Saturday, February 5, 2011

Reverse Innovation, is it fair to use the term for India & China

Is it fair to use the term “Reverse Innovation” for the technology emanating from India & China, especially when these countries are emerging as technology super powers????

There was a time when the Innovation was considered to emanate from the rich countries like USA, Germany, & Britain and spread to the rest of the developed world and then when it became obsolete in the developed world, it used to slowly drip down to the developing world as new technology. This was considered the process and procedure for the better part of the 20th century, and was closer to the reality of the times also.

 In India, the protectionist attitude and the populist policies were responsible for that, on account of the over dependence of the political parties on the industrialists for party funding, which allowed the corporates to mint money by selling outdated technologies and products to the people. Government also on its part, to protect the interest of Indian Business House, did not allow new technology into India except for defence, where also India availed the rupee payment option for the bulk of the imports from Soviet Union.

Add to this, the grim financial situation borne out of the 1971 Pakistan war, compelled India to protect its precious, precarious, Foreign Exchange Reserves. Which prevented the import of foreign technology, even in the priority sector like healthcare. Bulk of the foreign exchange was used to import petroleum products and of course for the luxury trips of Ministers and bureaucrats under various pretexts.

In China too, strong communist policies prevented the country from opening up to the latest in technology from the west. Its progress was limited to the defence and aerospace.

This was certainly not an ideal situation for Innovation & development of technology in India & China. Though it was in the eighties when both India & China started the liberalization process under Rajeev Gandhi and Deng Xiaoping, It was in the nineties that both the countries opened the gate to technology, progress, & prosperity.

Turn of the century saw India slowly but firmly getting a foothold in the development of technology in IT & ITES so much so that there was a reverse trickle of Innovative and cost effective technologies from Asia to the west. India and China could now boast of the best in Human Resources and Technologies. Successive Prime Ministers in India, Jiang Zemin & Hu Jintao in China propelled these two countries towards unparalleled Economic Growth.

Deprivations the west was suffering from were the assets the Asia was leveraging to usher in this revolution.

The west was taken aback by this sudden upsurge from Asia and sent them thinking. It was in this situation that in 2005, a phrase  “Innovation Blowback” was coined to describe this process, by John Hagel III and John Seely Brown in their 2005 McKinsey Quarterly article titled “Innovation blowback: Disruptive management practices from Asia." It was called Disruptive Management policies because it tried to disrupt & reverse the trend of trickle of technology from the developed countries to the developing ones.
This process was used intelligently by GE in its process of globalization  and was given a respectable name “Reverse Innovation”. Professors Vijay Govindarajan and Chris Trimble and GE’s Jeffrey R. Immelt first used this term.
Management Guru Late C K Prahalad had this to add “There are five ways in which resource-starved developing countries lead rich nations: 1) affordability, 2) leapfrog technologies, 3) service ecosystems, 4) robust systems, and 5) add-on applications. These very deprivations are catalysts for reverse innovation.”

Recession, and the Research Shrinkage in the West.
Continued and unrelenting recession has forced corporates in west to shift or outsource their Research and Development to Asia. All the large corporates are using the “Reverse Innovation” to keep themselves afloat amidst the stiff competition and the reducing bottom lines. GE has used it effectively for is globalization effort & other are also getting into the mode. Flow of regular technologies up west, is now a regular feature rather than an exception.
This being the situation, is it correct to use the term “Reverse Innovation” for the technologies emanating from India & the developing world???
Please express your views.
Best wishes,

Examples of Reverse Innovation:

Tata Motors – Tata Nano

While companies like Ford set up its global automobile platform in India and catered to the niche premium segments in India, Tata introduced the Tata Nano for the price conscious consumer in India in 2009. Tata plans to launch Tata Nano in Europe and U.S. subsequently.

GE – GE MAC 800

GE’s innovation on the GE MAC 400 to build a portable low-cost ECG machine to cater to the rural population who cannot afford expensive health care was launched as an improved version a year later in 2009, in U.S. as MAC 800.

Procter and Gamble (P&G) – Vicks Honey Cough – Honey-based cold remedy

P&G’s (Vicks Honey Cough) honey-based cold remedy developed in Mexico found success in European and the United States market.

Nestle – Low-cost, low-fat dried noodles

Nestle’s Maggi brand – Low-cost, low-fat dried noodles developed for rural India and Pakistan found a market in Australia and New Zealand as a healthy and budget-friendly alternative.

