When Vijay Govindarajan joined General Electric as its chief innovation officer two years ago, he says, he took it up more as a student. As he prepares to return to the Tuck School of Business at Dartmouth College as the Earl C Daum 1924 Professor of International Business, he has given an insight into the results of his experience in the form of his concept of reverse innovation in ‘How GE Disrupts Itself’ (co-authored with Jeffrey Immelt and Chris Trimble), which was published by the Harvard Business Review in its October issue. Reverse innovation, explains Govindarajan, is about innovating in emerging markets and then bringing the products to developed countries. The concept hinges on three points: It is vital for MNCs to win in emerging markets, they need to change the organisational architecture for this purpose, and they need to come up with breakthrough innovations. He spoke about the concept and its implications in the post-downturn phase in an email interview with FE’s Rajiv Tikoo. Excerpts:
How did the concept of reverse innovation come about?
In the Harvard Business Review article on ‘How GE is Disrupting Itself’, we have introduced a new concept called Reverse Innovation. Historically, multinationals innovated in their home markets and distributed those products in developing countries. Reverse innovation is about doing exactly the opposite. Under reverse innovation, you innovate in emerging markets and then bring those products to developed countries. When I joined GE as a professor in residence and chief innovation consultant, in January 2008, it almost coincided with the start of the great recession. One of the important changes that has been brought about by the financial crisis is that the growth has shifted from developed countries to developing countries. The world has been fundamentally reset since 2008 and emerging markets represent the next frontier of growth for American multinationals. Hence, the importance of the reverse innovation concept.
What is your take home from the GE experience? How according to you does it build on your 3-box strategic framework for innovation and execution?
The GE experience has been extraordinary for me. How many faculty members get an opportunity to have a front row seat to see a real company make real decisions in real time, especially during these extraordinary times in the past 24 months? I went into GE with my earlier body of research around the three boxes. And the 3-box framework essentially says that