Looking for new ideas? Get yourself to the developing world
From jeans to medical devices, products from India and China are disrupting markets in the West.
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We Americans may think of poorer nations as hotbeds of war and disease, a place to send our charity checks. But emerging economies are actually an invaluable breeding ground for innovations that could change lives in the United States.
Examples of reverse innovation range from the prosaic – low-cost Levi’s jeans that debuted in China and hit American stores last spring – to the revolutionary: a portable, seven-pound heart monitor developed by General Electric engineers in Bangalore, India.
Chris Trimble is an adjunct professor at Dartmouth’s Tuck School of Business and has written an influential book on reverse innovation with his “super star” (according to The Economist) colleague Vijay Govindarajan.
In an interview with Latitude News, Trimble argued that globalization is forcing big, bureaucratic companies like GE and Proctor & Gamble to change the way they do business.
“Emerging economies,” he says, “are the globe’s high-growth hotspots, and most of the world’s growth over the next two decades will be there. It used to be that you could grow a big corporation at a good clip in just the US, Europe, and Japan. That’s not the reality anymore.”
In order to stay competitive in the global marketplace, Western companies have discovered they must tap into emerging economies, where experts predict that 90 percent of the world’s middle class will live by 2030. And multinationals can’t just “dumb down” existing products for consumers in the developing world by stripping away features and lowering the price.
“If you’re trying to serve the people that live rich in poor countries, the old model is fine,” says Trimble. “But the needs of the middle class in the developing world are rising dramatically. The challenge when you go from the U. to, say, India is that where before you had one consumer with $10 to spend, now you have 10 consumers with $1 to spend. So there’s no way you can take your rich-world company and just customize your product for the middle class.”
Other experts agree.
“You really have to start from scratch,” says Joanne Lawrence , a professor at the Hult International Business School in Boston. “It’s not business as usual. These are different places with different markets, different consumers, and different needs.”
For example, Lawrence explains, India is a very poor country with a very high rate of heart disease. But GE’s standard electrocardiogram (ECG) heart monitor wouldn’t do much good there. It weighs 65 lbs., costs thousands of dollars, and requires a good deal of electricity and training to use. In India, most people don’t live near a hospital or clinic, and the power supply can be intermittent at best.