Reverse Innovation and the role of Mobile

Reverse-innovationReverse Innovation was coined by Vijay Govindarajan and it’s a very powerful phenomenon. Its the kind of innovation that happens in emerging & poorer markets and the best of breed filter into the developed world. Reverse innovation stems from the needs of poorer masses in emerging & developing countries and has a profound effect on their lives. It can also have a significant influence on products and services in developed countries. India is a hotbed for innovation, more particularly for mobile innovation and there are lessons to be learned from market tested products that have touched the lives of millions, especially in BoP (Bottom of Pyramid) markets.

One of the companies I’ve been following closely (ever since I used them in my pitch during my MBA @ IE Business School) is Sevamob. Sevamob is a unique solution that provides healthcare & advisory solutions to the BoP population at low monthly subscriptions. They utilize wireless tablets in order to provide advice on the spot and can create “trouble tickets” which are then handled by subject matter experts (SMEs) via a network all coordinated by their 24/7 call center. Essentially they have mobile agents (doctors, insurers, and agriculture/ farming experts) who carry these handhelds and can relay advice by SMEs and look back upon previous engagements in order to craft a solution. Think evidence based healthcare in the villages. Sevamob’s proprietary mobile software on tablets also functions as a channel that can go deep into the rural areas. Companies’ benefit from this is 2 fold – one, they can offer BoP products directly to consumers in these areas and two, significant cost savings on their SG&A expenses.

A second example is that of a much bigger conglomerate – Unilever. As a global FMCG company one of the key challenges is inventory and channel management. In order to reach the rural markets in India, Hindustan Unilever has provided mom & pop shops with mobile phones to help them with billing, relay stock levels and access promotions. The software on the phones not only allows Unilever to forecast demand and set pricing but it also empowers rural shop owners – by taking control of their goods and pricing. An additional benefit – Unilever can now track market potential and demographics of different localities. Brilliant.

Such is the power of mobile in emerging markets – from M-Pesa in Kenya for mobile payments to Sevamob in India, mobile architecture is transforming the lives of millions. So what can the developed world take away from the examples of SevaMob and Unilever? Hospitals can use the Sevamob model of evidence based healthcare to really reduce costs and incidents of errors – the cost savings can in turn be passed on to people.  States can provide cheaper healthcare alternatives by replicating Sevamob’s mobile agent model – if it can work in a 3000$ per capita economy it’s certainly feasible in the US economy. Similarly, Unilever’s tried and tested mobile solution can be designed and deployed in rural markets in North America. Small stores and markets can be empowered to offer better products and services to their markets. The solutions are not high tech and the models although simple are highly disruptive.

Reverse Innovation is not only disruptive but it can also provide organizations tremendous, sustainable competitive advantages. Designing a product for the BoP means you look at target costing from entirely new perspectives and using the lessons learned and applying them in developed markets allows you to massively undercut costs and beat competition.  To quote Vijay Govindarajan from a previous Wharton interview – “If multinationals ignore reverse innovation, they are likely to get disrupted. We have seen this happen in the 1970s and 1980s when Japanese companies disrupted the Detroit automakers.” Indeed.

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