'Reverse Innovation' makes Harvard most influential list

The radical concept of “Reverse Innovation” — which GE introduced in the article, “How GE is Disrupting Itself,” in October’s issue of the Harvard Business Review — continues to reverberate through the R&D world. This month, with the first decade of the 2000s officially over, the Review’s editors looked at the past 10 years of management thinking and chose 12 of what they dubbed the “most influential management ideas of the millennium (so far).” Reverse innovation made the critical cut, they said, because globalization is fundamentally changing when it comes to emerging markets. GE’s concept, put simply, is this: Rather than follow the historical route of developing high-end products and adapting them for emerging markets, reverse innovation focuses on developing local technologies in these regions and then distributing them globally.

Going forward in reverse: GE Global Research, which is the company’s technology development arm, operates research centers in New York, Germany, China, and Bangalore, India, pictured above. “Why India? It’s very straightforward,” Guillermo Wille, the center’s managing director, tells The Financial Times. “There are few other countries where you can hire such large numbers of engineers so quickly. China is comparable but after that, nothing comes close.”

Reverse innovation in action can be seen in GE’s research center in Bangalore, India — a city that is nicknamed “India’s Silcon Valley” and is helping to transform the entire country into a major center of global innovation. As The Financial Times’ Joe Leahy writes in an in-depth story this week about India’s technology metamorphosis: “Walk into [GE’s] John F. Welch Technology Centre in Bangalore and you could be forgiven for thinking you have strayed into Q division — the laboratory dedicated to inventing new gadgets — from a James Bond film.”

For example, at one end of the million square foot center, you’ll find scientists “testing a special ‘pedestrian-safe’ bumper bar for cars, which can hit people at speed without maiming them,” the paper notes. Elsewhere, researchers are “working on locomotive engines that run on methanol extracted from grass growing alongside India’s railway lines, and on super-compact medical equipment that costs a fraction of the price of similar products in the west.”

Professor Vijay Govindarajan of the Tuck School of Business at Dartmouth College — and chief innovation consultant at GE – co-authored the Harvard Business Review article with GE’s Chairman and CEO Jeff Immelt. Explaining the concept of reverse innovation, VG, as he is known, tells the FT: “We are at the cusp of a new paradigm in which innovation will happen in India and China first and then it’ll go to the rich countries. Companies, if they don’t realize it, will be toast.”

The FT notes that it’s not just GE that sees Bangalore as a bright spot. Today, 200 multinationals have R&D centers in India, and household names such as Microsoft, Intel, Google, and IBM are all opening facilities there. Although GE’s Bangalore center mostly develops global products, “it has begun to focus on innovations suitable for the developing world,” the paper observes. “The best-known such product is a handheld electrocardiogram unit that costs about $1,000 to make — about one-tenth of the cost of a standard machine. This suits rural India, where poverty and weak transport links make it virtually impossible for many people to get to hospital… But these technologies are now also making their way back to developed markets. The electrocardiogram is being sold in the US” – which is exactly how the reverse innovation model is designed to play out.

Innovation engine: : GE’s Bangalore research center, pictured above, opened in 2000 with 275 scientists and engineers and today employs 4,300. To learn about one of the technologies that has jumped from GE’s lab in India to the marketplace, read “New Technology to Trap Killer Sparks” on IEE Spectrum, which features the work being done by T. Asokan, senior scientist at GE’s research center in Bangalore. The team’s work resulted in an arc flash absorber innovation. It’s practical application can be seen in a video in our GE Reports story, “Shock and awe: GE unveils arc flash explosion blocker.”

* Read HBR’s ranking, “The decade in Management Ideas,” and comment on their blog
* Read Part 1: “Reverse innovation: How GE is disrupting itself” on GE Reports
* Download a free full copy of GE’s HBR article: “How GE is disrupting itself”
* Read Part 2: “Reverse innovation: Building GE’s local growth model” on GE Reports
* Read Joe Leahy’s full story, “India: A nation develops,” in The Financial Times
* Read “Cheers! To a decade of innovation at GE’s labs “ on GE Reports
* Hear more from VG in our story, “Winning micro customers in mega markets”
* Read our follow-up VG story, “Localized breakthroughs go global”
* Sign up for VG’s newsletter and read his blog at: vijaygovindarajan.com