Point: Creating new products & services for developing countries requires radical innovation and opens new opportunities in developed world markets as well

Story: GE Healthcare sells sophisticated medical imaging devices around the world. Historically, they have sold these high-end machines in emerging economies like India. But only 10% of Indian hospitals can afford a $10,000 ECG machine. Reaching the other 90% of the market takes more than simply cutting a few costs. It requires radical innovation and an in-depth understanding of local conditions.

For example, most Indians live in rural areas. That means they don’t have a local hospital to go to. Rather, the machine needs to go to them, and no rural healthcare clinic is going to lug a $10,000 machine into the field even if it could afford the device. Achieving the goal of a lightweight, reliable, simple-to-use ECG machine took radical re-thinking. GE built a device, called the MAC i, that could fit in a shoulder bag, has a built-in replaceable printer, and cost only $500. In addition, because the device would be used in rural locations with scant access to electricity, GE designed a battery that could do 500 ECGs on one charge.  To make it easy to use, GE designed the machine to have only three buttons. Finally, just because the device is inexpensive doesn’t mean it’s dumb.  Because the cost of a copy of software is zero, GE installed professional-level analysis software to aid rural doctors.

With its new MAC i, GE has unlocked a whole new market in developing countries.  Beyond that, GE has also opened up new opportunities back home — and that’s the reverse innovation side of the story.  How? The portable ECG machine with a $500 price tag is ideal for use in ambulances, saving lives of accident victims in rich countries as well.  Cheap, portable, and easy-to-use devices are desirable in any country.

Action:
Reverse innovation means designing a product for a developing country and bringing that innovation back home.

• Make the product extremely low in cost so that it is price-acceptable in developing markets and opens up new sales opportunities in developed markets
• Start from the ground up with a radical rethinking. (See also the Tata Nano example.)
• Plan for intermittent electricity
• Make the product modular to facilitate remote repair
• Make the product easy to use, like GE’s three-button ECG machine

Sources:

Vijay Govindarajan, “Reverse Innovation: A New Strategy for Creating the Future” HSM webinar March 18, 2010

Prof. Govindarajan will be speaking more on this topic at the World Business Forum in NYC October 5-6, 2009

India Tech Online

Point: Breakthrough innovation requires nonlinear change

Story: In his presentation at the World Innovation Forum, strategist and Dartmouth professor Vijay Govindarajan used the analogy of Olympic high-jumping to illustrate the non-linear thinking that companies need to make to create breakthrough innovations. The traditional approach to high-jumping until 1920 was the “scissors” approach: jumping over the bar with a scissoring motion similar to what is used by hurdlers. The highest jump possible was about 5′ 3″.
The best approach to jumping higher, however, is to identify the limiting factor in the jump. For high-jumping, the limiting factor is the jumper’s configuration of body parts relative to their center of gravity and to the bar. In the 1920s, the innovation called the “western roll” changed the jumping style from a hurdling over the bar with a scissors kick to rolling over the bar sideways with the jumper’s back to the bar. In the 1960s, the innovation of the straddle changed the center of gravity even further with the jumpers keeping their belly to the bar. And in 1968 the Fosbury flop (invented by Dick Fosbury) changed the motion yet again: jumpers launch themselves straight up into the air using both feet, and then they twist over the bar so that the head clears first.
The challenge for organizations: you can’t win by incrementally improving the incumbent scissors kick if your competitors are inventing the western roll or the Fosbury flop. Breakthrough innovations require removing or changing the limiting factor. This often means breaking old assumptions. Prior to the Fosbury flop, all high jump techniques assumed that the jumper goes feet-first over the bar and lands on their feet. Fosbury jumped head first over the bar to flop on the mat and extended the possible jumping height to over 8 feet.
Action:

• Document the fundamental limits that seem to prevent further incremental innovation
• Consider ways to break those limits or bend those limits
• Examine the “how we’ve always done it” assumptions to find opportunities for radical change

See Vijay Govindarajan’s blog here.