The term reverse innovation means developing ideas in an emerging market and coaxing them to flow uphill to western markets.
It can be witnessed from a U.S.-based business, known for ultrasophisticated infortaintment system that consists of GPS navigation, music, video, cell phone and Internet functions for deployment into luxury car; Harman International whereby they have developed a way to create products in emerging markets and applied that method to its product-development centers in the west.
High end had little room for growth or margin improvement, they attempted to sell to emerging market by producing scaled-down infotainment system which had in turn performed poorly.
It was a tough call.
Two new teams were set up. 1.) Software team in india and 2.) hardware team in China. Both team’s headcount are kept low and the initiative is called Saras which means adaptable in India. The purpose of this project was to completely recreate a new product at half the price and one-third the cost with promise of equaling the quality of existing top-selling infortainment product.
The new product architecture’s principles are scalability, simplicity, modularity, and third party solutions.
And after 1 year of R & D and refining work processes, this project entered commercialization phase in 2009.
Sales was met with resistance internally, especially amongst the salespeople in the western markets.
When the CTO attempted a coup against the project leader, the CEO (who initiated the project) Dinesh C. Paliwal intervened and made the project leader the new CTO.
Things took drastic change when Toyota accepted Saras and by late of spring 2011, 18 months after the launch, Saras had generated more than $3 billion in new business.
Having achieved such success, the Saras team prospered and has now grown to a size of 50 people. The team is now looking at developing infortainment system for motorbikes and for Tata Nano; the world most affordabable car.
Tips: Glocalization is referring to the process where innovations flow from rich to poor markets. Products for western market subjected to modification, often by stripping off many of their features, and then distribute them around the world at lower price points.
For more details, refer to ‘A Reverse-Innovation Playbook‘.
