Have you ever come across the drink Gatorade? You will probably know it as an isotonic sports drink – but there is more to its story. Gatorade was initially invented during a cholera epidemy in Bangladesh. Cholera patients must be kept hydrated to survive and Ayurvedic medical practices use carbohydrates and sugar in a salt solution to quickly help the patients’ recovery. This treatment did not comply with the western medical opinion at that time but eventually it was proven that the human body can intake water faster this way. The new product took the fast lane to the UK and the US and researchers concluded that not only cholera patients need to be rehydrated quickly but also football players. The advantages of Gatorade was projected onto those markets, has found its way into common supermarkets and has written a global success story ever since.
The basic principle that makes this concept adaptable for various kinds of businesses is called Reverse Innovation: Companies innovate for and in emerging economies and then transfer the successful innovation to their home country.
What do businesses gain from different cultures?
Reverse innovation is not about delivering less sophisticated or low-priced versions of established products to emerging markets but about inventing a new product or service which meets the needs of local consumers. Often solutions and products from European companies simply do not fit into the local market of emerging economies. The level of performance and costs are the two most important determinants and can be barriers preventing a successful market entry. For instance, most people in India cannot afford an expensive European SUV. They are rather interested in cheap mobility solutions which are more valuable and handy in the chaotic traffic of India’s mega cities. Those restrictions in terms of costs and performance can lead to disruptive innovations, which meet exactly the local needs: an affordable and accurate solution. The paramount example is Tata, a big Indian car manufacturer, who realised that there is no need for a high-class luxury car – the market for smaller and cheaper cars is much larger in India. So they have developed the Tata Nano, which is the cheapest car in the world, and a strong competitor for the two-wheelers manufacturers rather than European car manufacturers. Today this innovative product is not only sold in India, but Tata is aiming for the European and the US market as well.
How do businesses approach Reverse Innovation and what does it have to do with culture?
International SMEs often focus on developed markets, because they offer both a large market for business growth as well as a familiar economic environment. Nevertheless, growing SMEs into globally successful businesses also means reaching out to emerging economies. There the environment might appear overwhelming and intimidating due to its unfamiliarity and otherness, which can lead to opportunities beyond expectations. Leaving a path and a well-known strategy is an adventure – but there’s a lot more to gain than you would think!
Not only products and services can be innovated and influenced by cultural best practices. Our ways of communication, process management or understanding of leadership and team spirit are shaped by our cultural beliefs and roots. Where some might profit from new approaches to structure and discipline, others might experience amazing results by loosening their agendas and opening up more space for creativity and recreation.
At #rethinkeurope 2018 we want to encourage European entrepreneurs and leaders to start exploring and broaden their boundaries of imagination. Open your mind to new impulses and discover your company’s full potential in a global business environment.