Reverse Innovation Strategies for Emerging Markets
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Presentation at IRIS project's workshop, 17th of April 2018, Dar Es Salaam
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Reverse Innovation Strategies for Emerging Markets
- 1. Dr. Harri Jalonen www.turkuamk.fi/aadi harri.jalonen@turkuamk.fi www.harrijalonen.fi @Jalonen Reverse Innovation – From Strategy to Actions IRIS Project https://iris.turkuamk.fi/ Dar Es Salaam 17th of April 2018 Dr. Harri Jalonen
- 2. Agenda • The necessity of innovation • Reverse innovation – strategic approach • Reverse innovation in practice
- 5. @Jalonen
- 6. Nation % WW Labor % A % G % S China 21.0 50 15 35 India 17.0 60 17 23 U.S. 4.8 3 27 70 Indonesia 3.9 45 16 39 Brazil 3.0 23 24 53 Russia 2.5 12 23 65 Japan 2.4 5 25 70 Nigeria 2.2 70 10 20 Banglad. 2.2 63 11 26 Germany 1.4 3 33 64 Top Ten Nations by Labor Force Size (about 50% of world labor in just 10 nations) A = Agriculture, G = Goods, S = Services 2018United States (A) Agriculture (G) Goods (S) Services @Jalonen
- 8. New designs, new markets, and new distribution channels Existing design, current markets, and existing distribution channels Knowledege exploration ”Not yet known” Knowledege exploitation ”Known” IntuitionAnalysis EntrepreneurshipManagement OpennessCloseness Ambidextrous @Jalonen Seeing and doing things differently
- 10. Why seeing & doing differently is difficult? @Jalonen
- 11. • The performance trap • The commitment trap • The business-model trap • The deliberation trap • The short-term trap (Välikangas & Gibbert 2005) @Jalonen
- 12. FAILURE BLAMEWORTHY ---------- PRAISEWORTHY Deviance -an individual chooses to violate a prescribed process or practice Inattention -an individual inadvertently deviates from specifications Lack of ability -an individual doesn’t have the skills, conditions, or training to execute a job Process inadequacy -a competent individual adheres to a prescribed but faulty or incomplete process Task challenge -an individual faces a task too difficult to be executed reliably every time Process complexity -a process composed of many elements breaks down when it encounters novel interactions Uncertainty -a lack of clarity about future events causes people to take seemingly reasonable actions that produce undesired results Hypothesis testing -an experiment conducted to prove that an idea or a design will succeed fails Exploratory testing -an experiment conducted to expand knowledge and investigate a possibility leads to an undesired result (Edmondson, 2011) @Jalonen
- 13. @Jalonen (Garud et al., 1997)
- 14. Diffusion of Innovation Adoption of Innovation (Rogers, 1963) @Jalonen
- 16. Innovation in public services @Jalonen
- 17. Reverse innovation - strategic approach
- 18. @Jalonen RESEARCH DEVELOPMENT DIFFUSION REVERSE INNOVATION
- 19. @Jalonen developing ideas in an emerging market and coaxing them to flow uphill to developed markets Developed country innovation Developing country innovation TRADITIONAL PATH NEW PATH (Govindarajan & Trimble, 2012)
- 20. @Jalonen • the income gap between emerging and developed markets • the mismatch between needs and offerings Premises of reverse innovation
- 21. Population Total GDP GDP Per Capita Size Rank Size (USD) Rank Amount (USD) Rank China 1.3 billion 1 9 trillion 2 8,000 100 India 1.2 billion 2 4 trillion 4 3,000 150 Poor 5.5 billion 30 trillion countries @Jalonen
- 22. @Jalonen
- 23. @Jalonen Copyright: MTV3 Sport GDP per capita ~ 5 100 USD International Monetary Fund World Economic Outlook (October - 2016) 55 countries 28 countries GDP per capita ~ 32 800 USD Emerging market
- 25. 50 000 USD 500 USD @Jalonen
- 26. @Jalonen
- 27. @Jalonen
- 28. @Jalonen Health care revolution Aravind Eye Care Cataract Surgery 30 USD (30 000 USD) N. H. Hospital Open heart surgery 2000 USD (50 000 USD) Quality? How? Leap frog (Govindrajan, 2012)
- 32. Functional value (Sheth et al., 1991) CHOICE IS A FUNCTION OF MULTIPLE VALUESEpistemic value Emotional value Conditional value Social value @Jalonen
- 33. @Jalonen Copyright: MTV3 Sport PROVIDER CONSUMER CO-CREATION
- 34. @Jalonen Copyright: MTV3 Sport inviting providers and customers to “get on board” (Vargo & Lusch, 2004; 2017) PROVIDER VALUE SPHERE JOINT VALUE SPHERE CONSUMER VALUE SPHERE Production (potential value) Value co-creation in context (real value) Consumption (potential value) NEEDOFFERING
- 35. @Jalonen Premises of co-creation • value cannot be embedded in the value provider’s output and captured by price • value is fundamentally derived and determined in use in a particular context
- 36. @Jalonen Copyright: MTV3 Sport M1 M5 M4 M2 M3 Causal reasoning Given goals EFFECTUATION (Sarasvathy, 2001)
- 37. @Jalonen imagining possible new ends using a given set of means M1 (Sarasvathy, 2001) M2 M3 M4M5 Imagined means Given means E1 E5 E4 E2 E3
- 38. @Jalonen Premises of effectuation • takes a set of means as given and focus on selecting between possible effects that can be created with that set of means • new markets are created through alliances and other cooperative strategies
- 40. @Jalonen Copyright: MTV3 Sport “Innovations for the poor will transform the lives of the people in rich countries.” Vijay Govindrajan DISRUPTION Reverse innovation is about
- 41. Reverse innovation Co-creation Effectuation Dr. Harri Jalonen www.turkuamk.fi/aadi harri.jalonen@turkuamk.fi www.harrijalonen.fi @Jalonen Thank you! Q & A