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Article - A Reverse Innovation Playbook.doc

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Wilfrid Laurier University
Pat Lemieux

Article – “A Reverse-Innovation Playbook” • Multinational corporations need to learn to generate successful innovations in emerging markets and then export this knowledge and those innovations to the developed world • Limits imposed by its traditional operations become surmountable, and company can rethink all its products and attack new markets in search of growth • Few companies experience this kind of renaissance, because reverse innovation – developing ideas in an emerging market and coaxing them to flow uphill to Western markets – poses immense challenges • It requires a company to overcome its dominant logic, the institutionalized thinking that guides its actions • Major changes: throwing out old organizational structures to create new ones from scratch, revamping product development and manufacturing methods, reorienting the sales force • Example: Harman International o Known for sophisticated dashboard audiovisual systems designed by German engineers, developed a radically simpler and cheaper way to create products in emerging markets and applied that method to its product development centers in the West o Used a two part approach  radical change from below combined with astute leadership from above o Small team based in India and China set audacious goals, created a new organizational structure, and adopted new design methods o Approach ultimately enabled Harman to offer a unprecedented range of products along a continuum of markets Executing Radical Change • Division had a 70% share of the market and accounted for two-thirds of the company’s $3B in revenues • Harman had previously tried to move into these markets through glocalization, adapting its premium products for lower-priced segments • Understood that innovating for emerging markets would require radical changes in key aspects of the business • Rethinking Location, staffing, incentives, and reporting structure o Company deliberately placed the initiative within emerging markets o Team consisted of a software group in India and a smaller hardware group in China o Headcount was kept low to ensure flexibility and encourage the members to take initiative • Setting Audacious Targets o Lawande saw that the project would require a new engineering culture and approach to innovation o Team set the impossible sounding goal of creating products whose functionality would resemble that of the division’s existing infotainment systems • Rethinking Engineering Processes o Whereas the company’s dominant logic dictated that design engineers be oriented toward creating ever more complex o Key priority was scalability o Team adopted several other principles, including simplicity, modularity, and third-party solutions
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