October 23, 2014

Reverse Innovation Gives a Glimpse Into the Future

Reverse InnovationI’ve had a review copy of Reverse Innovation: Create Far from Home, Win Everywhere by Vijay Govindarajan (@vgovindarajan) sitting on my book pile for about a month or so.  When I read the overview for the book, I could feel my small business bias coming out.  I don’t know about you, but there is a part of me that resents all these case studies featuring big global brands with big budgets and a population of employees that rivals a small country giving me advice or insight as to how I should run my small business.  I am not a global brand, I don’t have infinite amounts of money to spend on the necessities – let alone innovation and there’s no chance that I’m going to be doing any innovating in some far flung country.

So why should I read this book and why should YOU read this book?

Read Reverse Innovation for the Insights on Trends

One big reason for digging into this rather academic and intellectual book is to get a glimpse into the trends that will be hitting your small business in the next few years.  When I put my prejudice against multi-nationals to the side, I begin to see that Reverse Innovation is really a bellwether of things to come.

First, let me explain what the term “reverse innovation” is.  In the past, big companies would do their innovating here in the United States and then, after making some adjustments, launch that innovation to the world.   Reverse innovation takes that model and turns it upside down.  The authors, Vijay Govindarajan and Chris Trimble did some research and found that by innovating abroad, you actually increase your chances of success worldwide.

How the Book and the Concept Got Their Start

In 2008, Jeffrey Immelt, then CEO of GE chose Govindarajan to advise them on innovation.  This should tell you something if you know that GE only likes to be in the #1 slot of any market.  Given that commitment, it’s no surprise that they are always on the lookout for new ways to do this.

As Govindarajan set out to transform GE’s strategies, he interviewed the thought leaders insight some of the best brands in the world which include: Pepsico, Logitech and P&G.   What he learned was that technology was not the primary stumbling block in developing innovations, rather it was a function of mindset and organizational structure.

What his research showed was that companies can earn the same or better return on their investments if they launch their innovations in low cost countries such as China and India rather than in highost countries such as the US.

The Three Fears That Keep Us From Taking Advantage of Reverse Innovation

The book discusses three fears that have kept big brands from practicing reverse innovation:

  1. Fear of low margins
  2. Fear of brand cannibalization
  3. Fear of losing technological leadership

When you read the book, you’ll see the answers to all of these questions as they pertain to large corporations and brands.  But the lesson for small business is that it’s our own mindset about where innovation should happen that holds small business back from really competing in a global marketplace.

In other words, US businesses suffer from a touch of xenophobia when it comes to innovation.  And I can see why.  We could easily let go of our manufacturing because it was “manual labor” but to send our innovations and ideas abroad could mean literally losing our competitive advantage.

Reverse Innovation will ease your fears about that.  Govindarajan encourages businesses to open up to new possibilities of innovation that can transform ideas that require too much money into completely feasible products and services.

Who Should Read Reverse Innovation?

This book is an ideal read for anyone who likes reading about big global companies and what they are doing to keep their business and their brands alive. (Visit Govandarajan’s blog where he writes about his research and reverse innovation in general.)

As a small business owner (no matter the size of your business), you’ll want to check into this book to see how you might be able to apply these principles to your own innovation plans.

Overall this is a serious book.  It’s not entertaining, or engaging – it’s informative and educational.  If you are involved with customers or companies who have multiple locations and technical facilities that span the globe, you will certainly want to read this and see if you can apply some of these concepts.

Reverse Innovation, may not be at the top of your reading list today – but you can expect to see the trends and applications of this work become more the norm in the next few years.  The businesses who are familiar with this process will find themselves better prepared for the future.

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Ivana Taylor - Book Editor


Ivana Taylor Ivana Taylor is Book Editor for Small Business Trends and publisher of DIYMarketers , where she shares daily do-it-yourself marketing tips, and is the President of Third Force, Inc., a marketing firm that specializes in getting your ideal customer to choose you. Ivana is the book editor for Small Business Trends and co-author of the book "Excel for Marketing Managers."

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