What Engineering a Reverse Innovation Looks Like

16 November, 2015 / Articles

When a company investigates a new product opportunity, it is important to define the problem, and the requirements that will dictate a viable solution, independently from the company’s existing lines of similar products or preconceived ideas of what a solution should entail. This is especially true when businesses are considering entering emerging markets or aim to realize opportunities to create high-performance, high-value products and services that appeal to consumers in poor and rich countries alike.

For example, clean cookstoves, many versions of which have been designed for developing countries to reduce harmful emissions from the combustion of biofuels, have had questionable impact on the quality of life for many users. These issues are not technical in nature — in laboratory tests, many stoves make significant reductions in carbon monoxide and particulate emissions. However, usage practices, how families value the stoves, and the fact that many cooking operations are not done on stoves, have affected their integration into, and impact on, peoples’ lives. These issues indicate that the full set of design requirements have not been addressed to provide users with healthier, affordable cooking solutions.

The primary challenge to creating products for emerging markets is delivering solutions of adequate quality at a price affordable for the masses. Companies may have to deliver 70-100% of the performance of their Western product equivalents for a tenth to a thousandth the price. Determining the performance required by a technology (in the case of cookstoves: emissions reduction and usability) and the price at which it will be adopted is the critical first step in creating products for emerging markets (Lines 1 and 2 in the graphic below).

After these core technical and socioeconomic requirements are defined, then a company can contrast what their existing product line can offer, and whether it can satisfy the new market requirements. Any product family, or family of related technologies in an industry, will have performance that scales with price (the existing technology curve in light blue in the graph on the left). The “Ferrari” solution will be at the top of the curve (the bleeding edge), and the “Tata Nano” solution will be at lower end of the curve (the trailing edge). If a company finds that the performance and price of their existing technology intersects their core requirements, then there is no reason to reinvent the wheel; simply adapting an existing product to be cheaper might be a viable solution. Procter & Gamble figured this out when they packaged the exact same shampoo sold in the West in small, low-cost, single use sachet packets.

In many cases, challenges faced by emerging markets will require innovative solutions that deliver a higher comparative performance at a lower cost than what existing technology can provide. For example, no family in the developing world will say that they are happy to accept dirty water, a higher infant mortality rate, and polluted cities just because they are poor. The reason so many development challenges persist that impact billions of people is because obvious solutions do not exist; if our Western solutions could be easily adapted to poor consumers, they would have been already. To solve these challenges, which often have unique technical and socioeconomic factors behind them, we as designers cannot simply adapt; we have to disrupt.

Engineers are very good at solving problems they know are problems. Visualizing the disparity between what existing technology can provide (the existing technology curve above) and the performance and price requirements that a new product must deliver (the red circle in the graph in the middle) will produce innovative solutions. The cliché that “necessity is the mother of invention” is absolutely true in the engineering community, and it can be seen in numerous examples in history such as saving the Apollo 13 astronauts by hacking together a device to remove carbon dioxide from the Lunar Module, the creation and dissemination of the polio vaccine in the 1950s, and the rapid decrease in vehicle emissions realized over the past decade. The constraints imposed by developing and emerging markets have formed a fertile bed for novel product development and academic research, which will drive the innovation of high-performance, low cost technologies (the black arrow in the graph in the middle).

Realizing that a disruptive leap is necessary to hit a product target gives an organization insight into how a new product could impact an emerging market, but also how the technology could be disseminated worldwide. A product that delivers significantly more performance at a lower price may become the basis for a new product platform, which can have features added or removed to adjust its price and performance to the specific needs of wealthy or poor markets (the dark blue Reverse Innovation curve in the graph on the right). GE Healthcare has demonstrated this idea with the customization of its low-cost ultrasound and electrocardiogram machines, which started as emerging market products and then evolved into valuable devices for North America and Europe.

Companies can envision the process of engineering reverse innovations before any metal is cut, plastic is molded, or prototypes made. By charting performance and price constraints in a market, and the solutions that existing technologies provide, companies can envision a global product line around a new technology platform, and use benchmarks of other products in the market space to understand how it can undercut competitors while delivering as good or better performance to consumers. By scoping worldwide market opportunities, and understanding the unique constraints and requirements in emerging as well as developed markets, companies can engineer reverse innovations to impact markets and consumers worldwide.

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