres of excellence, albeit indirectly, i.e., intermediated by reverse innovation. A survey was applied to 172 foreign subsidiaries in Brazil. The results confirm the association between autonomy and integration in the development of reverse innovation and the association of the latter with centres of excellence. Results also indicate that the rationale of centres of excellence in emerging markets is different from developed countries, demonstrating the importance of the structure of the multinational corporation to the occurrence of reverse innovation. The finds indicate managerial implication in terms of adjusting the structure of the relationship between headquarters and subsidiaries in favour of reverse innovation.

Mutual learning and reverse innovation–where next?

There is a clear and evident need for mutual learning in global health systems. It is increasingly recognized that innovation needs to be sourced globally and that we need to think in terms of co-development as ideas are developed and spread from richer to poorer countries and vice versa. The Globalization and Health journal’s ongoing thematic series, “Reverse innovation in global health systems: learning from low-income countries” illustrates how mutual learning and ideas about so-called "reverse innovation" or "frugal innovation" are being developed and utilized by researchers and practitioners around the world. The knowledge emerging from the series is already catalyzing change and challenging the status quo in global health. The path to truly “global innovation flow”, although not fully established, is now well under way. Mobilization of knowledge and resources through continuous communication and awareness raising can help sustain this movement. Global health learning laboratories, where partners can support each other in generating and sharing lessons, have the potential to construct solutions for the world. At the heart of this dialogue is a focus on creating practical local solutions and, simultaneously, drawing out the lessons for the whole world.

Reverse innovation, emerging markets, and global strategy

‘Reverse innovation’ refers to the case where an innovation is adopted first in poor (emerging) economies before ‘trickling up’ to rich countries. Although examples of reverse innovation are still rare, it raises interesting theoretical questions, such as what kinds of innovation emerging economies are likely to spawn, why such innovations might diffuse to rich countries, what competitive advantages local and foreign firms enjoy in this process, and how it affects the global strategy and organization of established MNEs. Research on reverse innovation can enrich and extend mainstream theories of innovation, internationalization, MNE management, and FDI spillovers.

AMENAZAS Y OPORTUNIDADES DE LA INNOVACIÓN INVERSA PARA LAS PYMES

RESUMEN: Las innovaciones inversas se originan habitualmente en economias en desarrollo para luego desplegarlas en paises desarrollados. Esta estrategia se esta llevando a cabo de una forma creciente por multinacionales que tienen acceso a la estructura de mercado de los paises en desarrollo y pueden desplegar todo su potencial para innovar. Las pequenas y medianas empresas (PYMES) europeas deben enfrentarse a una competencia creciente con productos procedentes de nuevos paises de economias en desarrollo asi como con productos desarrollados por multinacionales a traves de innovacion inversa. Por todo esto, es critico que las PYMES defiendan su posicion desarrollando productos utilizando las tecnicas de la innovacion inversa, encontrandose al hacerlo unos retos especificos. En este trabajo se tratan estos retos y cuales son las mejores practicas para aplicar la innovacion inversa en PYMES adaptandolas a partir de las utilizadas por las multinacionales.

In Search Of A Theoretical Framework For Reverse Innovations

Despite the increased strategic importance of reverse innovation, an inspection of the literature suggests that there is still confusion as to what it is, how it is related to, yet distinct from, other types of innovation (e.g., frugal or disruptive innovation), and what factors are needed for it to occur successfully. Best practices and underlying conceptual frameworks appear to be lacking or somewhat scarce in both academic and practitioner literature. In this paper, we propose that reverse innovation shares some common underpinnings with the well-established concept of reverse knowledge transfer. This provides a robust foundation upon which to study the phenomenon of reverse innovation. An added benefit of this perspective is that it enhances the generalizability of research on reverse knowledge transfer. By connecting reverse knowledge transfer and reverse innovation under a general perspective of global competence creation and transfer, we believe we provide a framework that allows all firms, regardl...

Research and development from the bottom up - introduction of terminologies for new product development in emerging markets

This paper gives a comprehensive overview of the commonly used terms jugaad, frugal innovation, frugal engineering, constraint-based innovation, Gandhian innovation, catalytic innovation, grassroots innovation, indigenous innovation, and reverse innovation. Based on that, a conceptual framework is introduced consisting of three core dimensions: sophistication, sustainability, and emerging market orientation. On the basis of these dimensions, analogies and distinctions between the terms are identified and general tendencies are explored such as the increasing importance of sustainability in social and ecological context or the growing interest of developed market firms in approaches from emerging markets. Hence, the presented framework supports further research in new paradigms for research and development (R&D) in developed market firms (DMFs), particularly in relation to emerging markets. This framework enables scholars to compare concepts from developed and emerging markets, to address studies specifically by using consistent terms, and to advance research into the concepts according their characterization.

