General Electric is disrupting itself through a strategy called reverse innovation, where it develops low-cost products for emerging markets and brings them to wealthy markets. This strategy requires decentralizing decision making away from headquarters to focus on local needs. GE sees reverse innovation as necessary for future growth and to challenge its assumptions that products for developing countries cannot succeed elsewhere. It is establishing local growth teams empowered to create offerings from the ground up for their regions.
General Electric is disrupting itself through a strategy called reverse innovation, where it develops low-cost products for emerging markets and brings them to wealthy markets. This strategy requires decentralizing decision making away from headquarters to focus on local needs. GE sees reverse innovation as necessary for future growth and to challenge its assumptions that products for developing countries cannot succeed elsewhere. It is establishing local growth teams empowered to create offerings from the ground up for their regions.
General Electric is disrupting itself through a strategy called reverse innovation, where it develops low-cost products for emerging markets and brings them to wealthy markets. This strategy requires decentralizing decision making away from headquarters to focus on local needs. GE sees reverse innovation as necessary for future growth and to challenge its assumptions that products for developing countries cannot succeed elsewhere. It is establishing local growth teams empowered to create offerings from the ground up for their regions.
General Electric is disrupting itself through a strategy called reverse innovation, where it develops low-cost products for emerging markets and brings them to wealthy markets. This strategy requires decentralizing decision making away from headquarters to focus on local needs. GE sees reverse innovation as necessary for future growth and to challenge its assumptions that products for developing countries cannot succeed elsewhere. It is establishing local growth teams empowered to create offerings from the ground up for their regions.
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How GE is disrupting itself
Introduction • In May 2009, General Electric announced that over the next six years it would spend $US3 billion ($3.3 billion) to create at least 100 healthcare innovations that would substantially lower costs, increase access, and improve quality.
• Two products it highlighted - a $US1000 handheld electrocardiogram device and a
portable, PC-based ultrasound machine that sells for as little as $US15,000 - are revolutionary, and not just because of their small size and low price.
• Glocalization Vs Reverse Innovation
• GE is pro at glocalization and new to reverse Innovation.
Introduction • For decades, General Electric and other industrial-goods manufacturers based in rich countries grew by developing high-end products at home and distributing them globally, with some adaptations to local conditions—an approach known as glocalization.
• Now they must do an about-face and learn to bring low-end products
created specifically for emerging markets into wealthy markets.
• That process, called reverse innovation, isn’t easy to master. It requires a
decentralized, local-market focus that clashes with the centralized, product- focused structure that multinationals have evolved for glocalization. Why Reverse Innovation • Newly Appointed CEO Jeff Immelt sets a goal for GE
a) Faster growth b) Challenge assumptions
• Assumption 1
Emerging economies will largely evolve in the same way that wealthy economies did.
• Assumption 2
Products that address developing countries Special needs cant be sold in developed countries because they are not good enough to compete there. Preempting the Emerging Giants • GE leaders had been looking to emerging markets to help achieve their ambitious growth objectives.
• GE embracing reverse innovations for defensive reasons.
• Reverse innovation isn’t optional , its oxygen
Shifting the centre of Gravity • Changing long-established structures, practices , attitudes .
• Investigate the firsthand size of opportunity , exploit it , encourage others to do
the same.
A Home grown Model
1) Shift power to where the growth is
2) Build new offerings from the ground up
3) Build LGTs from the ground up, like new companies.
4) Customize objectives, targets and metrics.
5) Have the LGT report to someone high in the organization.
Conclusion • GE has a dozen local growth teams in China and India.
• GE’s businesses in China will grow 25% ( even during a severe global recession)
• Majority of resources devoted to initiatives for developed ones.
