On Sunday, January 6, Vijay Govindarajan (popularly known as VG), the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business at Dartmouth College, gave an enthralling lecture on “Reverse Innovation” to an audience of nearly 200 people at the MYRA School of Business. This inaugural MYRA-Distinguished Lecture was held at MYRA’s newly inaugurated campus in Mysore. VG, author of the worldwide best seller Reverse Innovation, spoke on corporate strategy, emerging markets, and sustainability with close relevance drawn to the Indian context.
Throughout his lecture, VG referred to the growing disparity between “rich” nations and “poor” nations in terms of access to quality products. Through examples from healthcare and housing sectors, VG illustrated how Reverse Innovation – the idea that innovations should first be developed in and for emerging markets before spreading to the rest of the world – will dramatically change business and society.
VG started off with a picture of a typical electrocardiogram machine that costs around $50,000 in the United States with each scan amounting close to $100. He argued that in spite of a dire need for such a machine in rural India, the extreme cost, heavy weight, and reliance on electricity makes this a highly impractical and “useless” machine for Indians.
“Poor people have the same needs. Poor people have the same desires. Poor people have the same ambitions. Why can’t they have the same access?,” posed VG to the audience.
These questions led VG (Professor in Residence at General Electric) to work with GE Healthcare to design an ECG machine that costs just $500 – and only 10 cents per scan. This fantastic innovation is battery powered and weighs less than a can a Coca Cola, thus making it an extremely portable and cost-effective solution. The success of this innovation in rural India, he opined, has prompted healthcare professionals in the USA and around the world to take a new look at medical equipment design.
His next example showcased how Dr. Devi Shetty performs open-heart surgeries for $2,000 at Narayana Hrudayalaya in Bangalore as opposed to the $50,000 needed in the United States, simply by using innovative approaches and reducing unnecessary costs. He noted that despite the significantly lesser price, the quality was actually much higher. He explained, “Surgery needs to be of higher quality in India – because Indians typically have weaker hearts and the risk of post-operative complications from heavy air pollution is greater.”
Through this example he stressed that, “Reverse Innovation is not about lowering costs. It is about delivering a lot more quality at more reasonable price points. It is about doing more – with a lot less.”
Another example which supported this definition of Reverse Innovation came from Dr. Therdchai Jivacate, a Thai physician who creates artificial legs from recycled yogurt containers at just $30, which are more durable and robust than the $20,000 artificial legs available in the US. “While the $30 options may seem to be of poorer quality – they are in fact much better as they are designed to withstand unpaved roads, cross-legged sitting customs, agricultural labor, and other stresses of Thailand’s environment,” he stated – flabbergasting the audience.
VG also spoke on Reverse Innovation in Housing and the need to create affordable solutions for the 75 million homeless people in the world. He described the “$300 house,” a concept he popularized through an article in the Harvard Business Review and explained that housing issues cannot be solved by taking American design approaches and stripping features to make them affordable for the developing world. “It’s about designing it from scratch to fit the needs of the developing world,” he said. “Applying the American dominant logic simply does not work. Companies shouldn’t ask ‘how can our products fit into the market?’ but rather ‘how can our products help the market?’.”
To demonstrate the danger in “applying the dominant American logic,” he spoke of Kellogg’s efforts to sell cornflakes and other sugary cereals in India. In spite of aggressive marketing campaigns, Indians simply did not buy the cereals. Prof. Govindarajan pointed out that Indians like their breakfasts hot, and pouring hot milk on cornflakes would inevitably lead to an unappetizing soggy mush. The Indian consumer simply will not buy into the idea of pouring cold milk on breakfast cereal!”
VG called for a drastic change in mindset which required big corporations to create novel, affordable, and useful solutions for the world’s poor. “The need to Reverse Innovate has never been stronger,” and he opined that this is going to define how corporations innovate, impact and eventually survive in the coming decades.
He concluded on a light-hearted note, referring to typical South Indian movies where heroes like Rajinikanth would always find unexpected and imaginative ways of rescuing their heroines from the villain, stating, “if India has to excel in innovation, we have to produce more Rajinikanths!”
The Reverse Innovation lecture was part of the launch of MYRA’s Centre of Excellence in Sustainable Business Innovations (CESBI), which aims to create a world-class platform for entrepreneurs, academic researchers, students, policy-makers, NGOs, and corporations to collaborate on issues of sustainability and corporate responsibility.
About MYRA School of Business:
The MYRA School of Business is a newly established management institution in Mysore, India. Through a rigorous research-based curriculum, a distinguished faculty line-up, and an architecturally-acclaimed campus, MYRA aims to deliver an education that is unparalleled in Asia. MYRA will welcome its Founding Class in July 2013. To know more about MYRA’s academic programmes, visit www.myra.ac.in. To know more about the MYRA Distinguished Lecture on Reverse Innovation, visit www.myra.ac.in/reverse-innovation-lecture.