Innovation process in the automobile MNCs: implications for the role of the international subsidiaries

The scope of the present work is to provide insights into the emerging flows of innovation in the multinational corporations (MNCs) and to present some reflections for executives as how to leverage on the potential of the so called reverse innovation. Our study focuses on the automobile industry, and investigates the dynamics of innovation in three MNCs, whose focal subsidiaries are located in Brazil. According to our evidences, the reverse innovation phenomenon is accompanied by a radical transformation of the roles, responsibilities and activities located among the parent company and its subsidiaries. What clearly emerges is the fact that innovation flows are less and less parent-to-subsidiary. The subsidiary-to-parent flow of innovation is increasing, and a subsidiary-to-subsidiary stream is emerging. This phenomenon is redefining the relevance of the parent company in managing the innovation processes within an MNC.

Reverse Innovation: Create Far From Home, Win Everywhere

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Developing Disruptive Products for Emerging Economies: Lessons From Asian Cases

OVERVIEW: Emerging economies, with their vast, untapped markets, present new growth opportunities for multinational companies willing to accommodate the particular needs of these markets. Our study analyzes four innovative firms in Asia that became multinational companies on the back of disruptive products developed specifically to address the needs of consumers in emerging economies. The cases suggest that firms wishing to operate in these markets must be receptive to the opportunities arising from the resource constraints typical of consumers in the markets and willing to develop the capabilities to meet the aggressive price/performance ratios required by consumers. Our study highlights critical R&D and managerial practices that are vital for creating new, affordable products or services for the unserved mass markets in developing countries. This analysis has important implications for reverse innovation.

Made in India: Cisco reroutes innovation

Subject area Innovation, reverse innovation, frugal innovation and disruptive innovation. Study level/applicability Undergraduate, Postgraduate and Executive Education. Case overview This case describes the strategy adopted by Cisco India to develop the Advanced Services Router 901 (“ASR 901”), which is a next-generation 3G/LTE capable mobile backhaul and carrier Ethernet platform that is deployed at a cellular tower site or business premise to backhaul voice and data traffic into the core of the network. This was part of a larger strategy by Cisco headquarters to understand what could be built in the developing markets for the developing markets, as opposed to products conceived with only developed markets as the focus. Within a time frame of a few months, a team formed from scratch developed the ASR 901, the next-generation global networking technology product that was developed completely – from conception to launch – at the Bangalore site in India. The ASR 901 successfully took on the challenge of delivering all the functionalities and features required by sophisticated telecom clients, while meeting the specific requirements of its customers from the developing markets. ASR 901 was undoubtedly a milestone in Cisco India's indigenous innovation initiatives, and this case discusses the many challenges that had been faced during the process and the actions that had been taken to achieve success during this process. Expected learning outcomes Through this case, students will understand the concepts of innovation, particularly reverse innovation, frugal innovation and disruptive innovation. They will learn how large organisations have managed to successfully innovate by creating small and independent teams within the organisation. Students would also have the opportunity to analyse and discuss whether the lessons learnt by Cisco, while progressing through the several stages of developing the ASR 901 product, could be applied to similar new initiatives. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Knowledge Spillovers, Search, and Creation in China's Emerging Market

AbstractPrior research and the articles included in this special issue demonstrate that in emerging markets in general and in China in particular, knowledge spillovers exist between foreign firms and domestic firms. As domestic markets become more sophisticated, and competition between domestic firms and foreign firms becomes stronger, knowledge is flowing to and being sourced in many different directions: from overseas head offices to foreign firms then on to domestic firms; from domestic firms to domestic firms; and from domestic firms to foreign firms, and back to the multinational corporations' head offices in the form of reverse spillovers and reverse innovation. We propose that knowledge spillovers, search, and creation in an emerging market are a dynamic and reciprocal process with knowledge flowing between and among foreign and domestic firms. This represents a fertile field for future research and we have identified a number of areas ripe for study.

Disruptive Innovation … in Reverse: Adding a Geographical Dimension to Disruptive Innovation Theory

Based on a literature review on disruptive innovation and innovation from emerging economies, we offer an interpretation of a subset of reverse innovation within the disruptive innovation theory. We argue that the combination of these two theories provides a useful framework to look at emerging economies as sources of new products and technological solutions. Finally, we provide a new categorization of disruptive innovation considering a geographical dimension and future research directions.

Do Frugal and Reverse Innovation Foster Sustainability? Introduction of a Conceptual Framework

The fields of frugal and reverse innovation as well as sustainability and its management have received tremendous interest in recent times. However, there is little literature on how both fields are related to each other. Hence, this paper gives an overview of research in both areas and provides a view of the relationship between frugal and reverse innovation, sustainability management and performance constructs. The link between frugal and reverse innovation on the one hand and sustainability performance on the other hand is established through a differentiated perspective on dimensions representing different fields of sustainability management, i.e. the sustainability of resources used in value creation, the sustainability of the actual value creation processes, and the sustainability of the outcomes of value creation processes. Moreover, we also argue for a positive link between the three dimensions of sustainability management and a company’s market performance.

