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Reverse Innovation: Create Far From Home, Win Everywhere Hardcover – April 10, 2012
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Whether you are an executive of a global company or you are simply interested in innovation among cultural differences, creativity, and diversity, this is a lovely and persuasive read.” Business Insider
In Reverse Innovation: Create Far from Home, Win Everywhere, Vijay Govindarajan and Chris Trimble make a compelling argument for companies to not just widen their lens, but shift it to a completely different context that of developing economies.” strategy+business magazine
This lovely, persuasive work couples the focused repetition of a good textbook with the lively style of an entertaining article.” Directorship (South Africa)
Highly recommended... released this year to a chorus of approval from global business leaders this book explains the way in which the flow of innovation has changed... Reverse Innovation shows senior managers how to make innovation in emerging markets happen, and how these innovations can unlock business opportunities on a global scale - using real-life case studies to illustrate the theories.” Business Executive
The book presents its ideas clearly, with about half devoted to the general concepts and the other half to case examples of companies such as GE, Procter & Gamble and PepsiCo, which are leading the way in reverse innovation. If your company can benefit from reverse innovation or might suffer from itthe book is well worth reading.” Globe & Mail
a book that offers provocative insights into the quickly changing dynamics of the global economy.” The book is rich with examples ” The Wall Street Journal
In Reverse Innovation, [the authors] argue that western businesses must similarly learn new tricks from their emerging markets. It is an idea that they have been championing for years and which has become increasingly fashionable.” The Financial Times
The book, an extension of a 2009 Harvard Business Review article that Govindarajan and Trimble co-authored with General Electric CEO Jeff Immelt, reads like a how-to guide for executives looking to innovate beyond the U.S. and Europe...It's a useful and even inspiring read for any executive who cares about the future of business innovation.” Fortune.com
Reverse Innovation is a must read for anyone seeking to participate in emerging markets, be they CEOs of multinationals, leaders of NGOs, or government policy makers.” Stanford Social Innovation Review
This accessible new book...provides a clear evaluation of the issues faced and expert advice on how to implement a reverse innovation strategy.” Developing Leaders
Govindarajan [and Trimble] writes about how reverse innovation is rapidly changing the way companies think and how that’s affecting the way they look at markets.” Fortune (India)
This insightful book makes a compelling case for the developing world supplying the strongest emerging market of the new century.” Publishers Weekly
This is a fascinating book for anyone interested in how concepts of innovation need to change in order to succeed, and an even more important book for those who can actually take part on the level the authors advise.” 800 CEO READ
A well-researched and thoughtful book.” The Irish Times
This book shows how, counter-intuitively, there are many circumstances when business models and products developed in emerging markets can provide new opportunities in rich economies also.” Forbes.ru
ADVANCE PRAISE for Reverse Innovation:
Jeffrey R. Immelt, Chairman of the Board and Chief Executive Officer, General Electric
Govindarajan and Trimble offer a framework for the next phase of globalization.”
Robert A. McDonald, Chairman of the Board, President and Chief Executive Officer, The Procter & Gamble Co.
Reverse Innovation is a playbook for leaders who want to unlock growth in emerging markets.”
William D. Green, Chairman, Accenture
Innovation knows no geographic boundaries. This book is a defining work on how we invest and engage the future.”
Omar Ishrak, Chief Executive Officer, Medtronic, Inc.
"Unique and important work, hard-hitting examples, detailed and actionable steps, and clear explanations.”
Ajay Banga, President and Chief Executive Officer, MasterCard
As the world’s economic center of gravity continues to shiftand as new consumers continue to emergeit’s clear that the logic and business practices that drove yesterday’s success won’t drive tomorrow’s.”
Peter F. Volanakis, Former Chief Operating Officer, Corning Technologies
I wish I had this book ten years ago."
