Forward in Reverse: How “Reverse Innovation” Helps Win Future Markets

GE Healthcare’s Lullaby baby warmers have grown popular with doctors in Europe’s modern maternity wards, but their birthplace is far more humble. The machines, which help newborns adjust to room temperature, have been developed to salve an urgent need half the world away, in India. “India produces one Australia every year, as many as 30 million newborns” says GE Healthcare’s Manoj Menon. But the majority of the births happen in an unsupervised manner, and even hospitals have to deal with erratic electricity and lack of affordable equipment, Menon says. As a result, India has one of the world’s highest mother and infant mortality rates.

But most of these deaths are preventable with proper care. GE attacked the problem by developing the Lullaby. The machine’s easy controls, pictogram buttons, and simple dials require minimal training and allow nurses and doctors focus on the baby, not switches. It can be also connected to a battery to bridge brownouts.

World citizen: GE’s Lullaby baby warmer was developed to improve infant care in India. Now it keep babies warm around the world. 

The machine, which GE developed in Bangalore, and launched in 2009, costs $3,000 in India. But its appeal is universal. “This made-in-India product is now sold in [over eighty] countries, including rich countries in Western Europe,” says Vijay Govindarajan, a professor at Dartmouth’s Tuck School of Business and founding director of the school’s Center for Global Leadership.

Govindarajan just wrote a new book on the topic titled Reverse Innovation: Create Far from Home, Win Everywhere and the Lullaby warmer is a prime example of the “reverse innovation” concept. Govindarajan argues that to succeed, large companies must learn to innovate in developing markets, solve their pressing needs, and then bring the results back home. “A reverse innovation methodology requires companies to fundamentally rethink the price-performance paradigm, and that begins with understanding the customer problem,” says Govindarajan. “Once you do that, your solutions become very novel.”

For GE, the Lullaby was just a starting point. The company has since developed Lullaby LED phototherapy unit, which incorporates LED green technology into the warmer, as well as the Vayu low-cost ventilator, also innovated in India, which can cover up to 80 beds in an intensive care unit with its four-hour battery life.

Developing economies already represent more than two thirds of future global GDP growth and reverse innovation is a handy tool for catching some of that momentum. Govindarajan’s book presents additional case studies of successful reverse innovations by companies and organizations such as Procter & Gamble, EMC Corporation, Deere & Company, and Partners in Health.

Govindarajan says that “GE is one of the leading companies in the area.” He says: “Every GE employee must have a reverse innovation mindset. It’s the biggest opportunity for GE going forward.”