Fast Company: Business Lessons From A Baby Elephant
What can an elephant's prosthetic leg teach us about innovation?
Vijay Govindarajan is the co-author, with Chris Trimble, of Reverse Innovation: Create Far From Home, Win Everywhere, which hits bookshelves on April 10. A professor at the Tuck School of Business at Dartmouth University, Govindarajan chatted with Fast Company about $2,000 heart surgery, elephant prostheses, and the need for American businesses to, in essence, study abroad.
What’s "reverse innovation"?
Historically, multinationals innovated in rich countries like the U.S. and sold products in poor countries like India. Reverse innovation is doing the exact opposite, about innovating in a poor country like India, and bringing products to the U.S. It’s completely counterintuitive, because it’s logical to see why a poor man would want a rich man’s product, but it’s not that logical to see why a rich man would want a poor man’s product.
Why would a rich man want a poor man’s product?
There are two components here. First, why do we need to innovate in India at all? Why not simply send products to India? Second, why would those innovations defy gravity and flow uphill? The answer to the first question is that customer requirements in poor countries are fundamentally different than in rich countries. The per capita income in India is $1,000 nominal dollars; in the U.S., it’s $50,000. No business model created for the American consumer can go and capture Middle India. You have to innovate. That’s the first part. The second part: Why do these products flow uphill? Here’s an example: There’s a hospital in India called called the Narayana Hrudayalaya Hospital, or N.H. Hospital, in Bangalore. This hospital does open-heart surgery for $2,000. In the U.S., open-heart surgery costs at least $20,000. Because they offer open-heart surgery for $2,000 does not mean the quality is bad; the quality is on par with U.S. quality. ...
... How does an American executive learn to think in these reverse-innovative ways?
If America is to be a great country in the future, we have to become as curious about the problems of poor countries as we are about customers in rich countries. We have a dominant logic in the U.S. based on serving rich customers; we need a new logic to really serve customers in poor countries, and the only way we can do that is by creating a “local growth team,” or a dedicated team to do innovation in India, or Thailand, or Africa. ...