PREFACE

Leaving Something to Chance

I wish I could say that this book is the culmination of a decades-long, well-executed plan. The truth, however, is that it is the happy result of three chance events.

Event 1: An Unexpected Book

I earned my chartered accountancy degree in India in the 1970s. My course of study included many dry texts filled with numbers and abstract concepts. There was also a reference list of books not explicitly covered in the classes. I read many of these, including one by a legendary Harvard Business School professor named Robert Anthony. In it, Anthony expressed a view of my chosen field that was a total revelation to me: accounting, he asserted, was not the technical subject I had thus far presumed it to be. Instead, it was a force that could be used to influence human behavior in constructive ways.

This was so different from anything I had previously learned that I became determined to go to the Harvard Business School. I wanted to be exposed to people who, like Bob Anthony, had such interesting and surprising ideas that they could make accounting come to life for me and make it suddenly seem new.

At Harvard, I saw accounting as a tool for the execution of strategy. There were relationships between numbers, human motivation, and business execution. Accounting was a crucial instrument for achieving superior execution.

Slowly, then—entirely because I stumbled upon Bob Anthony’s book—my focus changed from “dry” accounting systems to the study of all of the administrative systems that exert a behavioral influence on an enterprise. In time I became a researcher, teacher, and consultant in the field of strategy execution.

Event 2: An Unexpected Partnership

I met my coauthor, Chris Trimble, more than a decade ago. The Tuck School of Business at Dartmouth, where I have taught since 1985, had received a large donation to establish a research center that would focus on global strategy and innovation. I was looking for a partner in the endeavor. Chris, who had been one of Tuck’s top MBA graduates and had been working as a consultant, was seeking a new challenge, with an eye toward academia. He agreed to join me.

Neither of us anticipated what followed: more than a decade of happy and productive work focused on the challenges of making innovation happen inside established organizations. In addition to Harvard Business Review articles, one of which, “Stop the Innovation Wars,” was a McKinsey Award winner, we have produced two prior books on innovation: Ten Rules for Strategic Innovators and The Other Side of Innovation. These books formed a crucial foundation for this book.

I am profoundly grateful to have met and struck up such a vibrant partnership with Chris. His contributions to this book have spanned a wide range. He developed theory, articulated key concepts in a high-impact way, served as the deep expert on innovation execution, produced many passages of hard-hitting prose, and even coined the term reverse innovation. In short, he has been a true partner in every aspect of our work, as well as a close friend.

Event 3: An Unexpected Assignment

Thanks to a lightning strike of good fortune, I spent two remarkable years serving as GE’s first professor in residence and chief innovation consultant. Two conversations, spread out over several years, yielded the tremendous opportunity.

In 2001, I gave a talk at a conference. After my session ended, I had time to kill before my flight home, so I stayed and listened to a talk by Susan Peters. She was then GE’s chief learning officer, and in her talk, she described the company’s approach to leadership development. I was captivated by this glimpse into GE’s thought process. After the talk, I went up and introduced myself to Susan. She asked me what I did, and I described my work at the Tuck School on innovation and execution.

A few years after that, GE CEO Jeffrey Immelt came to speak at Tuck. I requested a half hour one-on-one meeting. We talked about the challenges of combining innovation and efficiency, and I shared some ideas from our research. A year or so after that, Chris and I published Ten Rules. I sent a copy to Immelt, and he responded with a handwritten letter.

In 2007, Immelt discussed with Peters a plan for bringing an academic into GE to advise the company on innovation. He asked her to assemble a list of possible candidates with innovation expertise. When my name came up, it clicked with both of them.

GE as a Reverse Innovation Laboratory

I started my two-year adventure at GE in January 2008. Jeff Immelt had asked me to consult to two business units: GE Healthcare and GE Energy. Both were seeking ways of competing more effectively in the emerging markets of India and China. Immelt saw clearly that GE’s future as a company was tied to its performance in the developing world and, in particular, its skill at reverse innovation—that is, its ability to innovate specifically for emerging markets. “For GE to win in the U.S.,” he said, “it must win in India and China.” Or, as our book’s subtitle exhorts, to win everywhere, you must learn to create far from home.

