Reverse Innovation

Reverse innovation is a term referring to an innovation seen first or likely to be used first, in the developing world before spreading to the industrialized world. Reverse innovation refers broadly to the process whereby goods developed as inexpensive models to meet the needs of developing nations, such as battery-operated medical instruments in countries with limited infrastructure, are then repackaged as low-cost innovative goods for Western buyers.

The process of reverse innovation begins by focusing on needs and requirements for low-cost products in countries like India and China. Once products are developed for these markets, they are then sold elsewhere - even in the West - at low prices which create new markets and uses for these innovations.

Typically, companies start their globalization efforts by removing expensive features from their established product, and attempt to sell these de-featured products in the developing world. This approach, unfortunately, is not very competitive, and targets only the most affluent segments of society in these developing countries. Reverse innovation, on the other hand, leads to products which are created locally in developing countries, tested in local markets, and, if successful, then upgraded for sale and delivery in the developed world.

The reality is, developing countries are not following the same path and could actually go ahead of developed countries because of their willingness to adopt breakthrough technologies. With smaller per capita incomes, developing countries are more than happy with hi-tech solutions that deliver decent performance at a comparatively low cost - a 50% solution at a 15% cost.

Examples of reverse innovation can be found across various industries and geographies.

(Reference: Wikipedia and Docstoc)
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