Reverse & Frugal Innovation
Reverse & Frugal Innovation
1. Other than price sensitivity, what are the starkest differences between the needs of customers in developing countries and the needs of customers in developed countries? Why is it essential for companies in the developed world to understand these needs?
Typically, multinational companies of developed countries attempt to move their established products to the developing world. However, the customers’ needs of developed countries are different from the needs of developing countries’. The articles referring the frugal and reverse innovation indicate that customers of developed ...view middle of the document...
Further more, the companies try to meet the needs of developing countries customers by customizing the existing offerings. However, simply customizing existing offerings has poor performances. According to these two articles, we can concluded that customizing companies’ existing offering cannot meet the needs of developing countries’ customers.
Harman is a good example. The company sensed that the lower price is the key needs in the developing countries, such as India and China. Thus, Harman made a decision that they adapted its premium products in the lower-priced market segments. That means harman simply customizing their existing products to meet the developing countries customers’ needs. The result was disappointed.
Company should consider these followings before starting a clean-slate innovation:
1) There are new demands form emerging markets.
2) The exiting companies’ products or technologies cannot meet the new requirements.
3) There are slightly opportunities that the companies can meet the customers’ need by modifying the exiting offerings.
4) The new innovation can meet the company targets, such as developing new markets, lower the production cost, expending the brand.
Harman failed to launch the modifying exciting products in emerging countries. However, the company successes in radical innovation project Saras. Saras was a project that disrupted the company transitional products. The company’s traditional was to provide customers with after-sale customization. But, Saras provides the module products without changing by customer’s requirements. Instead of after-sale customization, Saras provides cheaper but reliable quality products. As the result, Sara was very successful to sale in both emerging countries and western-countries.
3. What does the term reverse innovation mean? Is reverse innovation disruptive? Explain with appropriate examples.
The definition of reverse innovation is: 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 creates new markets and uses for these innovations.Reverse innovation- developing ideas in an emerging market and coaxing them to flow uphill to Western markets.
The reverse innovation does disrupt existing process and products. A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology.
In Mr. Govindarajan’s article of A Reverse-Innovation Playbook. Harman targeted motorbikes market which was a burgeoning market. This market did not expect the infotainment system services before. Meanwhile, Harman did changes including relocation the research and development department, re-assigned staffs to new positions, set the...