It was in the year 2009—when most developed countries were grappling with a tumultuous economic crisis—that General Electric (GE) India, under the leadership of then CEO John L Flannery, toyed with the idea of creating and innovating on products and services tailored for the Indian market by optimizing domestic resources. The success of their reverse innovation products in India and other developing and developed markets was unparalleled. Its reverse innovation was featured in Harvard Business Review’s ‘Great Moments in Management in the Last Century’. Today, MNCs, government institutions and non-profit organizations are all turning to reverse innovation. Vishal Wanchoo, president and chief executive officer, GE South Asia, who has been an integral part of Flannery’s team explains the use cases, challenges and scope of reverse innovation. Edited excerpts:
GE has a history of pioneering innovation. Could you walk us through some of the standout examples of reverse innovation GE has produced?
GE has a more than 130-year history of life-changing innovations across the world in multiple sectors. Here, innovation is a process of collaboration and partnerships. In India, GE’s technology centre in Bengaluru is a significant contributor to the company’s overall research initiatives. The research and innovation undertaken in the technology centre in India in collaboration with various global businesses develops technology for both India and the world.
GE’s Revolution ACTs would be one such example. It is the first ‘Made in India’ CT (computed tomography) scanner, an advanced yet affordable device, which is transforming the way trauma, stroke, and other conditions are managed in India. The installations are from markets outside of metro and tier-I locations like Kumbakonam in Tamil Nadu, Purnea in Bihar, Daund in Maharashtra, Midnapore in West Bengal, Medak in Telangana, many of which never had access to this technology.
In global markets, the Revolution ACTs is approved to sell in more than 50 countries, primarily in South Asia, Africa, ASEAN, Asia Pacific and Latin America. In Vietnam, for instance, since the installation of the Revolution ACT in 2016 at The National Lung Hospital in Hanoi, there has been an increase in case load of 40-50 patients per day, using 40% less electricity, less space and lower dosage radiation, for a fraction of the cost of a traditional 16-slice CT.
Another example is from GE Renewable Energy. A significant part of the work on developing the customized wind solutions (2.5-132 low wind speed turbine) for low wind regime markets took place in India. It uses evolutionary technology platform, based on the learnings from the successful installation of 22,000 GE wind turbines around the world. Additionally, our researchers in India have developed data-driven solutions to provide more efficient and reliable wind power to customers in India and in similar markets with low wind speed sites.
Are there cultural biases against learning from a place to which the developed world earlier only sent its expertise?
Every challenge brings an opportunity. Reverse innovation, by virtue of its definition, is the phenomenon of products and services being designed and engineered in growth markets and provided to developed markets. So at the outset, there is that initial resistance as this goes against the grain of a traditional system in which products and technologies are created by and for the developed world. So that’s where the bias sets in. What’s important is to assess how reverse innovation, when done right, can lead to a win-win situation. If we look at India, it was earlier identified as a strong market from an outsourcing point of view. But over the years, India has shown its capabilities and expertise when it comes to key aspects like technology, design and engineering. This has led to products and services developed in India actually matching and even surpassing the performance of those produced in developed markets, and that too at prices that are rather affordable. So, India has been able to demonstrate value in that sense.
When do you see reverse innovation penetrating developed markets?
Developed markets have to understand that if they need to stay competitive, the only viable solution is to turn to newer growth markets. The centre of gravity has gradually shifted to these growth markets.
What is the potential scope of reverse innovation? And what can you forecast for its future?
We have seen how global supply chains have redefined the manufacturing model in the post-industrialization era. As the standards of living rise in the developing world, the demand for higher quality products and services is providing fertile ground for innovation. What started as frugal innovation for problems faced by emerging markets has now grown to solve global problems. Developing markets have leapfrogged many technological cycles, and governments are proactively supporting the spread of innovative thinking at a grassroots level. What came out of labs of large corporations is today being done by startups.
As the population rises in growth markets and entry barriers to high technology sectors are lowered, innovation is moving closer to these markets. Reverse innovation is now a viable business opportunity, and therefore, a magnet for talent in these markets. This trend is irreversible.
How important is India’s talent pool and the development centre? Is it just a function of cost arbitrage?
The talent in GE’s technology centres in India is among the brightest in the world. Set up in 2000, the John F. Welch Technology Centre in Bengaluru is credited with significant progress in affordable and accessible healthcare, renewable energy, among other solutions. It is our largest multidisciplinary research and development centre outside the US. India is well poised to contribute adequately when it comes to creating long-term sustainable products, which are high on performance and value and are more affordable. That’s because of the kind of talent pool that India possesses, especially in the areas of science and research.
Also, this means it is difficult to ignore countries like India (and many other growth markets) because of the value that they have been able to demonstrate consistently.