Reverse Innovation for the New Mobility

The confluence of increasing urbanization with climate change, and the associated need to decarbonize the economy, is driving urgency for the global adoption and diffusion of sustainable scalable solutions. IT-enabled, multi-modal transportation, often referred to as the “new mobility”, is making inroads in developed and emerging economies alike. Local emerging market entrepreneurs as well as multinationals, seeking transformative innovation strategies to open up new markets are engaging in this rapidly growing industry. This has created an opportunity for innovative indigenous firms in emerging economies to either scale internationally on their own or partner with (often Western) multinationals to define frugal products, services, and business models that address recession-constrained Western markets. Part and parcel to this shift in global engagement is the emergence of a new product development strategy, referred to as reverse innovation (RI). Here, we seek to explore the nexus of RI and the new mobility opportunity, by explicitly recognizing the spillover effects of knowledge transfer and economic development through local firms and, more broadly, the supply chains that internationalize. In fact, some Western companies are outsourcing RI to emerging economy partner firms, thus shifting historical cost-based relationships to value-based engagements. At the core, lies a radical shift in how products and processes are designed, to include: stripping out complexity without sacrificing customer experience; a high degree of customization not through features but by re-using underlying platforms; and customization at the latest stage of the value chain so as to not disrupt materials, components, and subsystems. The potential implications of RI designs and business models on the adoption of frugal innovations in the West are explored, and paths to engaging entrepreneurs in emerging economies are highlighted.

Value chain and innovation at the base of the pyramid

PurposeThis paper aims to investigate the factors a multinational corporation should adapt when doing business at the bottom of the pyramid (BoP) markets.Design/methodology/approachBased on a systematic literature review on BoP, value chain and innovation, an integrative framework is introduced for analysing business readiness in BoP: organisation, value chain and strategy. Four diverse cases were analysed: GE's reverse innovation project, GrameenPhone, Essilor, and P&G's PuR.FindingsBoP project should be a top‐down supported separate entity with its own strategic processes and financial measurements. Working in the value chain requires diverse thinking in terms of interactivity, partners, setup, and governance. Involving customers and consumers in the innovation process is crucial. The venture also needs to make its offerings accessible, affordable, acceptable, available, and valuable to the customers. A step‐by‐step scale‐up must be followed.Originality/valueThe BoP framework can be used as a practical roadmap for companies to analyse the readiness of the business venture and strategy development.

How Emerging Markets are Reshaping the Innovation Architecture of Global Firms

Purpose – The purpose of the paper is to advance knowledge on how firms should rethink and develop their innovation architecture by leveraging emerging market opportunities.Design/methodology/approach – The paper provides a conceptual framework comprising the drivers and consequences of innovation architecture across emerging and developed markets. It also highlights emerging market innovation characteristics using detailed examples.Findings/conclusions – Most of the future growth in the global economy will come from emerging markets. Successful global firms will have to rethink and develop their innovation architecture by leveraging innovations developed for emerging markets. By balancing the long-term costs and benefits of innovations in both developed and emerging markets, global firms can successfully reshape their innovation architecture.Practical implications – From a practical perspective, the paper provides guidelines to executives for managing innovation architecture across emerging and developed markets. Innovations appropriately developed and launched in emerging markets have the potential to expand global consumer base and increase shareholder value.Social implications – From a societal standpoint, the paper helps improve consumer welfare in emerging markets by offering a roadmap to develop safe, relevant, and affordable products for mainstream customers. Reverse innovations, developed primarily for emerging markets also benefit consumers in developed markets and enhance their social welfare.Value/originality – The paper provides an original theoretical contribution in an important and underexplored research area – emerging market innovation. It is the first to develop an in-depth analysis of innovation architecture, advance a conceptual framework of the role of emerging markets in the development and consequences of innovation architecture, and offer a roadmap for strategic management of innovation architecture. Academic researchers, practitioners, and policy makers will benefit from this paper.

Reverse Innovation: A Gift from Developing Economy to Developed Economy

In the era of globalization, emerging market economies are surfacing into centers of innovation. These innovations associate with low-cost products like healthcare devices, wind power, micro finance, electric cars and many more. The success of these frugal innovated products enable developed countries to adopt well. Hence, reverse innovation refers to those innovations which are adopted by developing countries first and then by developed countries. These innovative products are a result of cutting edge technology, common sense and ingenious use of local commodities with the price range that is affordable to a huge mass of consumers like Tata's one lakh ($ 1677) car Nano, Nokia's sturdy mobile phones, the Chottu Cool' refrigerator and many more. These products might be conceptualized for the customers at the bottom of the pyramid still not limited by scaled down versions meant for the lower end. This paper is an attempt to evaluate how reverse innovations are possible in emerging markets and how it can unlock business opportunities at a global scale.

Reverse innovation: create Far from Home, Win Everywhere20132Vijay Govindrajan and Chris Trimble. Reverse innovation: create Far from Home, Win Everywhere. Harvard Business Review, 2012. 229 pp. US$30.00

Reverse innovation: create Far from Home, Win Everywhere20132Vijay Govindrajan and Chris Trimble. <i>Reverse innovation: create Far from Home, Win Everywhere</i>. Harvard Business Review, 2012. 229 pp. US$30.00