Book Summary - Reverse Innovation (Document)

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Book Review – Reverse Innovation

HRM ASSIGNMENT: BOOK SUMMARY

Book Review – Reverse Innovation [AUTHOR NAME]

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Contents

Synopsis ..................................................................................................................................... 2

Organization of Content ........................................................................................................... 4

Part I: Reverse Innovation Challenge ....................................................................................... 5

ONE: The Future Is Far From Home ................................................................................................... 5

TWO: The Five Paths of Reverse Innovation ................................................................................... 5

THREE: Changing the Mindset ........................................................................................................... 8

Four – Changing the Management Model ....................................................................................... 9

Reverse Innovation Playbook ............................................................................................................ 10

Strategy ............................................................................................................................................... 10

Global Organization ........................................................................................................................ 10

Project Organization ....................................................................................................................... 10

Part – II: Reverse Innovation In Action ................................................................................... 12

Logitech, and the mouse that roared............................................................................................... 12

Playbook Lessons ................................................................................................................................. 13

EMC Corporation – Planting Seeds .................................................................................................. 13


GE – Healthcare in heart of India ..................................................................................................... 14

A Clean-slate solution.......................................................................................................................... 15

Beyond India ......................................................................................................................................... 15


Pepsico – Brand New-Bag .................................................................................................................... 16


Discussions on Reverse Innovation ........................................................................................ 18

Concerns with the work ...................................................................................................................... 18

So who should really read the book? ............................................................................................... 19


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Synopsis

When I read the title Reverse Innovation – the new book by Harvard Business

Review Press – by Vijay Govindarajan and Chris Trimble, I was very curious!

One of the first sentences that caught my attention was from Ratan Tata

Reverse Innovation offers a framework for leaders to innovate and extract

opportunities in today’s emerging markets. ‘Reverse Innovation – Create Far From Home,

Win Everywhere’, puts forward the fact that one needs to innovate in order to tap the

humungous growth opportunities existing in the developing markets. The stakes in these

economies are global and ignoring these glaring opportunities would result in a formidable

competition in their home markets in the near future.

In rich nations, home markets are mature and saturated and the gap between these

and emerging economies is closing. No longer will innovations traverse the globe in only

one direction, from developed countries to developing ones. They will also flow in reverse.

Most of the world’s untapped buying power is in the emerging markets of Asia, South Asia,

Eastern Europe, Africa and Latin America.

When it comes to innovation, the gap between the developed world and the

developing world is closing. Understanding this fact—and knowing how to “reverse

innovate” to stay in front of global demand—is critical for any business with growth in its

future.

Reverse Innovation helps leaders and senior managers understand what it means to

develop in emerging markets first, instead of scaling down rich world products, to unlock a

world of business opportunity. The book highlights strategies from some of the world’s

leading companies (General Electric, Deere & Company, Procter & Gamble, PepsiCo) that

emphasize innovations that “flow uphill”—that is, successes that were adopted in the

developing world first. It highlights what exactly works and what does not, in these cases,

and creates a framework for senior leaders and managers to generate innovation in

emerging markets and utilize these innovations to dig out opportunities worldwide. The

book says that it is always wise to initially develop in emerging markets instead of following

the herd in scaling down rich world products. There is a huge world of opportunities for

companies which are looking at leveraging long-term benefits from these developing

markets.

The term ‘reverse innovation’ in the words of the author means any innovation that

is adopted first in the developing world. In the past, reverse innovations were the rare

exception to the rule, but the phenomenon is becoming ever more common, and the

implications for multinationals are profound.


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In the past, reverse innovations have been the rare exception to the rule, but the

phenomenon is becoming ever more common, and the implications for multinationals are

profound. In particular, thanks to the rise of reverse innovation:

1. You must innovate, not simply export, if you want to capture the mammoth

growth opportunities in the developing world.

2. The stakes in emerging economies are global, not local. Passing up an

opportunity in the developing world today may invite formidable new

competition in your home markets tomorrow.

3. Legacy multinationals must rethink their dominant organizational logic if they

are to win in an era of reverse innovation.

There is no one industry that needs to reverse innovate; instead, all industries must

have interest in the needs and opportunities in the developing world in order to thrive in

tomorrow’s global marketplace. There is an intense focus on the fact that organizations

need to learn new tricks in order to succeed and sustain in the growing economies of today.

