Reverse innovation: how developing countries inspire the developed world to innovate

Summary

The definition of innovation is evolving in the wake of the multiple crises faced by the world. It is no longer only happening in the labs of Western R&D departments. Or, to be more accurate, we are now finally seeing that it has been happening elsewhere – in resource-limited environments. And that is where the developed world is now seeking some of its inspiration.

29Oct.
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“Reverse innovation”, according to its Wikipedia definition, refers to a simple, clear-cut idea: it is “an innovation seen first, or likely to be used first, in the developing world before spreading in the industrialised world ».

When an innovation is born in under-privileged contexts and then inspires wealthier actors to replicate it, this is called reverse innovation. “Reverse”, because we have been used to the idea that the most advanced countries are the ones who innovate, and that those with less financial resources are just trying to keep up with the pace of progress – if and when they can. This vision is in fact quite simplistic, and lacks pertinence in a world where crises strike all countries and all contexts, creating the need to innovate under constraints that have been forgotten in the Western World since the end of World War II. The “Thirty Glorious Years” are definitely over, and the definition of progress is no longer the sole privilege of the industrialised world. Hence, the apparition of the expression “reverse innovation” to qualify ideas that come from countries which, until now, have been thought less able to innovate.

The origins of reverse innovation

The term was coined by Vijay Govindarajan, a world expert on strategy and innovation, Jeffrey Immelt, CEO of General Electric, and Chris Trimble, an author and expert on innovation. Govindarajan and Immelt worked together on a paper, How GE Disrupts Itself, published in the Harvard Business Review in 2009, in which they first introduced the concept. Three years later, Govindarajan and Trimble wrote the book Reverse Innovation: Create Far From Home, Win Everywhere.

Reverse innovation is the new business idea everyone is talking about. Why? Because it presents the blueprint for scaling growth in emerging markets, and importing low-cost and high impact innovations to mature ones,

wrote the editor of the book, the Harvard Business Review Press. In other words, reverse innovation is an important source of inspiration and creativity for “classic” business in developed markets.

In their 2009 article, Immelt and Govindjaran explained how biased the Western vision of developing countries can be: it is in fact likely that they are not going to follow the same path and “could actually jump ahead of developed countries because of their greater willingness to adopt breakthrough innovations.” Also, products that are conceived and developed for the developing world can be sold in more mature countries, and even create new markets there. They consider the idea that these products would not be good enough for Northern consumers to be false. The authors even challenge the “glocalisation” strategy that had been leading the choices of multinational companies in emerging markets: adapting globally available products to local contexts is not enough anymore. Emerging markets need to be home to real innovations, which could later be replicated somewhere else – and not always and systematically the contrary. “Reverse innovation isn’t optional; it’s oxygen,” they write. In the wake of this observation, businesses are now diversifying their innovation methods – and reverse innovation is one of them. François Colomban, head of the Food Design unit at the the Danone Research Center, explained to Down to Earth how the work accomplished by his teams on Lemateki (a locally-produced snack which specifically targets Senegalese schoolchildren) inspires the innovation process more globally.

With these experimental projects, we try to learn in every field of our work. And what we learn, we tell the company. The experience and expertise we build are completely different and can be useful in developing business for the Western World. What we do has repercussions on other areas of Danone’s business.

From agriculture to health: reverse innovation is everywhere

Smaller companies, social businesses and NGOs are also developing solutions to tackle specific problems in the developing world that can later be adapted to mature markets. Jean-Michel Huet, from consulting agency BearingPoint, recently published a series of articles on reverse innovation on French magazine L’Express’ website. He notably explains how mobile applications help farmers in India and Kenya irrigate the soil precisely when it is needed, get information on the market price of raw materials, and insure their harvest in case of extreme meteorological events. These innovations are not unknown to the developed world, but they do answer different challenges: in the North, the issues are mainly concentrated around soil exhaustion, while Southern countries are struggling with yield and food security. But while the global population increases and traceability challenges spread, these issues are more and more likely to converge in the future – and the diffusion of best practices between the South and the North will need to be efficient and reciprocal.

Huet also writes about how reverse innovation is developing in the health sector: for instance, Japan, China and India are using medical social networks for health professionals much more than Germany and France. In several African countries, similar systems have been put together using mobile phones, with SMS and alerts that allow the doctors to collect data on their patient’s health. You can read our article on Living Goods, a social business that has developed this solution in Uganda to tackle distribution, health and nutrition issues. Here too, there is food for thought for better patient follow-up: developed countries are in fact leading new discussions on how the cloud could help doctors in their work. On L’Express, Huet also wrote about biometrics, dematerialised payment, fuel poverty, social media and smart cities – domains in which ideas developed in emerging countries could well inspire Western companies and markets.

The Harvard Business Review has rated reverse innovation as one of the ten big ideas of the decade.

In some countries and contexts, it can be integrated with jugaad innovation, the ability to innovate in resource-limited environments, which is also gaining momentum in the media and with the business world. This is yet more evidence that innovation is definitely not the prerogative of post-industrialised countries.

Photo from:  © wong yu liang / Shutterstock