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Top Customer Reviews
Starting reading the book, I first had a hard time to understand its "dominant logic" of connecting social aspects of people living in emerging countries and industrial innovation. Then I found out, that the authors have introduced from the beginning (2009), coining the term: "reverse innovation", the link between the argument "smaller per capita incomes" in emerging markets with "innovations" for them. This way, the living conditions of the majority of people in emerging countries become the benchmark for successful innovation and consequently social criteria like "poor and rich", "one person with 10 dollars vs. 10 people with one dollar", "megatrends with microconsumers", "downhill vs. uphill" which fill the book's pages are understandable. The focus of the book shifts automatically towards innovations for "poor" consumers and consumer goods - not capital equipment.
But "re-engineered innovation" for capital equipment to be sold in emerging markets is also on its way and faces quite similar challenges as consumer goods. In both cases the main driver is the gap between market price levels in developed and developing countries, however, the customer types differ: companies and their staff behave not quite similar to street-level consumers - therefore, social aspects as such are no longer the dominating factor ( trying to avoid the use of social categories, however it is obvious, that peoples' income correlates with market prices for goods and vice versa).
The book presents several detailed (interesting and helpful) business stories of the way " reverse innovation" for consumer goods is handled - and this is the most valuable part of the book: practical examples with a lot of hints, how to overcome the dominant logic of western headquarter people and how to bridge the cultural gaps between developed and developing countries. Industrial re-engineering innovation projects for capital equipment resemble much.
The historical sequence multinational businesses have undergone is quite similar: growth by supplying home markets until they are nearly saturated, going abroad for further growth into similar economies and then, with emerging markets expanding world market volume and strengthened buying power trying to gain market share there as well. We call this "globalization" and due to price-level gaps between developed and developing countries and ever growing competition, companies had to reduce their product cost and adapted them according local needs: "glocalization" was born. Product costs were minimized producing locally and reducing product features and functions, however, the remaining costs often prevented complete market success in emerging countries.
People familiar with product management know that product costs are defined by engineering and design and production costs are only a consequence of it. So if production efforts are minimized but product costs still prevent market success - the dominant cost part, defined by design must be changed by re-engineering efforts.
Every efficient product engineering project must combine two key ingredients for success for consumer- as well as for capital goods: 1.profound understanding of customer's needs and 2. Technological expertise and latest know how for a thrilling solution fulfilling those wishes and needs. And this has paramount importance for emerging markets innovations.
The later (technological expertise) is usually incumbents market leader's core competency. As a consequence, their real challenge is, to have people onboard with in-depth knowledge of the needs of target-group customers - which live in completely different cultures - and to manage that merger. Preferably, experts with headquarter-know-how and local team members form an innovation project team for a defined target-group of customers. To make that teamwork happen merging the two ingredients, that's the whole story of "reverse innovation" and re-engineered innovations for capital goods!
The authors deliver 8 business stories of different companies which managed "reverse innovation" successfully. The GE-story from 2009 serves as the backbone of the book and is the most colorful: it demonstrates what works in practice and what doesn't. Some key points are very clear: "Innovation is sometimes a matter of simply talking to the right employees - those who understand local needs"; "Breakthrough customer insights not breakthrough technology matter most in unloading new markets"; "Move people, power, and money to where the growth is"; "Strike the right balance between local autonomy and global authority"; "Carefully managed partnerships of local teams and global expertise" are only a few.
Analyzing the business stories in detail, you see sometimes confusing mixes of social and methodological argumentation happen (e.g. in the Hartman-story) and some pure re-engineering examples focusing on one country only (mostly India). So the red thread of the book's main idea is not always very consequent. In the end, a few doubts still remain:
1. "Reverse innovation" by the author's definition takes place in a certain (emerging) country based on typical local needs (which are the root-causes for innovation). Can the innovative solution also become successful in other markets? If local needs dominate - won't localization start again and again - country by country? The book's claim: "some fundamental needs are widespread among emerging markets, so that relatively straightforward customizations will suffice for other countries" simply repeats the argument that drove glocalization - what is different this time?
2. Even if some (more than 50%) of the solutions given in the examples for "reverse innovation" could also be sold lateron outside the country, where "reverse innovation" initially took place, does this percentage stand for "winning everywhere"? Why should "reverse innovation" solutions "win everywhere", when glocalization failed?