As the gap has been on the decline between the rich nations and the developing economies,

innovations will not necessarily flow from developed to emerging economies; there will be

reverse innovation. The authors also state that this is the right time to apply reverse

innovation and create new products and strategies for emerging markets. As quoted in the

book, “Reverse innovation is a potent force that will transform the global economy over the

next few decades. It will redistribute power and wealth to countries and companies who

understand it and diminish those who do not.”

The basic essence of reverse innovation has been successfully captured and

portrayed by the authors in a highly creative and interesting manner. There is not a single

point when the attention of the reader will fluctuate, as the content maintains a strong grasp

throughout. The book is truly a culmination of decades of in-depth research done by the

authors, which easily come across to the reader. Whether one is a student, a manager, a

senior leader or a CEO, understanding the phenomenon of reverse innovation is integral in

unfolding the innumerable opportunities that emerging markets have to offer.


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Organization of Content

The book has been divided into two parts. Part I, named as “Reverse Innovation

Challenge” discusses the need, opportunities, and challenges in path of Reverse Innovation

and goes on to lay down a framework for successfully reverse innovate. Part I is concluded

by presenting Reverse Innovation Playbook that encapsulates the important points covered

in Part I.

Part II, named as “Reverse Innovation in Action”, contains the eight different case

studies of some of the big MNC’s who have successfully adopted the Reverse Innovation.

These case studies discuss the challenges faced by these companies and how they managed

to reverse innovate. Each case study distinctly lists the playbook lessons applicable to that

particular case study. Part II is concluded with the Reverse Innovation Toolkit which is a

discussion on recommended tools and how companies can use them to reverse innovate.


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Part I: Reverse Innovation Challenge

ONE: THE FUTURE IS FAR FROM HOME

This chapter starts with an early case that dates from the 1960s, when Western

doctors who went to Bangladesh to help address a cholera outbreak. The doctors discovered

that the locals were using a drink made of carrot juice, rice water, bananas and carob flour—

a mix of carbohydrates and sugar—to rehydrate those suffering severe diarrhea. A doctor at

the University of Florida read about the traditional treatment and concluded that

something similar might help dehydrated football players. The result: Gatorade.

The authors also describe how Wal-Mart discovered that its big-box-store formula

didn't work in Central and South America because shoppers didn't have enough money or

storage space to make buying in bulk feasible. So the company developed smaller stores

selling products in more manageable quantities for those markets—and now is bringing the

idea to dense urban settings in the U.S.

Chapter one argues that these anecdotes aren't isolated examples but rather part of

a trend that is gathering steam. If growth is going to be driven by developing markets, they

say, then innovation almost certainly will be, as well.

Another reason cited by author as to why reverse innovation is more important is

the size and growth rate of emerging (developing) economies. On President Obama’s call

for the US to ‘out-innovate, out-educate, and out- build the rest of the world’, the authors

propose that this won’t happen till American innovators focus strictly on American

problems. The focus has to shift far from home, preferably towards the less developed

economies and their problems. This call further gains strength in the light of fast-paced

economic growth of many hitherto poor- countries, and the 2008 economic recession that

had hit the rich-countries.

Authors predict that “poor countries” are likely to account for 2/3rd of world GDP in

coming decades. And if multi-national companies want to be part of this growth, they have

to understand developing economies are day-&-night different from developed economies.

In rich world, there are few people who spend a lot whereas a developing world has lots of

people each willing to spend little.

TWO: THE FIVE PATHS OF REVERSE INNOVATION

Defining India and China as ‘megamarkets with microconsumers’, the authors

identify five need gaps in such nations that could be starting point of a firm’s reverse

innovation journey. These are: performance gap, as customers seek decent performance at

ultralow cost; infrastructure gap, which triggers technology leapfrogging; sustainability gap,

pushing adoption of ‘green’ solutions; regulatory gap, that eases experimentation; and

preference gap, as likings vary not only across countries, but also within.


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Table 1: Why Reverse Innovation must be Clean-slate innovation

The authors call reverse innovations as ‘clean- slate innovations’ and propose that it

doesn’t begin with reinventing, but with forgetting. Such innovations flow ‘uphill’ from

emerging economies, first to the marginalized markets of the developed economies, and


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then penetrating into the mainstream market. Authors go on to explain why reverse

innovation must be clean-slate innovation and how to achieve the same by identifying the

trends that can fill need gaps.

