{"id":478,"date":"2012-09-07T16:08:52","date_gmt":"2012-09-07T16:08:52","guid":{"rendered":"http:\/\/scqa.hult.edu\/en\/news\/news\/2012\/september\/looking-for-new-ideas-get-yourself-to-the-developing-world-latitude-news\/"},"modified":"2021-11-02T11:57:45","modified_gmt":"2021-11-02T11:57:45","slug":"looking-for-new-ideas-get-yourself-to-the-developing-world-latitude-news","status":"publish","type":"post","link":"https:\/\/www.hult.edu\/blog\/looking-for-new-ideas-get-yourself-to-the-developing-world-latitude-news\/","title":{"rendered":"Looking for new ideas? Get yourself to the developing world [Latitude News]"},"content":{"rendered":"
GE employees work on a portable, battery-powered ECG machine that they developed in Bangalore at a fraction of the cost of standard models. (Reuters)<\/div>\n

We Americans may\u00a0think of poorer nations as hotbeds of war and disease, a place to send our charity checks. But emerging economies are actually an invaluable breeding ground for innovations that could change lives in the U.S.In a process known as \u201creverse innovation,\u201d multinational corporations are rolling out cheap, easy-to-use products in Africa, India and China and then bringing them \u201chome\u201d to Western markets.<\/p>\n

Examples of reverse innovation range from the prosaic \u2013 low-cost Levi\u2019s jeans that\u00a0debuted in China<\/a>\u00a0and hit American stores last spring \u2013 to the revolutionary \u2013 a portable, seven-pound heart monitor developed by General Electric engineers in\u00a0Bangalore, India<\/a>.<\/p>\n

Chris Trimble<\/a>\u00a0is an adjunct professor at Dartmouth\u2019s Tuck School of Business and has written an influential\u00a0book<\/a>\u00a0on reverse innovation with his \u201csuper star\u201d (according to The Economist<\/em>) colleague Vijay Govindarajan<\/a>.<\/p>\n

In an interview with\u00a0Latitude News<\/em>, Trimble argued that globalization is forcing big, bureaucratic companies like GE and Proctor & Gamble to change the way they do business.<\/p>\n

\u201cEmerging economies,\u201d he says, \u201care the globe\u2019s high-growth hotspots, and most of the world\u2019s growth over the next two decades will be there. It used to be that you could grow a big corporation at a good clip in just the U.S., Europe and Japan. That\u2019s not the reality anymore.\u201d<\/p>\n

In order to stay competitive in the global marketplace, Western companies have discovered they must tap into emerging economies, where experts predict that 90% of the world\u2019s middle class<\/a>\u00a0will live by 2030. And multinationals can\u2019t just \u201cdumb down\u201d existing products for consumers in the developing world by stripping away features and lowering the price.<\/p>\n

A clean (and cheap) slate<\/h3>\n

\u201cIf you\u2019re trying to serve the people that live rich in poor countries, the old model is fine,\u201d says Trimble. \u201cBut the needs of the middle class in the developing world are rising dramatically. The challenge when you go from the U.S. to, say, India is that where before you had one consumer with ten dollars to spend, now you have\u00a0ten<\/em>\u00a0consumers with\u00a0one<\/em>\u00a0dollar to spend. So there\u2019s no way you can take your rich world company and just customize your product for the middle class.\u201d<\/p>\n

Other experts agree.<\/p>\n

\u201cYou really have to start from scratch,\u201d says Joanne Lawrence<\/a>\u00a0, a professor at the Hult International Business School in Boston. \u201cIt\u2019s not business as usual. These are different places with different markets, different consumers and different needs.\u201d<\/p>\n

For example, Lawrence explains, India is a very poor country with a very high rate of heart disease. But GE\u2019s standard electrocardiogram (ECG) heart monitor wouldn\u2019t do much good there. It weighs 65 pounds, costs thousands of dollars and requires a good deal of electricity and training to use. In India, most people don\u2019t live near a hospital or clinic, and the power supply can be intermittent at best.<\/p>\n

