There's really no way to take a product created
for say, the American mass market, make a few changes,
and make it work for the Indian mass market.
But that hasn't stopped multinationals from trying.
That's the model global companies have followed
for decades, to appeal to customers in emerging markets,
they water down products designed for developed markets.
However, a better way is for global companies
to develop brand new cost effective products
inside the countries where they'll actually be used.
For example, General Electric developed
several medical devices in emerging markets
that were a little simpler and a lot less expensive.
In China, they developed a compact portable ultrasound
machine from scratch.
It cost just $15,000 compared with over $100,000
for their high end model.
Although it didn't have all the bells and whistles,
it was a hit in China's rural clinics.
That's when G.E. realized that American doctors could use it
too.
Not to compete with the more expensive product,
but for new uses.
In situations where portability was important
or space was tight.
This is what Vijay Govindarajan and Chris Trimble
call reverse innovation.
Not only does it result in products
that address market needs in emerging economies,
it also creates new sales opportunities
in developed ones.
Reverse innovation can be tough to pull off
but there are two reasons to try.
First, because emerging markets have larger populations
and lower per capita GDP's they're
especially sensitive to many of the forces affecting
competition in global markets today.
Products built for emerging markets
are more likely to be well suited
to issues that ultimately affect every market.
Second, as emerging market companies grow,
they'll be looking to export their own products often
at much lower prices, which incumbent firms will
find tough to beat.
Practicing reverse innovation today
will help protect incumbent firms
from being disrupted by low cost competitors tomorrow.