Table 2: Reverse Innovation Flows to fill the need gaps


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Table 3: Trends that close the five needs gaps

THREE: CHANGING THE MINDSET

Borrowing the notion of ‘dominant logic’ from Prahalad and Bettis, and the concept

of selectively borrowing, forgetting and learning for managing innovation proposed in their

earlier work, the authors confer that reverse innovation requires a shift in dominant logic.

Orthodoxies of thinking in terms of ‘exporting to emerging markets’, has to be forgotten in

favor of embracing the intent of ‘innovating for emerging markets’, that is to move away

from glocalization to reverse innovation, and from battle for the market share to creating

new markets.


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The authors list the five levels of thinking; initial ones that organizations must break

free from and the ultimate one (level five) that organization must reach to lay the framework

for the Reverse Innovation. The five levels of thinking, as described by authors, are –

Level One Thinking. Poor Countries are irrelevant.

Only the rich world matters. Poor countries are too poor to be worth worrying

about.

Level Two Thinking. Just sit tight.

In poor countries, there is an opportunity to sell offerings at the top of the economic

pyramid. This market will expand, as poor nations get richer.

Level Three Thinking. Customization is sufficient.

Emerging-market customers have different needs. We`ll have to customize our

existing products and services.

Level Four Thinking. Winning Requires Innovations.

Emerging market customers have vastly different needs. We`ll have to design new

products and services from scratch.

Level Five Thinking. The stakes are global, not local.

After reasoning out the need for a mindset shift, the authors offer the first significant

contributions of the book: the strategies executives should take to embrace reverse

innovation.

These are:

1. Shifting the center of gravity to emerging market, in terms of reapportioning people,

money, R&D focus, and power;

2. Bulking up on emerging market knowledge and expertise through induction of

senior people from emerging geographies, and planned geographic rotation of

executives; and

3. Changing the tone through highly visible and symbolic personal actions.

FOUR – CHANGING THE MANAGEMENT MODEL

Cultivating the mindset is only half the story, says Govindarajan and Trimble, as

firms now exposed to reverse innovation mindset need an equally significant shift in

management model. For a firm to manage a model of reverse innovation within the larger

organization, the authors make their second important contribution: formation of

autonomous units, called Local Growth Teams (LGTs). The focus of Local Growth Team is

reverse innovation and not the glocalization.

Local Growth Teams must follow three principles –

1. Must practice clean-slate organizational design: building an LGT is similar to

building a new company from scratch – a company with its own dominant logic

2. Must be connected to global organization and be able to leverage its resources


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3. Must practice disciplined experimentation

Such units, based out of developing markets, focus exclusively on reverse

innovation, while allowing the rest of the organization to still leverage the glocalization

mindset. Such units are built on clean- slate organizational design, perform disciplined

experiment, and yet borrow necessary resources and capabilities from the parent

organization. In such a setup, the conflict between global firm and LGTs is eminent.

Sighting the case of GE Healthcare’s reverse innovation efforts in Chain and India, authors

propose a battery of practices on how to manage such conflicts and mitigate the fears of

cannibalization.

REVERSE INNOVATION PLAYBOOK

Reverse Innovation Playbook marks the conclusion of Part I of the book. The playbook

contains some of the most crucial recommendations from the part I. They are as below –

Strategy

1. To capture growth in emerging markets, you must innovate, not simply export.

2. Leverage opportunities to move emerging market innovations to other parts of the world:

to other poor countries, to marginalized markets in rich countries, and, eventually, to

mainstream markets in rich countries.

3. Keep so-called emerging giants on your radar screen. These small but rapidly growing

companies, headquartered in the developing world, have global aspirations that could one

day threaten your own.

Global Organization

1. Move people, power, and money to where the growth is — the developing world.

2. Create a reverse innovation mindset throughout the corporation. Put the spotlight on

emerging markets through the use of expatriate assignments, immersion experiences,

corporate events that are held in emerging markets, creative board appointments, and

highly visible CEO actions.

3. Create separate business scorecards for developing nations with full income statements

and an emphasis on growth metrics.

