Blog5 The local strikes back

The local strikes back

Before coming to Pittsburgh, I lived in Kanagawa in Japan. Kanagawa is adjacent to Tokyo and of course much smaller than Tokyo, so sometimes it is called “One of the subordinates of Tokyo”.  Since I was born and grew up in and love Kanagawa, I feel sad when it is called so. But I found a very interesting and piquant case or GE’s “Reverse Innovation”.

Where R&D and marketing are typically performed? I think most of the people will confidentially answer “at Head Quarter Office!”, but some companies performed them at local or to some extent remote areas. It makes sense because global companies need to adapt to the local markets to provide products and services (Glocalization, I sometimes hear the word). However, could you imagine that the products which were developed to adopt the local markets hit in the main market?

GE sells healthcare devices and they tried to sell the products in the rural area in China and India. To adopt the markets which are significantly different from the main markets, they invested to implement the place to perform R&D and marketing. Because the remote markets’ buying power is relatively weaker than that of main markets, and also there are a small number of hospitals, so people need portability (the existing products were non-portable and expensive). They innovated a portable and affordable supersonic device there. And the products sold for the particular segment of the main markets (ex. In case of a traffic accident, people need small and portable products). This case was impressive for me because the local markets are small and the invested assets are also small, but in the limited resources, they developed products which sell not only in the local markets but also in the main markets. What is the essence of GE’s successful story?

The implementation of GE’s “Reverse Innovation” is decentralization and autonomy. GE thought that the “Glocalization” can only gain the least common multiple, and therefore, they broke it down into the independent groups and endowed the autonomy. However, the decentralization is not a panacea. The CEO mentions that it might cause the loss resulting from the redundancy. Moreover, as the CEO says in the interview, “Reverse Innovation” required to shift the mindset, or culture of the company and put local areas into the top management team. Personally, I think this case implies that the decentralization looks efficient, profitable, and innovative, but it requires careful consideration and management.

Mr. HQ “I am No.1!! Shut your mouth and follow me!!”

Mr. Local “Oh? I developed this.”

Mr. HQ “…”

Reference

How GE Does Reverse Innovation. (2015, March 30). Retrieved May 1, 2019, from https://hbr.org/2009/10/how-ge-does-reverse-innovation.html

Noria Corporation. (2009, September 23). Reverse innovation: How GE is disrupting itself. Retrieved May 1, 2019, from https://www.reliableplant.com/Read/20157/reverse-innovation-how-ge-is-disrupting-itself