Uploaded byAshish Anand
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Vijay Govindrajan is a professor and chief innovation consultant at GE who conceptualized the theory of disruptive innovation. Disruptive innovation describes how new entrants can displace established incumbents by introducing simpler, more convenient products that appeal to new customer groups. Govindrajan provides examples like personal computers disrupting mainframes and cellular phones disrupting fixed-line telephony. He notes innovation is now occurring in emerging markets first before being brought to wealthy countries, like Nestle innovating Maggi noodles in India. Reverse innovation, where low-cost innovations from developing countries disrupt developed markets, is an important strategic priority for large companies to access new growth opportunities.
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- 2. Vijay Govindrajan :Brief background • Served as faculty member: Harvard, INSEAD, IIM-A • Professor : Earl C. Daum 1924 Dartmouth college, Tuck School of Business • Chief Innovation Consultant :GE • Conceptualized Disruptive Innovation • Worked with CEO’s of 25% of Fortune 500 companies • Keynote speaker : World Economic Forum, TED, BusinessWeek’s CEO Forum etc.
- 3. Disruptive Innovation • Conceptualizedby VG • A particular Dynamic that endangers incumbent • Mostly concentrated in Western nations due to infrastructure, sustainability and income gap • Pursuing sustaining innovations • Charging high prices for innovative products • A competitive price or labor advantage is unsustainable
- 4. Some examples ofDisruptive Innovation Disruptor Disruptee Personal computers Mainframe and mini computers Mini mills Integrated steel mills Cellular phones Fixed line telephony Community colleges Four-year colleges Discount retailers Full-service department stores Retail medical clinics Traditional doctor’s offices
- 5. Changing Dimensions of Innovation •• Innovate in poor countries Innovate in poor countries •• Bring it to rich countries Bring it to rich countries •• Earlier it was just the reverse Earlier it was just the reverse that was being done that was being done •• Ex. Nestle- Innovation of Ex. Nestle- Innovation of Maggi, it was done in India Maggi, it was done in India •• Huge market in emerging Huge market in emerging countries and in the western countries and in the western nations nations •• Godrej Chotucool :: Disruptive Godrej Chotucool Disruptive Innovation Innovation •• Recipient of Edition Awards Recipient of Edition Awards
- 6. Strategy Adoption • Organizations Over focus on Box 1 i.e. managing the present • Creating a Future means focusing on box 2 • Strategy is about the projects the companies need to implement now • Shaping the evolution for future would entail thinking out the box, i.e. focusing on reverse innovation
- 7. Work at GE • Pioneer of ultra low cost X-ray machine in China • Portable Machine • Need for disruptive innovation because of 70% of China being in rural segment • No hospitals in Rural China • Portability is the main clause of concern then • Pricing at USD15000 compared to usual pricing of USD350,000 • Ultra Low cost keeping in mind customer affordability • US market also being a prime business location
- 8. Reverse Innovation: Important Strategic Priority • Shift in Growth from developed countries to Developing countries • Huge market opportunity in emerging markets • Third world countries a grater market opportunity for these products • A trend setter for the big companies.
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