Reverse innovationA General Overview Max Biocca Marco Solfato
Objective of the presentation Explain the overall framework of Reverse Innovation. Provide a description of industrial dynamics. Compare Multinational vs Local firms The role of R&D Conclusion.
HISTORY GLOBALIZATION GLOCALIZATION LOCAL INNOVATION REVERSE INNOVATION
What is Reverse Innovation1. Design a new product/service for emerging countries market facing a new price-performance paradigm2. Export the product in the developed world
New Price-PerformanceParadigm1. Income gap between rich countries and developing ones. (key driver)2. Different & new demand: youthful, open minded and adventurous.3. Infrastructure gap.4. Sustainability gap.
Two key aspects of a new approach to innovation1. Emerging markets will evolve in a different manner to developed countries2. Solutions that address the specific requirements of developing countries can be adapted for the developed world.
Important of Reverse Innovationfor MNEs Presence in future markets -avoids emergence of new competitors. -understand the market and visibility (collaboration) Implementation of a new corporation mentality (fast time to market) -acquisition of human capital -new innovation strategy Governments provide funds
How to implement ReverseInnovation? Decision-making localized in emerging market. The local organization connected to global technology. Experiment-and learn approach. Outsource and collaboration.
Institutional Innovation Is a new approach to re-think company’s structure. redefining the NETWORK that bring together independent entities. flexible reconfiguration capability & long-term relationships sophisticated approaches to capability leverage in scalable business.
R&D MNEs are developing an open innovation model outsourcing R&D in emerging economies. Growing important of patents and joint venture because of increasing competition.(appropriability)
Decentralization & focus on local-market people and resources based and managed in the local market. Local Growth Teams (LGTs) must have the decision-making authority LGT must have access to company resources Successful local product must be taken global with pioneering approach
Problems for MNEs lower-priced products could weaken the brand and cannibalize existing sales. lower-priced products drag down overall margins R&D effort can be diverted to more profitable projects. shorter-term payoffs distract from a sustainable strategy.
Industry Analysis Explain the theory behind Reverse Innovation through data. Sample NOT- reliable Analysis of 4 aspect through dummy- variable: - company - product & market - strategy - the entrepreneur
The companywas the technology previously owned by the company yes(1) no (0) in a city(1) or in a rural area (0) 2 new company (1) or old company(0) 1 dimension of company smal(0) medium(1) or big(2) multinational(1) or national (0) company 0is the activity related to previous activity yes(1) no (0) 0 2 4 6 8
Product & MarketReinvented product in :technolog y many consumers?yes(1) no (0) price satisfied existing demand?yes(1) no (0)dimension yes yes created new market? yes(1) no (0) no use no 0 2 4 6 8 0 2 4 6 8
Strategy Competitive advantage : R&D serves foreing markets with same technology yes(1) no (0) yes price yes noknowledge of consumer needs no integration implementation process exploration(0) or exploitation (1) economy of scale 0 2 4 6 8 0 5 10
The Entrepreneurnational enterpreneur? yes(1) no (0) yes no a user? 0 1 2 3 4 5 6 7 8
Local innovators Deeper understanding of local consumers. Local resources (low). Local capabilities. Higher passion for addressing local problems Higher flexibility Local networks
Conclusion Reverse innovation is an opportunity of sustain growth for countries and companies. Requires flexibility and the ability to meet the consumer needs. Glocalization and Reverse innovation need to cooperate and the companies need to be on both sides of this strategy. It is crucial initiative to create innovation for the developed world.