Project Organization

1. Commission Local Growth Teams (LGTs) with full business capabilities for each reverse-

innovation opportunity. LGTs should act like brand new companies:

o They must conduct clean-slate needs assessments

o They must develop clean-slate solutions

o They must practice clean-slate organizational design


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2. Enable LGTs to leverage your company’s global resource base through carefully managed

partnerships.

3. Reverse innovation initiatives must be managed as disciplined experiments, with a focus

on resolving critical unknowns quickly and inexpensively.


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Part – II: Reverse Innovation In Action

This part present detailed cases of some leading western firms on their reverse innovation

journey. Out of all given cases in the book, I will be giving summary of 4 cases here, viz.,

Logitech, EMC, GE and PepsiCo.

LOGITECH, AND THE MOUSE THAT ROARED

California-based Logitech had a winning strategy for selling wireless computer mice

in China—until an unheralded Chinese company called Rapoo began selling mice at one-

third the cost. Within six months Logitech responded by designing a mouse that had less

memory and simpler software but could still perform the functions most consumers

wanted—and cut its entry-level price from $50 to $19.99, nearly the same as Rapoo’s. The

redesign went global, and within a year Logitech had shipped 4.5 million units.

In March 2009, Logitech formed a special team with an urgent mission. The maker

of computer peripherals, especially keyboards and mice, had been caught off-guard when

consumers in China unexpectedly fell in love with a new mouse that was not Logitech’s. The

company closely monitored its direct rivals, especially Microsoft, but this market insurgency

was engineered by a Chinese company called Rapoo, at best a faint blip on Logitech’s radar

screen.

When Logitech first noticed Rapoo’s mouse, the instinctive response was denial.

Small companies had challenged Logitech before, and they usually went away. Within just

a few months, however, the data were unambiguous. Logitech needed to respond. If it did

not, it would find itself crippled in China, a lynchpin market in the company’s global growth

strategy.

As of 2009, there were three wireless chip technologies commonly used in mice —

27 MHz, 2.4 GHz, and Bluetooth. Around these technologies, Logitech had built a good,

better, best product lineup. Consumers that chose the 27 MHz chip got a stripped-down

mouse. But those that upgraded to 2.4 GHz or Bluetooth also stepped up on other mouse

features. The better and best mice could work on more surfaces, were more programmable,

had more ergonomic designs, and were easier to use. Logitech priced its good, better, and

best mice at roughly $30, $50, and up to $150.

This product-line strategy worked well for Logitech. And, until Rapoo jolted

Logitech into thinking twice, the company had interpreted its lackluster sales in China as

nothing more than something to endure.

Logitech had a typical Western worldview. It believed that consumers were

becoming more and more alike around the globe. If Chinese customers weren’t yet buying

Logitech mice the way U.S. customers were, it could only be because of their higher price

sensitivity. And that was something that could only be fixed in time, with cost reductions

and with rising incomes.


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But Rapoo understood something that Logitech did not: that Chinese customers

“moused” differently. Critically, for millions of Chinese consumers, satellite or cable

television was too pricey. As such, people hungry for evening video entertainment

connected their PCs to their televisions and surfed Internet video sites. In such a setting, a

mouse is not just a mouse, but also a remote control. When used this way, a mouse needs

at least the “better” 2.4GHz chip. It needs the longer range, and, because so many Chinese

live in cramped urban apartment buildings, it needs better shielding.

Rapoo also saw that as much as Chinese consumers needed a better chip, they did

not like Logitech’s $50 price point. To get the price down, Rapoo designed a mouse that had

the 2.4 GHz chip but none of the other functionality that Logitech had bundled with it.

Consumers loved it.

The mouse may be a humble device, but the lesson from this mouse tale is profound.

Developing world customers cannot simply be differentiated from rich world customers

because they have less money. They also have unique needs. To win in emerging markets,

you have to understand those needs, and innovate to meet them.

This could not have happened if Logitech relied on its existing product-

development teams. Though these teams were effective at home, Logitech saw that these

teams had biases and work processes that made them uniquely unqualified for the special

challenge of innovating for China. So, the company instead commissioned a special team

focused solely on the challenge of designing a mouse for the Chinese market. It tapped an

experienced engineer to lead a team composed primarily of technologists from Taiwan or

China who had a more intuitive understanding of the way Chinese customers used

technology.

