“The reverse innovation process succeeds when engineering creatively intersects with strategy,” writes Amos Winter in the Harvard Business Review.
Reverse innovation is a term coined by Vijay Govindarajan to describe the phenomenon of goods and services being produced in emerging markets (such as India) and then exported, with a few “tweaks,” to developed markets such as Europe and the United States.
This goes against the grain of a traditional system in which products and technologies and created by, and primarily for, the developed world. Govindarajan has argued that reverse innovation encourages–even enforces–better, more cost-effective design. And while numerous large corporations want to use this technique to improve their ability to design for a global market, few have truly succeeded.
In a new article published by Harvard Business Review, Govindarajan and Tata Center faculty member Amos Winter write that reverse innovation “allows companies to enjoy the best of both worlds,” but only if they do it right.
In that spirit, Winter and Govindarajan lay out five “traps” that businesses routinely fall into, along with corresponding design principles to avoid those mistakes. For example, many companies try to “reduce the price by eliminating features.” Instead, Winter and Govindarajan argue they should “create an optimal solution, not a watered-down one, using the design freedoms available in emerging markets.”
The challenge is strict: “To win over consumers in developing countries, multinationals’ products and services must match or beat the performance of existing ones but at a lower cost. In other words, they must provide 100% of the performance at 10% of the price, as product developers wryly put it.”
Winter, an assistant professor of mechanical engineering at MIT and director of GEAR Lab, is no stranger to this kind of innovation. He spent six years designing the Leveraged Freedom Chair, a high-performance, low-cost wheelchair used in both India and the United States. Working with Tata Fellows, he is leading projects on water desalination, high-performance prosthetic limbs, design of tractors for small-scale farming, and more.
He and Govindarajan caution that many companies “still don’t realize that [the business world’s] center of gravity has pretty much shifted to emerging markets.” If they don’t figure out how to reach consumers there, the authors argue, they’re going to get left behind.
Photo: Amos Winter with a user of the Leveraged Freedom Chair in India.