Vijay Govindarajan and Chris Trimble first coined the term reverse innovation in 2009. In simple terms, reverse innovation refers to creating a solution for emerging markets to serve them in well-developed markets later.
The concept of reverse innovation provides an immense perspective on embarking on low-cost solutions in emerging markets that can later be scaled to developed markets. Trying to reverse innovation requires a mindset shift, as we usually perceive innovation as something that originates from the developed context.
As Vijay Govindarajan states, brands that focus on tapping developed markets’ revenue potential forget the entrepreneurial potential hidden in emerging markets. Many emerging markets, such as India and China, are growing, and simply creating low-cost solutions can lead to tapping into their huge profit potential. Embarking on the journey of reverse innovation is not profitable but community-empowering.
Many MNCs are practicing reverse innovation, such as General Electric, created the first electrocardiogram for India. “We opened a whole new market in India with the ultra-low-cost ECG machine, and guess what? They were able to bring it to the US,” Vijay Govindarajan said in an interview with Business Because. High-tech startups in emerging markets often offer ultra-low-cost solutions to the broadest possible consumer base. Vijay Govindarajan likens this to producing a sachet of shampoo for 100 customers rather than supplying a whole bottle to one.
While the current focus of reverse innovation revives on high-tech products, it is not to be forgotten that there are day-to-day products that have huge potential to reach developed markets and even have the potential to solve the world’s most significant problems.
I find varied opportunities with the existing products of the Northern micro-scale entrepreneurs. The following products can be used in the healthy food and beverages industry.
Jamun seeds-based products: many micro-entrepreneurs from the North produce home-based coffee made from Janum seeds. Jamun seeds are a great source of sugar control and play a key role in maintaining people with diabetes.
Hibiscus drink: In the traditional culture of the North, hibiscus flowers added to hot water with lemon was a drink alternative to tea. This specific drink is said to have benefits such as boosting haemoglobin in the blood.
Neem products: Traditionally, many Northerners used neem sticks to brush teeth, which are said to strengthen teeth. Similarly, neem’s health benefits are now appreciated worldwide.
Moringa-based products: Moringa is also now recognised worldwide for its nutritional benefits.
Palmyra root-based products: Palmyra root is a traditional food from the North, and the flour made from it can be used in Palmyra cooking.
Palmyra fruit-based products: According to research initiatives of the Palmyra Development Board, this is a magic fruit that can be used to make delicious snacks such as cakes and biscuits and even beverages such as wine.
The list can go on, and there are many products. Diverse products are made from traditional origins, and many micro-scale entrepreneurs are already doing it. Many of them distribute these products on a small scale within the local market and engage in indirect forms of exporting. For example, tourists buy these products when they come to the North.
The problem is that although there is scientific evidence that the raw products (e.g., jamun seeds and moringa leaves) meet health claims, international bodies are already researching this. However, many micro-entrepreneurs don’t have facts or testimonies to make claims to market their original products, such as ‘Jamun seeds coffee’. This limitation puts them into a narrowed scale of marketing. If done through proper research-driven methods, these products could be marketed in different packages, such as ‘tablets of Jamun seeds’, to tackle real-world problems such as diabetes.
Real innovation can then only happen when researchers and entrepreneurs work together to create ‘fact-driven solutions’ that have actual potential not just in local markets but also in well-developed markets.
Mindset shift and collaboration are the first steps to re-design these products to tap the global markets. An example from the North itself would be ‘palmyra-wine’ exported by TAATAS, a domestic company that brings root-level innovations from domestic products of the North. While Palmyra-based alcohol products might be familiar to the North, it is new to the Western world. Locally produced ‘Palmyra toddy’ is tested and proved to have local demand. Further, Palmyra toddy is the favourite of the migrated locals & those who visit from Colombo. Hence, the tested demand exists, and the product can be rooted further in the international market.
It is time to realise the huge potential of existing products that can be packed in different forms to serve both the local and international markets and to kick-start reverse innovation!
