55-28.
REVERSE INNOVATION
Pattern description
Simple and inexpensive products, that were developed within and for emerging markets, are also sold in industrial countries. The term ‘reverse’ refers to the process by which new products are typically developed in industrial countries and then adapted to fit emerging market needs.
Inventive problems
The product development should focus on the customers at the upper end of the market in order to get the maximum revenue.
The product development should focus on the customers at the lower end of the market in order to reduce the development costs.
The product should be targeted at a small group of customers in order to fully meet the needs of customers.
The product should be targeted at a large group of customers in order to attract more buyers and get the maximum revenue.
Application examples
The US-based multinational conglomerate General Electric is widely considered to have pioneered Reverse Innovation. In 2007 the company developed a portable electrocardiography (ECG) device for the Indian and Chinese markets which could be connected to a standard laptop computer and cost just about one-tenth of the price of a conventional ultrasound machine. A few years after launching the product, General Electric brought this low-cost alternative to developed markets such as France, Germany and the United States, where it sold very well.
The Finnish telecommunications company Nokia used the concept of Reverse Innovation to develop its Nokia 1100 mobile phone in 2003. This low-cost phone was designed specifically for the rigours of India’s hinterland, excluding expensive features such as a colour screen and camera, and opting for practical country-specific features such as a torch, alarm clock, and slip-free grip. Following success in the Indian market, the Nokia 1100 became very popular in industrialised countries, appealing to customers looking for a simple telecommunication device without too many additional features. It sold like hot cakes all over the world – more than 250 million Nokia 1100s were bought, making it the world’s top selling consumer electronics product.
Chinese electronics company Haier employed the Reverse Innovation model to produce a small washing machine that was originally sold exclusively in rural China. Towards the end of the 1990s, Haier introduced the Mini Magical Child, a lowpriced alternative to large and expensive washing machines. After considerable success with Haier’s low-priced washing machine in China, the company sold a slightly revised version on the world market with great success. Over two million Mini Magical Child units were sold in more than 68 countries.