Playbook Lessons

1. Keep emerging giants on your radar. (Playbook lesson #3)

2. Conduct clean-slate needs assessment. (Playbook lesson #7)

EMC CORPORATION – PLANTING SEEDS

In this case study, authors explore how EMC Corporation, a company providing

data-services, effectively used the local innovators’ talent to come up with a solution that

helped the company in defeating giants like Google, Microsoft, etc. to become the favorite

desktop search system in Chinese Market.

China is ahead of the evolutionary curve in terms of digital content consumption.

Chinese consumers are already storing tremendous amounts of material on their hard-

drives. A second reason China’s hard-drives are hefty with data is that Chinese put high-

importance on the privacy and thus refuse to use the public data sharing networks.

Nevertheless, personal information is exploding for each Chinese user. This explosion is

hard to manage for a user. An average Chinese user hard-drive is like a cluttered,


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disorganized office. When searching for a document, a user will never know where to begin

the first.

Unfortunately, traditional search methods can’t help. Searching personal data with

keywords is becoming increasingly challenging as users create more and more personal

data, e.g., large amounts of local files, emails or cached web pages in their PCs. Current

desktop search systems such as Google Desktop only support keyword searches that rank

results by their relevance to the query. One problem with keyword search is that the result

set usually contains many unrelated documents. To solve it, we need to find out what the

user really needs besides using keywords.

In most cases of desktop search, the user is more interested in documents related to

his context. What is meant by the "context" is that user's task when he submits the query.

A task can be simply modeled as a set of documents accessed by the user for a specific

purpose. A user constantly goes back to his previous tasks when he is using his PC. Thus, a

context-aware system would be more useful in this case, EMC figured out. A search

mechanism based on the associative memory would be able to reconstruct the context in

which you last viewed some piece of information that you now want to retrieve.

Based on these observations, EMC developed a context-aware desktop search

system called iMecho. The idea was to build a user behavior model based on the user's

previous activities. This system was developed by Jidong Chen and Hang Guo, two local

innovators.

The strategy followed by EMC was –

1. Situate innovators in emerging markets, and empower these innovators to take

initiative to solve local problems

2. Enable local innovators to draw on other local resources – both inside & outside the

company

3. Multiply the capabilities of local innovators by connecting them to wealth of

resource in global enterprise

Playbook Lessons

1. Move people, power, and money to where the growth is (Playbook lesson #4)

2. Enable LGTs to leverage the company`s global resource base (Playbook lesson #8)

GE – HEALTHCARE IN HEART OF INDIA

When visiting their local doctors, members of a Bangalore-based GE Healthcare

engineering team noticed something troubling. More precisely, it was what they failed to

notice that frustrated them.

Starting in 2001, they had been developing and manufacturing GE’s high-end

electrocardiogram (ECG) machines in India. Electrocardiograms are noninvasive, risk-free,


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relatively low-cost tests that measure electrical activity in patients’ hearts. The ECG is the

most widely performed cardiac test in the developed world. In poor countries, GE’s “global

premium” ECG machines have typically been available only in hospitals in major urban

centers. The price of the machines, their weight, and their power requirements have put

them out of reach for rural India. As a result, heart problems that could have been detected

early and treated have too often gone undiagnosed.

So, the idea was simple and clear – a low-cost ECG machine. But this new business

idea within GE had to clear many hurdles. Not the least of these was convincing the

corporate office that you had the capabilities needed to see the project through to success.

GE’s emphasis was increasingly on capturing growth in emerging markets. It took

persistence, but for its trouble, the team got a $500,000 investment for a low-cost ECG the

engineers were calling the MAC 400.

A Clean-slate solution

After a series of experiments to design a cost-effective printer in-house, the team hit

upon a novel idea: to consider the suitability of the kind of ticket printer used on public

buses and in movie theaters.

Minimizing the size of the printer reduced the footprint and weight. Eliminating the

monitor reduced overall technical complexity, weight, and power consumption, which in

turn contributed to longer life for the rechargeable battery. The team achieved its goal of

recording a minimum of one hundred ECG tests on a single charge.

The MAC 400 launched in December 2007 and quickly proved itself. At just over 2.6

pounds, it could be carried easily in a briefcase or hooked to a shoulder strap. Moreover,

under the hood of this small device, there was considerable ingenuity. For example, it used

the same patented GE analysis algorithm that runs on premium ECGs.

