Engineering Reverse Innovations

Principles for creating successful products for emerging markets

by

Amos Winter

and

Vijay Govindarajan

by

Amos Winter

and

Vijay Govindarajan

From the Magazine (July–August 2015) · Long read

Photo by Bruce Peterson

Summary.

Multinationals are starting to catch on to the logic of reverse innovation, in which products are designed first for consumers in low-income countries and then adapted into disruptive offerings for developed economies. But only a handful of companies have managed to do it successfully until now. In this article an MIT engineering professor and a Tuck professor of management explain why. After conducting a three-year study of reverse innovation projects, they’ve concluded that the main hurdle facing product developers is a mindset.

Western designers, who usually create products by following time-tested methods, struggle to overcome the constraints and leverage the freedoms of emerging markets. They tend to fall into common mental traps that prevent the development of reverse innovations: matching segments to existing products, lowering price by removing features, failing to think through all the technical requirements, neglecting stakeholders, and refusing to believe products created for low-income markets could have global appeal.

But companies can avoid these traps, the authors found, by adhering to five design principles. The success of several new products illustrates how. One is the Leveraged Freedom Chair, a low-cost wheelchair that can navigate rugged terrain in places with poor infrastructure; a modified version is taking Western markets by storm.

HBR Reprint R1507F

Idea in Brief

The Problem

Multinational companies are starting to realize that developing new products in and for emerging markets will allow them to outperform local rivals and undercut them on price—and even disrupt Western markets. However, most struggle to create those products and then sell them in the developed world.

The Analysis

A three-year study suggests that Western companies often fail to grasp the economic, social, and technical contexts of emerging markets. Most Western product engineers find it tough to overcome these markets’ constraints and leverage their flexibility. They tend to fall into one or more traps that thwart their innovation efforts.

The Takeaways

Companies can avoid these traps if they:
1: Define the problem independent of solutions.
2: Create the optimal solution using the design flexibility available.
3: Understand the technical landscape behind the problem.
4: Test products with as many stakeholders as possible.
5: Use constraints to create global winners.

Slowly but steadily, it’s dawning on Western multinationals that it may be a good idea to design products and services in developing economies and, after adding some global tweaks, export them to developed countries. This process, called “reverse innovation” because it’s the opposite of the traditional approach of creating products for advanced economies first, allows companies to enjoy the best of both worlds. It was first described six years ago in an HBR article cowritten by one of the authors of this article, Vijay Govindarajan. (See “How GE Is Disrupting Itself,” October 2009.)

A version of this article appeared in the July–August 2015 issue (pp.80–89) of Harvard Business Review.

Amos Winter is the Robert N. Noyce Career Development Assistant Professor and the director of the Global Engineering and Research Laboratory in the department of mechanical engineering at the Massachusetts Institute of Technology.
Vijay Govindarajan is the Coxe Distinguished Professor at Dartmouth College’s Tuck School of Business, a Dartmouth-wide chair and the highest distinction awarded to Dartmouth faculty, a Faculty Partner in the Silicon Valley incubator Mach49, and a Senior Advisor at the strategy consulting firm Acropolis Advisors. He is a New York Times and Wall Street Journal bestselling author. His latest book is Fusion Strategy: How Real-Time Data and AI Will Power the Industrial Future. His Harvard Business Review articles “Engineering Reverse Innovations” and “Stop the Innovation Wars” won McKinsey Awards for best article published in HBR. His HBR articles “How GE Is Disrupting Itself” and “The CEO’s Role in Business Model Reinvention” are HBR all-time top-50 bestsellers. Follow him on LinkedIn.
vgovindarajan

Engineering Reverse Innovations

Idea in Brief

The Problem

The Analysis

The Takeaways

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