reverse innovation

1. Reverse innovation
A General Overview
Max Biocca
Marco Solfato

2. Objective of the presentation
 Explain the overall framework of
Reverse Innovation.
 Provide a description of industrial
dynamics.
 Compare Multinational vs Local firms
 The role of R&D
 Conclusion.

3. HISTORY
 GLOBALIZATION
 GLOCALIZATION
 LOCAL INNOVATION
 REVERSE INNOVATION

4. What is Reverse Innovation
1. Design a new product/service for
emerging countries market facing a new
price-performance paradigm
2. Export the product in the developed
world

5. New Price-Performance
Paradigm
1. Income gap between rich countries
and developing ones. (key driver)
2. Different & new demand:
youthful, open minded and
adventurous.
3. Infrastructure gap.
4. Sustainability gap.

6. Two key aspects of a new
approach to innovation
1. Emerging markets will evolve in a
different manner to developed
countries
2. Solutions that address the specific
requirements of developing countries
can be adapted for the developed
world.

7. Important of Reverse Innovation
for MNEs
 Presence in future markets
-avoids emergence of new competitors.
-understand the market and visibility
(collaboration)
 Implementation of a new corporation
mentality (fast time to market)
-acquisition of human capital
-new innovation strategy
 Governments provide funds

8. How to implement Reverse
Innovation?
 Decision-making  localized in
emerging market.
 The local organization  connected to
global technology.
 Experiment-and learn approach.
 Outsource and collaboration.

9. Institutional Innovation
 Is a new approach to re-think
company’s structure.
 redefining the NETWORK that bring
together independent entities.
 flexible reconfiguration capability &
long-term relationships
 sophisticated approaches to capability
leverage in scalable business.

10. R&D
 MNEs are developing an open
innovation model outsourcing R&D in
emerging economies.
 Growing important of patents and joint
venture because of increasing
competition.(appropriability)

11. Decentralization & focus on
local-market
 people and resources based and
managed in the local market.
 Local Growth Teams (LGTs) must
have the decision-making authority
 LGT must have access to company
resources
 Successful local product must be
taken global with pioneering approach

12. Problems for MNEs
 lower-priced products could weaken
the brand and cannibalize existing
sales.
 lower-priced products drag down
overall margins
 R&D effort can be diverted to more
profitable projects.
 shorter-term payoffs distract from a
sustainable strategy.

13. Industry Analysis
 Explain the theory behind Reverse
Innovation through data.
 Sample NOT- reliable
 Analysis of 4 aspect through dummy-
variable:
- company
- product & market
- strategy
- the entrepreneur

14. The company
was the technology previously owned by the company
yes(1) no (0)
in a city(1) or in a rural area (0)
2
new company (1) or old company(0)
1
dimension of company smal(0) medium(1) or big(2)
multinational(1) or national (0) company
0
is the activity related to previous activity yes(1) no (0)
0 2 4 6 8

15. Product & Market
Reinvented product in :
technolog
y
many consumers?yes(1) no (0)
price
satisfied existing
demand?yes(1) no (0)
dimension
yes
yes
created new market? yes(1) no
(0) no
use
no
0 2 4 6 8
0 2 4 6 8

16. Strategy
Competitive advantage :
R&D
serves foreing markets
with same technology
yes(1) no (0)
yes
price yes
no
knowledge of consumer needs no
integration implementation
process exploration(0)
or exploitation (1)
economy of scale
0 2 4 6 8 0 5 10

17. The Entrepreneur
national enterpreneur? yes(1) no (0)
yes
no
a user?
0 1 2 3 4 5 6 7 8

18. Local innovators
 Deeper understanding of local
consumers.
 Local resources (low).
 Local capabilities.
 Higher passion for addressing local
problems
 Higher flexibility
 Local networks

19. Conclusion
 Reverse innovation is an opportunity
of sustain growth for countries and
companies.
 Requires flexibility and the ability to
meet the consumer needs.
 Glocalization and Reverse innovation
need to cooperate and the companies
need to be on both sides of this
strategy.
 It is crucial initiative to create
innovation for the developed world.

20. Thank you for your attention
Q&A ?