So GE engineers in Bangalore designed the MAC 400, which is hand-held, runs on batteries and retails for just $800. Lawrence says that the product has great potential for poorer rural and urban areas in America, as well as emergency rooms and doctors\u2019 offices.<\/p>\n

Chris Trimble points to another GE product, a cheap and portable ultrasound device called the\u00a0Vscan<\/a>\u00a0that was\u00a0developed in China and is now for sale in the U.S. \u201cThe current generation of kids is the last one that will need stethoscopes to dress up as doctors,\u201d he says. \u201cThe next one will be carrying around these hand-held ultrasound devices.\u201d<\/p>\n

Innovate, or lose your lunch<\/h3>\n

Reverse innovation has actually been happening for a long time, according to\u00a0Mike Grandinetti<\/a>, who teaches entrepreneurship at Hult. The sports drink Gatorade, for example, was born in 1965 after University of Florida scientists noticed a study showing that carbohydrate-rich drinks helped save the lives of Bangladeshi cholera patients (it\u2019s called Gatorade after Florida\u2019s football team, the Gators, who used the drink to re-hydrate).<\/p>\n

But Grandinetti argues reverse, or \u201cfrugal<\/a>,\u201d innovation has a lot of room for growth as consumers and corporations look to cut costs. \u201cLook what\u2019s happened to the global economy,\u201d he says. \u201cThere\u2019s no question people are living on different budgets than they have in the past. The West has moved to a different mindset about purchasing, and there are all sorts of opportunities for innovation at the bottom of the pyramid.\u201d<\/p>\n

Reverse innovation is, in part, a defensive strategy. Foreign companies like Tata (cars), Mahindra (tractors), Mindray (healthcare) and Lenovo (technology) are all making cheap products and selling them in domestic and, increasingly, Western markets. If big multinationals don\u2019t keep up, they\u2019ll find their markets have been \u201ccannibalized\u201d by low-cost competitors from abroad.<\/p>\n

And Trimble says Western corporations still have a long way to go:<\/p>\n

\u201cReverse innovation is still an emerging phenomenon. Companies are working on it, doing some things \u2013 but not everything \u2013 right. It\u2019s tough because these are companies like GE, like Pepsi, like Proctor & Gamble, that have grown up in a different world.\u201d<\/p>\n

\u201cIf you look at these big multinationals,\u201d he says, \u201cwhile they may have both a technology and a sales team in India, chances are they\u2019re not even in the same city. And chances are they report back to different people in the US.\u201d<\/p>\n

For Trimble, perhaps the most important take-away of reverse innovation is what it means for today\u2019s students. \u201cFor young people to be successful later on,\u201d he argues, \u201cthey\u2019ll have to be just as curious about the needs and opportunities of places like Brazil and India and Japan as they are of those in U.S. That\u2019s pretty daunting.\u201d<\/p>\n

\u201cThere are places in America that are very worldly. But for the most part, this country is pretty insular, and it\u2019s going to be an enormous challenge for us.\u201d<\/p>\n

Hult offers a range of highly skills-focused and employability-driven business school programs<\/a> including a range of MBA options and a comprehensive one year Masters in International Business<\/a>. To find out more, take a look at our blog Transforming CSR: Hult students launch social business to bring electricity to South African townships<\/a>. Download a brochure or get in touch today to find out how Hult can help you to learn about the business world, the future, and yourself.<\/p>\n","protected":false},"excerpt":{"rendered":"

GE employees work on a portable, battery-powered ECG machine that they developed in Bangalore at a fraction of the cost of standard models. (Reuters) We Americans may\u00a0think of poorer nations…<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[24],"tags":[191],"yoast_head":"\nLooking for new ideas? Get yourself to the developing world [Latitude News] | Hult International Business School<\/title>\n<meta name=\"description\" content=\"GE employees work on a portable, battery-powered ECG machine that they developed in Bangalore at a fraction of the cost of standard models.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Looking for new ideas? 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