The MAC 400 extended affordable diagnostic testing to a poor rural population

whose needs had hitherto been neglected. Despite the machine’s bare-bones architecture,

it recorded and printed clinically accurate electrocardiograms, detected cardiac illnesses,

and helped to save lives.

Beyond India

Although the MAC 400 was designed for the unique circumstances and needs of

India, it quickly found a market in the developed world. Much to the surprise of everyone

involved, the fraction of MAC 400 sales made in Europe grew rapidly to half. The machine

was a perfect solution for physicians in individual practice who could not afford the bigger

systems. The quick win validated the LGT’s foresight in complying with all international

standards. The MAC 400 is now sold in virtually every country (except the United States

and Canada, where GE instead sells a model developed in China).


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Playbook Lessons

1. Leverage opportunities to move emerging-market innovations to other parts of the

world (Playbook Lesson #2)

2. Manage reverse innovation initiatives as disciplined experiments. (playbook

Lesson #9)

PEPSICO – BRAND NEW-BAG

PepsiCo, a world leader in the food and beverage industry, has built its world-class

product lines for soft drinks, juices, chips and cereals through its innovation capability and

acquisitions across the globe. The case study discusses the innovative efforts of PepsiCo in

the emerging markets for its sustainable global growth. PepsiCo, which earlier offered its

global products in the third world countries, started offering products as per local market

requirements to capture higher market share in these countries. Pursuing this idea, it

launched products such as Kurkure, Aliva and Nimbooz in India, creating distinctive

categories and achieving huge success. After tasting success with these brands in India,

PepsiCo plans to launch them in other countries reversing its earlier process of innovation.

This case study describes some of PepsiCo India's experience developing a new

snack cracker named Aliva. It beautifully highlights the inevitability of mistakes when you

are trying something new, and that persistently pushing through and learning from those

mistakes are hallmarks of a successful product launch.

From its inception to its 2009 launch, the Aliva project took nearly four years. Aliva

was evaluated against criteria that took full account of potential uncertainties. Such latitude

was indispensable. Aliva had to make its way through a predictably fraught gestation. There

were plenty of bumps in the road, and plenty to learn on the way.

Aliva's most vexing challenge was its packaging. Packages are hugely important to

snack food performance. If snacks had remained in the era of the general-store cracker

barrel, great branding opportunities would never have materialized. Aliva's packaging

needed to be as distinctive as the shape of the cracker. The packaging had to communicate

that Aliva was both healthy and fun. Decisions about the package would have implications

for Aliva's texture and shape, the way the cracker was produced (through baking), and the

attractiveness of the offering at the point of sale.

The Aliva bag featured a number of innovations. [Program manager Vidur] Vyas

claims that nothing like it had ever been tried before. It was to be made from new materials

on brand-new - and untested - machinery. The bag was designed to be flat on the bottom.

Unlike typical snack bags in the United States, it could stand up straight on a retail shelf,

tabletop, or counter. The packaging material was therefore heavier and stiffer than

conventional plastic film. It turned out that a more rugged package could actually be made

using only two laminate layers, not three. This solution was both more cost-effective and

environmentally friendly.


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The package specifications needed to address certain constraints of local

infrastructure. It often took a long time to distribute perishable goods through a vast,

predominantly rural retail network. Crackers can spoil more quickly than other types of

snacks. Aliva therefore had to be protected from spoilage as well as breakage. A rugged,

lightproof, hermetic package was key.

Vyas and his team endured a perfect storm of complications on the way to satisfying

these needs. Because the Aliva bag was a first-of-its-kind package design, it seemed that

every element of the package's structure and manufacture either had to be invented or

endlessly troubleshot. To start with, the new packaging machinery was touchy. In limited

test runs, things seemed fine. But once Aliva launched, in May 2009, problems cropped up

during production-scale runs, particularly with the heat seal at the top of the bag. So, new

material had to be designed. This required help from squadrons of global experts on

polymers and lamination technologies.

There were nettlesome challenges on other fronts as well. Because Aliva would rely

on a new baking system, which had only recently been used for the first time to produce

cookies in PepsiCo's Mexico region, Vyas's team needed time and technical guidance to

learn how to operate it reliably.

