In the article, How GE Is Disrupting Itself, Jeffrey Immelt, then-executive chairman of GE, and Tuck School of Business academics Vijay Govindarajan (his chart pictured) and Chris Trimble argued that once products have proven themselves in emerging markets, they must be taken global in a process they called reverse innovation.
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Reverse innovation is the opposite of the glocalisation approach – where companies develop products at home and then distribute them worldwide – that many industrial goods manufacturers based in rich countries have employed for decades, HBR said.
Glocalisation allows multinationals to trade off the global scale needed for minimising costs and the local customisation required to maximise market share.
The problem is the centralised, product-focused structures and practices that have made multinationals so successful at glocalisation actually get in the way of reverse innovation, which requires a decentralised, local-market focus, the authors said.
These local growth teams need to have profit and loss responsibility, the power to decide which products to develop for their markets and how to make, sell and service them, and the right to draw from the company’s global resources, the article said.
Once products have proven themselves in emerging markets, through reverse innovation they can be taken global, which may involve new applications, lower price points, and even using the innovations to cannibalise higher-margin products in rich countries, HBR added.