Reverse Innovation Analysis

In my last post I introduced Vijay Govindarajan’s (VG) reverse innovation theory. His theory was introduced in the context of the grim outlook for traditional high-tech innovation presented at the World Innovation Forum and World Business Forum in 2009. The graphic below (re-drawn from VG’s website) can be used to dive into the specifics of the reverse innovation concept.

Many corporations have created “Centers of Excellence” in order to expand their R&D footprint outside of their corporate headquarters. The formation of these COEs, according to VG, is part of a “sound strategy” for controlling the costs associated with research and development. The phases of reverse innovation are as follows:

1. Products are developed in the United States and “dropped” into the world.
2. Global COEs are created that leverage low costs of labor.
3. COEs “glocalize” U.S. products for local markets.
4. COEs begin to invent their own business processes and innovate for local markets.
5. COE innovation is exported globally.

In my last post I also mentioned that VG’s Box 2 and 3 strategies (depicted below) represent two areas of corporation investment that a company must make in order to create new products and services.

Corporate investments into Box 2 and Box 3 – if it only occurs at corporate headquarters – cannot possibly meet the needs of growing markets in developing countries. Those corporations that wish to participate in the new economic reality must, therefore, take advantage of their own intrapreneurs in foreign countries.

Corporations need to choose how to globally distribute the resources that support Box 2 and Box 3. Intrapreneurs, on the other hand, need to apply these boxes to themselves and the local business units of which they are a part.

How does a job-seeker find a company that allows them to innovate with global influence? In my next post I will build the bridge between the reality of reverse innovation and the career opportunities that the theory provides.

Steve
http://stevetodd.typepad.com
Twitter: @SteveTodd
EMC Intrapreneur