Reverse Innovation: Create Far from Home, Win Everywhere Free

The beauty of reverse innovation is in its simple definition and yet profound implications to global business and consumers. The acclaimed authors of reverse innovation define it as “any innovation that is adopted first in the developing world” (p. 4). The premise of the book lies in that western firms are focussed on creating rich world solutions and only partially customizing these for emerging market applications. Consequently they miss out on the learning and growth achievable by doing the opposite – i.e. develop for the emerging world, create new markets there, and then tap new segments in the developed world. If they don’t, growth can be strangled and worse, emerging market firms as an “invasive species” may outcompete them both in emerging and even developed, mature and saturated markets.

Emerging market firms are described as “underdogs” responding to generally globalization and specifically the glocalization strategies of western firms. Hence the authors argue the developed world firms need to rethink their strategy of scaling down rich world solutions for emerging markets and instead develop for emerging markets first and then scale up to the rich world. This reverse innovation strategy can help firms create and tap new markets in high-growth emerging markets, learn and customize for home markets, and in the process ward off potential threat from emerging market giants – firms founded in and headquartered in emerging market economies. The growth of emerging market economies compared to slower growth in developed economies is shown as contributing to the awareness of reverse innovation opportunities. These opportunities arise from some of the large emerging markets to create new markets, new business models, and new technologies.

Govindarajan and Trimble back their arguments based on academic theory moving from high-level strategy, to organizational design, and project level implementation. The study methodology is exploratory and embedded in grounded theory. The analytical framework of reverse innovation is explicitly positioned in the literature of international business and strategy drawing on the work of Ray Vernon. The book debuted at an opportune time in contemporary debates on innovation and international business. These debates revolve around structure, process, and efficiency of innovation and around tapping rich segments versus bottom of the pyramid markets, or creating new ones where none currently exist.

The book serves its professed purposes well – to help the audience grasp the theory and value in reverse innovation and to provide practical guidance on ways to execute it. The book targets primarily American businesses by drawing on eight American-based cases with links to innovation in emerging markets. The opening case of Gatorade captivates the reader by divulging the little known twist of its more humble origins in a South Asian concoction for the cure of cholera.

The book's main points and recommendations are clearly and succinctly laid out in part 1 which constitutes a little less than half of the book and appends lengthy expository case studies in part 2. The thoughtful questions and exercises throughout provide for useful activities for those managers considering adoption of the strategies posed. The cases are tagged with questions useful for classroom discussion and an agenda for future academic research is included in Appendix.

Although the emerging market consumers are willing to lower their expectations on quality to gain access to solutions at a fraction of the price, in many unique contextually relevant ways these expectations are even higher than those of the developed market consumers. These are succinctly classified under the five needs gaps posed as starting points for reverse innovation opportunities: performance gap, infrastructure gap, sustainability gap, regulatory gap, and preferences gap.

The book though could afford greater attention to how emerging market firms are innovating. By cautioning western firms of the prevalence of reverse innovation by local emerging market firms, it makes the supposition that emerging market firm strategies are the “right way” and are in an enviable situation. Lessons are mainly for developed country multinational corporations, and there are few explicit ones for emerging market firms. The obstacle-ridden story in reverse innovation of V. Raja (p. 52) on challenges of proposing a reverse innovation strategy in a glocalized focussed MNC is an eye opener to the complications faced by change agents. It would have been though useful to see how the same story would pan out in emerging market giants such as Tata or Wipro. Such an exposition would have made the argument of emerging market's leading in reverse innovation mindset more persuasive.

Although inspiration is drawn from emerging markets marked by constraints such as performance and infrastructure gaps, the discussion of constraints as drivers of creativity in reverse innovation is secondary. The text does not cover constraints apart from acknowledging “In a situation free of constraints, and evolution toward complexity is almost inevitable” (p. 127). However, some cases such as Deere, Harman, GE, and also social enterprise Aravind embody several features of constraints. Other cases not primarily driven by constraints include Pepsico, PIH, P&G, EMC, and Logitech. For this reason, the structure of the book could be strengthened by signposting and categorizing the eight cases as they support some or all of the instrumental five needs gaps.

Though the recommendations are important, the book loses energy and vigor as it goes from strategy level to organizational and project level recommendations in part 1. Of the eight cases the last case of Partners in Health & PACT seems like an anomaly among the other seven large business cases, given the former is non-profit and social business focussed. Although the case for reverse innovation goes well beyond C.K. Prahalad's “Fortune at the bottom of the pyramid,” some of the components of reverse innovation in leveraging business to improve people's lives identifies with Prahalad's work. So it is somewhat surprising that the book is dedicated from the onset to C.K. Prahalad but only refers to him or the BOP once in the appendix only. It espouses making global people's lives better globally. But strangely neglects discussion of the BOP or the role business can, does, or should play in reducing poverty.

One leaves the book having understood the concept of reverse innovation and its implications, even if one does not agree with the arguments. In this sense the book does a great job of laying out its arguments. The book is written in simple language and provides digestible takeaways for a wide audience, both academic and managerial. Although the notion that innovations for developing markets can escalate to benefit people globally sounds simple, the repercussions of this idea are cogently presented by Govindarajan and Trimble, for both the business and academic community. The hope is that with more studies investigating this emerging field, a second edition would include answers to the many intriguing questions the book helps trigger.