Finally, the team aspired to create a cracker in an eccentric triangular shape. The

cracker's unique design was considered an important aspect of the values the brand would

communicate. The triangle shape was meant to connote speed, stimulation, and taste. The

triangle's curved edges were meant to connote health. At first, however, the crackers

suffered unacceptable levels of breakage. Coming up with a workable version - a cracker

with a low rate of breakage and a pleasing combination of textures - required innumerable

trials.

But if Aliva's journey to market had an unusual share of difficulties, that is only

because it was forging entirely new paths in a number of areas. To its credit, PepsiCo

patiently tolerated a high degree of necessary experimentation with packaging, with the

baking system, and with the architecture of the cracker itself.

Playbook Lessons

1. Enable LGTs to leverage the company`s global resource base (Playbook lesson #8)

2. Move people, power, and money to where the growth is (Playbook lesson #4)


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Discussions on Reverse Innovation

CONCERNS WITH THE WORK

I have certain concerns with Reverse Innovation. First, the authors miss the concept

of aspirations in the developing world. The Nano is an excellent example. While the Nano

offers viable transportation, it is well-recognized as the least expensive car in the market,

which ignores one key attribute product developers may overlook – aspirations. The Nano

has struggled not because it doesn’t meet needs of an underserved population, but because

that underserved population has aspirations to own a more robust, more expensive car.

Reverse Innovation was written in late 2011, so the authors had to know that the Nano has

not yet been a market success.

Second, the concept of Reverse Innovation isn’t especially new. For example, an

article in the New York Times in 2008 described the failure of western designed medical

devices like infant incubators in African countries. The incubators were designed in the

west and required western infrastructure – power, cooling, maintenance. Teams from

several non-profits reinvented the incubator from locally available parts that could be easily

maintained. The heating element was based on a car headlight, with other cannibalized

parts from a range of automotive technologies. These local innovations proved easier to

build, easier to maintain and much more rugged than products designed and engineered in

the west.

Third, while the authors titled the book Reverse Innovation, Create Far from Home,

Win Everywhere, the only examples they provide of reverse innovation take place in India

and China. Certainly these two countries are excellent locations for reverse innovation, but

they don’t define “everywhere”. Can the idea of reverse innovation be applied elsewhere?

Absolutely. Why then no examples from Brazil, for example, or Vietnam, or Nigeria?

Adding further, there are more shortcomings that this work suffers. Firstly, it’s

focused on how US based companies innovate in emerging markets, and not European and

Japanese companies, as the models might be very different, owing to cultural differences,

among others. Secondly, while the book lacks a specific methodology, it’s heavily influenced

by the model of one ‘ideal type’ - General Electric, the source of Govindarajan insights.

Extrapolating, the case beyond specifics of GE remains a risky bet, and that’s owing to an

ill-defined method of conducting research, as this leaves the proposition highly subjective.

In any case, the book makes a timely contribution to the literature of innovation in realm

of emerging economies, and makes a handy read for executives.

Reverse Innovation is difficult to review, because it gets a lot about innovation right,

but does so with relatively obvious observations that are applicable anywhere. Clearly many

western firms have myopia about product requirements and needs in developing countries

and can learn by exploring customer needs and understanding the channels, infrastructure

and support needs in these countries to innovate products that are more relevant. The


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authors don’t offer ideas or solutions for small and mid-sized companies that may want to

take advantage of reverse innovation. Further, they don’t make recommendations about

how small and mid-sized firms in developing countries can use their innovation insights to

penetrate developed markets with new innovations. It’s as if the only audience for this book

is multinational CEOs interested in creating local market innovations that they control and

bringing those innovations back to developed markets.

SO WHO SHOULD REALLY READ THE BOOK?

This book is an ideal read for anyone who likes reading about big global companies

and what they are doing to keep their business and their brands alive.

As a small business owner (no matter the size of your business), you’ll want to check into

this book to see how you might be able to apply these principles to your own innovation

plans, although the book doesn't really offer any advice on this part.

Overall this is a serious book. It’s not entertaining, or engaging – it’s informative and

educational. If you are involved with customers or companies who have multiple locations

and technical facilities that span the globe, you will certainly want to read this and see if

you can apply some of these concepts.

Reverse Innovation, may not be at the top of your reading list today – but you can expect to

see the trends and applications of this work become more the norm in the next few years.

The businesses who are familiar with this process will find themselves better prepared for

the future.

Documents

Book Summary - Reverse Innovation (Document)