Benefits of Reverse innovation

Innovation is understood as the successful commercialization of unique ideas, including products, services, processes and business models. It is a critical element of economic progress of any country. A reverse innovation is unfamiliar but dominant concept that entails any innovation espoused first in the developing countries. Reverse Innovation basically denotes to any modernisation that is first hosted in the developing countries like India which later implemented in industrialized marketplace. Reverse Innovation is also called as Trickle-up Innovation. Reverse innovation will transform just about every industry, including energy, health­care, transportation, housing, and consumer products.

Reverse Innovation is effective strategy of innovating in incipient markets and then distributing/marketing these innovations in advanced markets. Many companies are engrossed in innovating products such as China and India and then dispensing them internationally. Factually, reverse innovation has been a sporadic phenomenon.

Global companies must recognize that to grab emerging markets, they must revolutionize, not simply export. And, they must successively be prepared to wander those innovations from the developing world to the affluent world.

Scope of Reverse Innovation:

 Multinational companies must have to transform their business process on strategy and innovation. Since long time, multinational companies are more involved in innovation on the needs of industrialized countries and then exported products to different locations of globe. Presently, they must revolutionise to solve the glitches of the developing world and then bring the innovations home.

Major grounds which propel reverse innovation:

1. Income gap between emerging markets and matured markets: The primary driver of reverse innovation is the income gap that exists between developing markets and the industrialized countries. In the developing countries, per-capita income is low. Conditions are suitable for innovations that offer quality products and services at low cost.

2. Infrastructure gap: Main infrastructure such as energy, transportation, telecom in developing countries are still to develop.

3. Sustainability Gap: Around the globe, as the economy cultivates, the battles between economic vitality and environmental sustainability are likely to become more severe. The pressures will not rise consistently. In many cases, the intensity of sustainability issues are at peak in the developing world.

Developing countries such as India with their snowballing disposable incomes, and the largest and ever rolling middle class with higher than before spending capacitates, is now a very profitable and powerful target market for numerous giant international companies to venture into and capitalize on or to establish a stronger hold. Though the middle class in India today can afford to spend an extra buck for their added requirements and interests, they continually explore products developed in the western economies out of reach, highly priced or high-priced.

An active example of reverse innovation is Tata Motors who innovated Tata Nano. While companies like Ford establish its international automobile podium in India and supplied to the niche best segments in India, Tata launched the Tata Nano in 2009 at low cost so that middle class consumer can afford it. Tata planned to launch Tata Nano in Europe and U.S. afterwards.

Another example is Nestle’s Maggi brand which offered at reasonable cost, low-fat dried noodles developed for rural India and Pakistan then found a market in Australia and New Zealand as a healthy alternative.

Merits of Reverse Innovation for India:

Principally Reverse Innovation may lead to prosperity in industrialization. Today many Multinationals embrace and opt to produce and/or invent new products in India for local as well as western markets, the Indian economy is observed as an increase in FDIs and also the Original Multinationals would automatically rise their investments to build advanced R&D facilities that would motivate progressive innovation and engineering. As a result, the engineers may get good job opportunities, and the consumer market would be lucrative from better products developed to furnish their requirements of customers at low prices.

Reverse Innovation also lead to the complete development of the entire eco-system including of Tier I and II suppliers, technology vendors, educational institutions which support, strengthen and facilitate this unparalleled growth through synchronised engineering, providing smart and agile engineering and production solutions to complex challenges, and development of resources.

Reverse innovation may bring the countries and global markets closer by vanishing the global borders to make “one world, one market” phenomenon.

Reverse innovation may offer better products for customers and various options at low cost.

It is predicted that reverse Innovation would certainly transform, and revolutionize industry standards, market imperatives, and global expansion and success strategy viewpoints for the Multinationals who continually require to keep exploring various distinctive ways.

Demerits of reverse innovation:

-      Per-capita incomes are small in the developing countries and conditions are ripe for innovations that offer decent quality at an ultralow price that is, 50% solution at a 5% price

-      Most of the infrastructure (energy, transportation, telecom in the developing world is not favourable for innovation as it is still at developing stage.

-      Many developing countries are challenged with environmental restraints in their path of financial development as compared to affluent nations.

Business phenomenon of reverse innovation: 

Reverse innovation lies in a reversal of the traditional process by which new products are developed and approved in the Western countries and later exported to developing economies.

To bind up all filaments, it is well clinched that Reverse innovation is a prospect of sustain progress for countries and companies. It requires flexibility and the ability to fulfil the consumer needs. It is vital inventiveness for the developed world. In final words, Reverse Innovation would positively transform the market place and consumer may get huge benefit from this rare strategy.