Outshining the competition and generating disruptive ideation are worthy objectives, but they shouldn’t be your only objectives. If you plan to take your products global or expand your global reach, reverse innovation must be a priority.
By meeting the needs of lower-income demographics and emerging markets, you can rapidly and drastically increase your profits. Not to mention, generate global brand recognition.
What Is Reverse Innovation?
A term coined by Vijay Govindarajan and Anil K. Gupta in 2008, the initial concept was to adapt or reverse engineer existing products for use in developing nations.
For example, LG developed a low-cost air conditioner that targets middle and lower-middle-class families in India. The end result is a product that is 30% less expensive than all other air conditioners on the market. Not only that, but the new model cools rooms faster and more evenly. Their more expensive models can still be purchased in India, but now they capture a wider range of consumers.
How Has Reverse Innovation Evolved?
Like all things, the concept of reverse innovation has evolved. Today, organizations aren’t just adapting their existing products—but creating new products designed specifically to meet the needs of lower-income consumers.
This goes beyond products that are regionally or culturally relevant. For example, in the United States, fast food restaurant chains may offer regional menu items. This includes the sweet potato pie served at some McDonalds in southern states. You can also find a sweet potato pie at McDonalds in Hong Kong and a savory bacon-potato pie at McDonalds in Japan. These additional menu options are not examples of reverse engineering.
However, the continually growing global trend of instant noodle products is. These instant options only require hot water, which serves the needs of consumers that may not have easy access to electricity or modern kitchen appliances. Instant noodles are also far more budget-friendly than noodles that must be boiled. That being said, like McDonald’s desserts, the flavors for such products should be regionally modified.
What Are the Benefits of Reverse Innovation?
As with everything you do, ensure all initiatives align with your mission, vision, and values. Many organizations, and their employees, are searching for ways to positively contribute on a global scale. Reverse innovation aligns with this objective.
Consumers in different markets have unique priorities and needs. Even more so if they are early on in their local industrial revolution. By fulfilling regional needs, you can:
Go global—breaking into the global marketplace presents unique challenges. By expanding beyond your current product range, you can establish and expand your global presence.
Profitability—manufacturing reverse-engineered products is often less expensive. As always, be mindful of profit margins, but serving the underserved can be a highly lucrative strategy.
Empower equity—improving access to modern technologies, amenities, and luxuries even uneven playing fields. Depending on your business model, your global expansion may also provide equitable employment in your new regions.
Can You Only Reverse Innovate in Foreign Countries?
No—you can reverse innovate in the US market too. For example, Oral B has smart toothbrushes that range from around $70 to $250. They also have a AA battery-powered toothbrush that retails for around $12. Their $12 option doesn’t just serve as a low-income product, but an excellent introductory product to electric toothbrushes. Frugal individuals who are unclear of the benefits of an electric toothbrush may try the entry-level product before investing in the more advanced product line.
Another example is laptops built with a mechanical hard drive, and overall less expensive parts, which cost hundreds of dollars less than those built with a solid state drive. The less expensive alternatives are likely to be less durable, are a bit slower, have less storage, and have an overall shorter lifespan. Nonetheless, they deliver modern computing power for a price point that improves equitability.
How to Reverse Innovate?
The first step is always to perform local market research. Your innovation team likely works from the “more is more” and “next-generation” mindset, so it is easy to overthink reverse engineering. Or overthink how to create innovative new products with different features and functions. Not to mention, it can be challenging to see beyond our own regional and cultural needs.
For example, approximately 570 million Africans don’t have electricity, including 70% of those who live in rural areas. While great strides are being made to expand the grid, the more rural the location—the longer it will take to reach. This has presented a shining area of opportunity for solar gadgets and wind turbines.
- Solar-powered lights charge during the day, providing increased safety when the sun goes down. Also, additional light to study, read, and socialize.
- Solar-powered coolers provide the benefits of refrigeration without the need for electricity.
- Solar generators and electronics chargers improve safety, provide access to entertainment and education, and keep families and communities connected.
- Wind turbines provide fast access to electricity in rural homes and medical facilities in areas farthest from the grid. They are also a clean alternative to gas-operated generators.
- Solar-powered camping and outdoor lanterns, lights, fans, and other products can be adapted for daily use.
How to Reverse Engineer Existing Products?
The exciting thing about reverse engineering existing products, is that you may not need to go back to the drawing board. Perform market research to determine the needs in the region you plan to target. Then, revisit your prototypes, minimum viable products, and previous generations of products. You are likely to identify products that meet the needs of your emerging market. Or products that will after a few modifications.
While some markets want “more”, emerging markets are more likely to benefit from your entry-level versions. Like the solar examples above, leverage new technologies, but go back to the basics a bit.
How to Measure the Feasibility of Your Reverse Innovations?
To ensure your innovative new product is a relevant and viable option in each market you serve, an innovation maturity assessment is a must. For best results, have this assessment performed by an unbiased third-party partner. This will eliminate the inevitable blind spots of team members who are passionate about your new product.
If you are searching for a strategic innovation partner, look no further than IdeaScale.