Once I investigated the health-care and energy markets of the developing world, I saw exactly the same sets of opportunities and constraints. In both markets, there were deficient infrastructures that struggled to meet growing demand.

For example, health care in India faced an urgent shortage of hospital beds. This deficiency coincided with a rapidly growing and more-prosperous middle class that was beginning to experience higher rates of so-called lifestyle ailments such as diabetes and obesity. There was also a shortage of physicians and other health professionals. And India had a grossly underserved rural population with little or no access to basic care or to the sorts of diagnostic technologies that could catch illnesses at an early, easily treatable stage.

Furthermore, the underdeveloped and unreliable electric grid in India made it impossible for small local clinics to rely on traditional ultrasound or electrocardiogram machines that ran on house current. Moreover, existing versions of these typically high-performance machines were cost-prohibitive in a predominantly poor country.

These were daunting barriers. However, I also saw that both health care and energy presented opportunities that exceeded a trillion dollars over the next two decades. GE urgently needed creative solutions. At that time, however, GE was playing a traditional market-share game in India, China, and other developing nations. The company was trying to sell lightly modified global products into markets that instead needed fresh ideas—breakthrough innovations engineered for local realities. Consequently, I believed that if GE expected to tap into these trillion-dollar opportunities in a significant way, it needed to play a market-development game, not a market-share game.

My time at GE was invaluable in helping to formulate the concepts, methods, and requirements for practicing reverse innovation. Critically, I was exposed to a fascinating and ultimately quite successful project under the leadership of Omar Ishrak, the head of GE’s ultrasound business, to create a portable, low-cost ultrasound machine in China. The project demonstrated, in so many ways, what GE needed to be doing in almost every business unit to win in emerging markets. In October 2009, I coauthored a Harvard Business Review article on reverse innovation (with Jeff Immelt and Chris Trimble). “How GE Is Disrupting Itself” chronicles Ishrak’s ultrasound project.

I was privileged to get a firsthand look at how a powerhouse U.S. multinational climbed the reverse innovation learning curve. It was a rich education. Suffice it to say that my debt to GE, as an inspiration for this book, is enormous.

The book is also stocked with many examples from other companies. In particular, chapters 5 through 12 in part 2 include richly detailed profiles of inspiring experiments in reverse innovation. We are indebted to the seven other organizations that generously shared their experiences with us with candor and in detail.

We regard the study of reverse innovation as an emergent field. It is a next-practice endeavor rather than a best-practice one. There is still so much yet to be learned. Nevertheless, the reverse innovation initiatives described in this book reveal a great deal about what works well—and what does not—when you are innovating for emerging markets. We hope that the concepts and evidence we have gathered here will tempt you to tackle your own reverse innovation endeavor. Perhaps, then, you will look back on the discovery of our book as an important chance event in your own business career.

Two Special Acknowledgments

In my previous books, I have gone to great lengths to acknowledge every contributor. This book is no different from my past books, in that the number of individuals involved is large. Nonetheless, I’d like to make an exception in this case, so that I may focus only on the two individuals who made, by far, the largest and most noteworthy efforts.

The first is Lew McCreary. Given his long and impressive career in journalism, including writing and editing for the Harvard Business Review, I was fortunate to be able to add Lew to the team for this book. Lew’s contributions were broad and numerous. He participated in almost every interview, offered insights derived from a career writing about business, and drafted most chapters. Lew’s deft writing brings style, originality, charm, wit, and energy to these pages, far beyond what we could otherwise have achieved.

The second is Chris Trimble, my close partner and coauthor since 2000. I often urge corporations that I advise to bring about discontinuous changes in their organizations. Chris Trimble has brought about a discontinuous change in my career. As Chris has taken on a new role at Dartmouth, this book is the culmination of our full-time partnership. He has made me a better professor—and a better person.

—Vijay Govindarajan