Business Innovation PPT

1. Vijay Govindarajan

2.  Reverse Innovation:
Developing ideas in an emerging market and coaxing
them to flow uphill to Western markets
 Challenges :
Overcome its dominant logic
 Changes needed
1. Throw out old organisational structures to create new.
2. Revamp product-development and manufacturing methods
3. Reorient the sales force

3. HURMAN INTERNATIONAL
 U.S. based business known for ultra sophisticated
dashboard audio-visual systems designed by German
engineers
 Developed a radically simpler and cheaper way to create
products in emerging markets
 Applied it to its product-development centres in the West
 Used a two-part approach:
Radical change from below
Astute leadership from above

4. CONTD…
 From below Small team based in India and China
Set audacious goals
Created a new org structure
Adopted new design methods
 From above CEO Dinesh C. Paliwal rebranded the
:
company’s future.
Shifted focus to emerging markets
Ensured - legacy units continues
Averted conflict between old and new

5. rESULTS
Enabled Harman to offer unprecedented range of
products in the market from low end to the luxury.

6. INFOTAINMENT DEVISION
Makes factory-installed
systems that integrate GPS
navigation, music, video, cell
phone and internet
Leader in the luxury-car
segment
70% market share; accounted
for two-thirds of the company’s
$3 billion in revenues
Determined to build a low-cost design and manufacturing platform
for the emerging markets, radical changes in key aspects of the
business were required.

7.  Rethinking Location, staffing, incentives and reporting structure :
• An initiative names “Saras” was placed within the emerging markets- software group in India
and hardware group in China.
• Head count was kept low to ensure flexibility and encourage members to take initiative.
• Project was run by people familiar with emerging markets and deeply rooted in the company
culture.
• Change in reporting structure: Heads of India and China group - Chief software architect
(Infotainment Division) and not to the head of the automotive section
• Team had 3 Engineers from Germany and 3 from U.S. - To maintain connections with the
division’s traditional product development.
• To facilitate sharing, legacy engineering units were compensated for transfers of needed
technology.

8. CONTD
 Setting audacious targets : Team sets the impossible-sounding goals.
Ex: Creating products whose functionality would resemble that of the
division’s existing infotainment systems, but at half the price and
one-third the cost.
 Rethinking Engineering Processes:
 Scalability : Team adopted principles such as simplicity, modularity and
third-party solutions.
 Worked with standard technologies rather than those invented at
Harman.
 Abandoned the company’s traditional practice of costly after-sale
customization.

9. CONTD
 Rethinking Engineering Processes:
Products assembled from a menu of predesigned features
functions.
Modularity extended to the system’s software, too, allowing
the team to more easily add or subtract features.
“Saras” - took a cross-functional, unspecialized, experimental,
adaptive, and lean approach to its work.

10. OVERCOMING RESISTANCE
 Saras met with internal suspicion & idea spread that its products were
inferior.
 After successful demo to the board in 2009, the project entered
commercialization phase.
 It approached entry level & mid range cars in India & China.
 It also approached high end customers. But some of them were reluctant.
 After Toyota accepted Saras, the concerns for quality melted away, and
ultimately the sales went up.

11. Changes from below & above
 The two part approach
Local teams generating radical change from below
CEO orchestrating companywide changes from above
 It helps org to bypass traditional thinking & integrate new
logic into product offerings.
TWO PART APPROACH
PROJECT LEVEL TOP LEVEL
ACTION ACTION

12. Project level action
Ideally the parent company gives the local growth team the
freedom to function with all the energy and imagination of a
start-up, encouraging it to:
 Establish radical goals:
 Set challenging goals (features at half price & one third cost)
 Got people’s attention.
 Not possible to achieve through traditional methods.
 Practise clean-slate organisational design:
 Helped shatter the dominant logic.
 Showed that new organisational structure was as good as or
better than the company’s traditional one.

13. contd
 Leverage global resources:
 Must not isolate themselves.
 Make full use of multinationals’ extensive assets and continue
to interact with legacy units.
 By recruiting several of Harman’s German engineers to join
his team Lawande (CTO) was able to tap into Harman’s global
expertise.
 Choose team leaders without conflicting interests:
 The team should be led by an executive whose highest priority
as project.

14. Top level actions
Responsibility lies with the CEO. Actions taken by him include:
 Rebranding the company’s future:
 Denial and resistance flourish if there is no communication from CEO.
 So he/she must create a new picture of where the company is going.
 Shifting people and power to emerging markets:
 Cannot change the dominant logic without changing the people and
the hierarchy.
 Hired two high profile executives, one from Bosch and one from
Philips.
 Put them into newly created positions overseeing sales, marketing and
distribution for India and China.

15. contd
 Increasing R&D spending in emerging markets and focusing it on
local needs
 Shifted the engineering function’s centre of gravity from
Germany and the US to emerging market
 Where local carmakers’ needs were apparent every day.
 Bulking up on emerging market knowledge and expertise
 Shattering the mindset and integrating reverse innovation are
often impossible at western multinational companies.
 Leaders need to fully understand the huge potential of emerging
markets.

16. Presented by
Siva Priya S
Kaveri Seth
Manu Kanchan
Megha Dhingra
Megha Singh Tomar
Sonia Malhotra