The role of emerging
markets
In fact, the needs and opportunities in the developing world
are so different from those in the developed world that the very first
requirements for reverse innovation success are humility and curiosity. One
must let go of what he has learned, what he has seen, and what has brought him
the greatest successes. In fact, it is best to assume that one have just landed
on Mars.
Developing countries
will become R&D labs for breakthrough innovations in diverse fields as
housing, transportation, energy, health care, entertainment,
telecommunications, financial services, clean water and many more.
Reverse innovation has
the potential to transform wealth in the world. Growth in developed countries
has slowed down. Much of the growth is now in developing countries. The 2008
financial crisis and the more recent debt crisis [in Europe] have only
exacerbated this situation. As such, we are likely to see the center of gravity
for innovation shifting from rich to poor countries.
How would Reverse Innovation benefit India?
Primarily Reverse Innovation would lead to further boom in
industrialization. As more and more multinationals adopt and opt to produce
and/or invent new products in India for local as well as western markets, the
Indian economy would witness an increase in FDIs and also the indigenous
multinationals would instinctively raise their investments to build advanced
R&D facilities that would inspire cutting edge innovation and engineering.
It also means the engineers would experience higher employment opportunities,
and the consumer market would profit from better products developed to cater to
their needs at reasonable prices.
Besides OEMs, Reverse Innovation would also lead to the
overall development of the entire eco-system comprising of Tier I and II
suppliers, technology vendors, educational institutions which support, fortify
and facilitate this unprecedented growth through concurrent engineering,
providing smart and agile engineering and production solutions to complex challenges,
and development of resources.
Implications of
reverse innovation for developed countries
If Western
multinationals do not innovate for customers in developing countries, they not
only stand to lose growth in these countries, the implications are far worse.
Emerging giants will do the innovation and bring those innovations into rich
countries and disrupt multinationals. We are already seeing strong local players
such as Tata, Mahindra, Haier, Lenovo, Goldwind, Suzlon, Cemex and Embraer. The
list will increase, no doubt. The biggest competitors for multinationals are
local companies from emerging markets.
For multinational
corporations, reverse innovation is not a "nice to have" boost to
revenue growth rates. It will power the future -- not just in emerging markets,
but everywhere. Many tremendous rich-world business opportunities will arise
first in emerging markets. To compete, global corporations must be just as
nimble innovating abroad as they are at home. The future is far from home.
Way forward..!!
The emerging economies have the world’s highest projected
economic growth rates by a wide margin. The possibility of missing out on such
growth should be more than enough to compel many of today’s multinationals to
tackle the challenge of reverse innovation. And, again, the full implications
of standing aside while others tackle the reverse innovation challenge are even
more consequential. Failure abroad can lead to failure at home.
Innovation is expensive and risky. As such, it is hardly
surprising that many established global companies discount the need to innovate
when competing in emerging markets. How can it make sense to spend heavily on
an innovation for a market in which customers have so little money?
Because in an ever lengthening list of industries, it is the
only way to win.