Xerox – Innovation Managers

Xerox has employed two researchers who will look for inventions and products from Indian start-ups that Xerox can use for North America. The company calls them as ‘innovation managers’

Microsoft – Starter Edition

Microsoft is using its Starter edition’s (targeted at not so technically savvy customers in poor countries and with low-end personal computers) simplified help menu and videos into future U.S. editions of its Windows operating system.

Nokia – New business models

Nokia’s classified ads in Kenya are being tested as new business models. Nokia also incorporated new features in its devices meant for U.S. customers after observing phone sharing in Ghana

Hewlett-Packard (HP) – Research Labs in India

HP intends to use its research lab to adapt Web-interface applications for mobile phones in Asia and Africa to other developed markets.

Godrej – Chotukool Refrigerator

In February 2010, Godrej Group’s appliances division, Godrej & Boyce Manufacturing Co Ltd test-marketed a low-cost (dubbed the world’s lowest-priced model at Rs 3,250) refrigerator targeted mainly at rural areas and poor customers in India. The product runs without a compressor on a battery and cooling chips. The company wants to use a community-led distribution model (as an alternative channel of distribution) to push for product growth.

Tata – Swacch – World’s cheapest water purifier

Swacch means clean in Hindi. Tata launched the water purifier – Tata Swacch targeting the rural market in India with the cheapest water purifier in the market. The product does not require running water, power or boiling and uses paddy husk ash as a filter. It also uses silver nanotechnology. It can give purified water enough to provide a family of five drinking water for a year. The company feels it will open a whole new market.

Pepsico – Kurkure and Aliva

Pepsi is planning to give developed markets (particularly West Asia) a taste of its salted snack Kurkure (and also another snack Aliva). The product enjoys huge success in India and has become a Rs 700 crore brand within a decade of its launch. The success is attributed to product innovation and a good marketing strategy. E.g. Made from corn, rice and gram flour, zero per cent trans fats and no cholesterol, Rs-3 small packs for pushing sales in the lower-tier towns.

Bharat Forge – Maintenance Management Practice

The best practices group at Bharat Forge, a large Indian manufacturer and exporter of automobile components implemented a maintenance management practice it developed in India (developed over 15 to 18 years) in its units it acquired in countries (known for sophisticated engineering) in Germany, Sweden and U.S. The maintenance management process focused on minimizing downtime during machine maintenance and has an advanced information system that predicts problems before they happen. Consequently, Bharat Forge plants globally are very efficient and have an average down time of less than 10 per cent.

KFC – Taco Bell – Yum! Restaurants

KFC test-marketed Krushers, a range of chilled drinks in the cold beverages segment in India and Australia and plans to introduce it to other markets. The launch in India was very successful as ‘Krushers’ accounts for 8 per cent of KFC’s beverage sales in India.
Yum! Restaurant’s Tex-Mex chain Taco Bell has one Indian-designed dessert (tortilla filled with melted dark chocolate) on Taco Bell’s US menus.

Husk Power Systems

In India, Husk Power Systems brings light to rural population (over 50,000) by using locally grown rice husks to produce electricity (a unique and cost-effective biomass gasification technology). The company has also received seed capital from Shell foundation in 2009 to scale up operations.

LG – Low-cost Air Conditioners (AC)

South Korea based LG Electronics (LG) planned to develop low-cost air conditioners targeting the middle and lower-middle classes in India. Their goal was to manufacture air conditioners at the cost of air coolers which were very common.

Renault – Logan

Renault designed a low-cost model of its brand Logan for Eastern European markets. It also sold in the Western European markets later on.

Better Place – Smart Grid of Battery charging/Swap terminals

In Israel, Better Place, a electric vehicle (EV) services provider (creates systems and infrastructure that support the use of electric cars), created an intelligent grid of battery-charging terminals and battery-swap stations. The company is now present in many countries like China, Japan, Australia, the U.S., Canada, France and Denmark.

GE India – Steam Turbines

In 2010, GE’s Indian arm tied up with Triveni Engineering and Industries Ltd to manufacture steam turbines in the 30-100MW range. The company plans to then take advantage of lower input costs incurred in manufacturing and export these products to markets in West Asia, Indonesia, Europe and Latin America.

PS: Please also read my article on WikiHow about the deterioting standards of imparting in Science & Technology (STEM) education in United States, wherein 15 year olds in USA ranked 29th in the world in terms Math Intelligence  

"How to Impart STEM Education to Your Children"


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