Reverse Innovation: An Interview with Vijay Govindarajan

Abstract

Vijay Govindarajan talks with Jim Euchner about the power of reverse innovation and the challenges of getting it right.Companies have struggled with globalization on many levels. A particular difficulty has been developing products for emerging markets. In their new book, Reverse Innovation , Vijay Govindarajan and Chris Trimble take this challenge to a new level. They argue that companies will not only need to get good at innovating in emerging markets, but also learn how to bring these innovations back to their core markets. This is not an option, in their view, but an imperative. Because of the potential for reverse innovation to disrupt whole industries, companies must learn how to master it.JIM EUCHNER [JE]: I appreciate the chance to talk to you again. We published an interview with you a few years ago about the book The Other Side of Innovation , so it's a pleasure to have a chance to talk to you about Reverse Innovation .Reverse innovation is a relatively new concept, but one that is related to other approaches people may be familiar with. I'd like to start by asking you to help make some distinctions between reverse innovation and some related concepts. First, growth in emerging markets and innovation for the bottom of the pyramid has been discussed for a while. What's new about reverse innovation?VIJAY GOVINDARAJAN [VG]: I think there are three major differences. First, reverse innovation is not about the bottom of the pyramid. It is about innovation outside of the top 10 percent of the economic pyramid. The top 10 percent of the people in a poor country like India are similar to those in the United States, so you don't need new innovation for them. You can send them products that Americans consume. But the top 10 percent is a very slim number. The rest of the population requires innovation. Reverse innovation is for the middle of the pyramid, and of course, it includes the bottom of the pyramid, too. So that's one difference.The second difference is that reverse innovation is about how products that are invented in India for Indians, for example, will move to the rich world. That is a very major contradiction in many people's eyes: the product that is created for the poor man will appeal to a rich man. That's a counterintuitive argument. It's easy to see why a poor man would want a rich man's product, but it is not easy to why a rich man would want a poor man's product. That's the second difference.The third difference is more about process. Our book, Reverse Innovation, really focuses on how you do it. Many of the books that have come before have focused on ideas and how to come up with ideas, but our book talks about how you actually make reverse innovation happen.VIJAY GOVINDARAJAN [VG]: I think there are three major differences. First, reverse innovation is not about the bottom of the pyramid. It is about innovation outside of the top 10 percent of the economic pyramid. The top 10 percent of the people in a poor country like India are similar to those in the United States, so you don't need new innovation for them. You can send them products that Americans consume. But the top 10 percent is a very slim number. The rest of the population requires innovation. Reverse innovation is for the middle of the pyramid, and of course, it includes the bottom of the pyramid, too. So that's one difference.The second difference is that reverse innovation is about how products that are invented in India for Indians, for example, will move to the rich world. That is a very major contradiction in many people's eyes: the product that is created for the poor man will appeal to a rich man. That's a counterintuitive argument. It's easy to see why a poor man would want a rich man's product, but it is not easy to why a rich man would want a poor man's product. That's the second difference.The third difference is more about process. Our book, Reverse Innovation, really focuses on how you do it. …

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