3. Many similarities in projects for consumer goods innovation (i.e. "reverse innovation") and capital goods re-engineering innovation exist today. The authors' vision of innovated solutions flowing back into "headquarter's markets" seems to be fragile and to a certain extent questionable even for consumer goods (see 2.). For capital equipment innovations: won't the percentage be much lower?
4. The cannibalization topic is well recognized and the counter-arguments given repeat well-known rational statements - however, to convince headquarter people with their emotions and fears: it needs more!
Reverse Innovation does both. It builds on groundbreaking earlier frameworks (including Clay Christensen's theory of disruptive innovation and Govindarajan and Trimble's own models of innovation execution) to both describe, and explain how to make use of, an astonishing phenomenon: emerging-market innovations that "defy gravity" to gain traction in developed economies.
This trend is real, and the authors have the examples to prove it - from John Deere and GE to numerous small companies and entrepreneurs you've never heard of. But the best part of the book is the combination of practical, how-to advice (they provide counterintuitive organizational steps to "create far from home and win everywhere") with the illustrations of how this trend is literally changing billions of lives.
The potential to win in rich markets as well as poor will attract every major corporation to solve the problems of those not at the "top of the pyramid." This is capitalism at its best: the profit motive as a phenomenal engine for the welfare of the entire world. Kudos to Govindarajan and Trimble for both uncovering the trend and providing a playbook for everyone to take advantage of it.
Here, eight years later, is the book that Prahalad -- now, unfortunately, deceased -- should have written. Govindarajan, a professor at Dartmouth's Tuck School of Business, and Trimble, a younger Tuck faculty member, have formulated a concept they call "reverse innovation" that is the key to doing business in those emerging markets that excited Prahalad's lust. Their book, too, is dominated by case studies, but in this case the examples do a good job of illustrating how multinational companies have successfully developed products that gained a foothold in developing countries -- though by no means necessarily at "the bottom of the pyramid."
"Reverse innovation" -- an ethnocentric term -- begins with the conventional wisdom that business innovation takes place in rich countries but asserts that transnational corporations wishing to become established in developing markets must cast off traditional thinking and develop products and services within those markets and base them on the needs and wants of people living there. Govindarajan and Trimble advocate reverse innovation as the alternative to exporting rich-country products and services with minor adjustments, a strategy that many companies have found unsuccessful. (The authors call this strategy "glocalization.")
The case studies in Reverse Innovation span a wide range of needs, desires, and prices. The authors write about an extremely inexpensive electrocardiograph machine developed and marketed in India by GE Healthcare, lightweight enough for use by individual physicians on rounds in villages. They relate the story of the development from scratch of a lentil-based new snack food by PepsiCo in India, and of a new automotive "infotainment" system crafted through an international effort by Harman and eventually purchased by Toyota. Other examples include Procter & Gamble, Logitech, and the nonprofit Partners in Health.
Most of the case studies are great stories, even if they are better illustrations of how multinational corporations can make more money than they are of how poor people in emerging nations can gain access to needed goods and services at affordable prices. However, the bulk of Reverse Innovation is given over to discussion about change management in large corporations: it's clear that the real challenge these companies face in growing their markets is to get around the massive barriers thrown up by organizations that are too large, too successful, and too set in their ways. The authors write, "Reverse innovation begins not with inventing, but with forgetting . . . You must let go of the dominant logic that has served you well in rich countries . . . Reverse innovation is what we call clean-slate innovation."
Govindarajan and Trimble make it clear that the only way for a transnational company to bring about reverse innovation is to (1) start with a champion at the top, usually the CEO; (2) appoint a brilliant and politically savvy person to head up an "LGT," by which the authors do not mean to suggest gender preference but simply to abbreviate "Local Growth Team;" (3) recruit to the team a group of mavericks willing to ignore the conventional rules; and (4) work on site in one of the major emerging markets, far, far from headquarters.
Reverse Innovation is well-organized, well-written, and delivers on its promise. Why, then, have I awarded this book only three @@@ out of 5? Out of pique, perhaps, more than anything else. For one thing, the do's and don'ts of management in large organizations are . . . well, for me, the only apt word is boring. And I can't get past my aggravation that this is yet one more instance of brilliant minds being lashed to the task of making the rich richer.