Reverse Innovation – The Way Forward?

There are occasions in your professional career when you bump into a project and thank your stars for getting an opportunity to work on it. Well I have had my fair share of interesting projects to work on but the one which has intrigued me greatly of late pertains to the Innovation project that I have been involved in for the past 1 year or so. My knowledge on Innovation as a discipline was rather limited (and admittedly bookish in nature) before I started working on it but with each passing day, I have become more and more passionate about the discipline. And one of the sub-topics that I have become truly fascinated about relates to ‘Reverse Innovation’. My fascination with this particular topic went up by a few notches recently when I came across the book ‘Reverse Innovation – Create Far From Home, Win Everywhere’ by Vijay Govindarajan and Chris Trimble.

Written in the lucid style of a business article, the book talks about the reverse innovation process where organizations create new products in emerging countries. The products are initially created for consumption in the emerging economies but at a later stage are sold / made available in developed markets. The book challenges the traditional view that innovation and developed countries / markets are synonymous to each other. The authors argue that time is ripe for reverse innovation and share a number of examples of reverse innovation in action. If you are interested, here is the link to the book on Amazon.

Ever since I read the book, I have been thinking of examples of reverse innovation. I did a bit of search to find examples which I can relate to. I came across some really interesting examples, namely, Tata Nano (family of four on a scooter steps up to a family of four in a four wheeler available at a hard to believe price), P&G’s Vick’s Honey Cough (developed in Mexico and later rolled into US and Europe), Nestle’s Maggi (from India to Australia and New Zealand), Godrej’s Chotukool Refrigerator (touted to be the world’s cheapest refrigerator model), Coca Cola’s Minute Maid’s Pulpy (from China to the world) etc. You may visit this link for more examples.

But the two examples which I wanted to expand in this post come from two organizations for which I have great admiration and respect.

The first is Grameen from Bangladesh. I came to know about Grameen a long time back during my first visit to the country (around 1999). Mobile phones were still exclusive at that time and I hardly knew anyone who used to own one in my neighbourhood. So it came to me as a surprise when I realized that many people in Chittagong (2nd largest city in Bangladesh) were proud owners of brand new glossy mobile phones. During my enquiries which ranged from isn’t it expensive to have a mobile phone to which company makes this possible, I heard the name ‘Grameen Phone and Grameen Bank’ a zillion times! The name perplexed me even further as I was expecting the name of a multinational company and Grameen if literally translated into Bengali stands for rural. I simply could not make the connection. More enquiries about Grameen revealed that it is a microfinance organization and rural women were the principal beneficiaries of the initiative! I have been a huge fan of Grameen and the man behind it, Muhammad Yunus ever since.

The Grameen model has defied many myths that surrounded the microfinance world and has proved that:

  • There need not been an agreement between the lending institution and its borrowers and the entire system can run on trust
  • A significant proportion of Grameen’s borrowers are women (more often than not poorest of the poor) and the pay back rates are in the region of 98%
    • This despite the fact that the interest rates for Grameen are higher compared to traditional lending institutions

So why am I including Grameen as a case in point for reverse innovation. For the simple reason – the Grameen philosophy is longer restricted to Bangladesh!

In 1997, Grameen Foundation was formed by the friends (and if I may add the admirers) of Grameen Bank. While the Grameen Foundation shares the philosophy and ideas of Muhammad Yunus, the two institutions function independently and are not linked with each other in any way. Headquartered in Washington DC, the Grameen Foundation has operations across countries in Asia, the Americas, Middle East and North Africa and Sub-Saharan Africa. The principal objective of the organization is to help the World’s poor; especially the women have access to financial services and income generating opportunities. You may read more about the foundation, here.

In 2008, Muhammad Yunus started Grameen America, a not for profit microfinance organization based in New York. The organization’s model revolves around providing individuals with small loans to enable them to start their new businesses. Leveraging the model, so successfully implemented in Bangladesh for many years, Grameen America lends a loan to individuals who fit the simple criteria of:

  • Living below the poverty line
  • Located in a community which has a Grameen America branch in the vicinity
  • Ready to join a 5 member group of like minded individuals who are looking to initiate their own business or want to expand their existing ones

The organization has already made its mark and has proved that the model that works in rural Bangladesh can work in urban America too. It has been expanding its centers across cities.  Here is an article linked to the opening of its centre in Charlotte.

The second example comes from an organization which touches the lives of Indians on a day to day basis in some shape or form. Yes, I am referring to the Tata group. The product, Tata Swach is the latest entrant to the already crowded water purifier market in India. The product which has been developed jointly by Tata companies like Tata Chemicals, Titan, TCS etc has already cooked up a storm due to its innovative features. It is a low cost solution with zero maintenance and is extremely user friendly. The product developed to reach out to the mass meets the stringent purification norms set forward by the United States Environmental Protection Agency. So what makes this product unique? Consider the following:

  • Is not dependent on electricity
  • The water to be purified does not need to be boiled
  • The user does not need make provision for running water
  • Chemicals like chlorine, bromine and iodine are not used during the purification process
  • Removes harmful bacteria and viruses
  • Capacity up to 3000 litres

 And it costs around INR 2000 ($40)!

The product has already been awarded many awards for innovation. Some of them include Product of Year in 2012 in the water purifiers’ category in India; Aqua Excellence Awards in 2011 for water supply and treatment; Wall Street Journal Asian Innovation Awards, Hong Kong, 2010; Best Product Innovation at ICIS Innovation for Awards, UK, 2010 etc. The product also won the prestigious Industrial Design Society of America’s (IDSA) Design of the Decade, Gold award in 2010. The other winners included Nike, Apple, Amazon, Mercedes, BMW etc.

While the product has clearly been developed keeping the Indian market in mind, it won’t be surprising if there are many takers for the product beyond the shores soon.

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