The
traditional model of innovation in business is that new products are created
and distributed in the West. When the market for the product matures, or even
declines, the product is finally distributed in the Third World, often in some
less desirable form. But as a recent article in Fast Company1 highlights, a new phenomenon called trickle-up
innovation is emerging. BusinessWeek2 recently described it as “creating
entry-level goods for emerging markets and then quickly and cheaply repackaging
them for sale in rich nations.” That, of course, is an abrupt reversal of the
traditional model.
For
example, General Electric developed a cheap, portable electrocardiograph
machine for use in remote areas of India and China. Released in 2008, the
$2,500 device weighs 50 percent less and costs a fraction of typical ECG
machines. In 2009, it began introducing the machine, called the MAC 800, in
the United States.
That’s
just one example. As noted in the book, The Fortune at the Bottom of the
Pyramid: Eradicating Poverty through Profits3 by C.K. Prahalad, several companies,
including Microsoft, Nokia, and Procter & Gamble, are jumping on the
“trickle-up bandwagon.”
One
version of this model relies upon harvesting ideas from low-income nations and
then adapting them to Western marketplaces. For example, Xerox hires so-called
innovation managers who seek out products from start-up companies in India.
Hewlett-Packard owns a research lab in India that is working to adapt African
and Asian mobile phones for developed countries.
Consumer
goods designed for developing markets are migrating up-market, too. Nestlé
makes a dried noodle meal called Maggi for low-income areas of rural Pakistan
and India. It has recently started selling Maggi as a money-saving, nutritious
food in Australia and New Zealand, as well. Procter & Gamble, which
developed its Vick’s Honey cough syrup for the Mexican market, is now
introducing the product in Europe and the U.S.
Not
every organization, though, is flexible enough to embrace trickle-up
innovation. According to an article in Strategy +...
