The term reverse innovation was popularised by management guru Vijay Govindrajan.
The process of reverse innovation begins by focusing on needs and requirements for low-cost products in countries like India and China. Once products are developed for these markets, they are then sold elsewhere esp. developed world at low prices which create new markets and uses for these innovations.
This approach is very different from earlier approach of western countries, wherein they removed some features of existing product which brought the price down and then tried to sell it in developing world. People in developing countries were not interested in products that had some features removed or were outdated in western markets.
Vijay Govindrajan gives an interesting example of Ford Company. In 80s to sell their car in Indian market, they decided to remove some features of existing model in US ex. power windows, i.e. the front seats had power windows, while back seats had manual system, to lower price and tried to sell it in India. But what Ford overlooked was, that in India a person who could affort buy Ford car could also afford chauffeur ( unlike in US). So chauffer had power windows and owner manual!
Let us see few examples of reverse innovation. As usual I will start with group I work for- Tatas.
Tatas developed a small car for lower middle class Indians called Nano (which itself was a major innovation), after selling in India, they launched it in western world as Tata Europa.
Nestle had launched Maggi Noodles in Indian subcontinent as low priced noodles. After their success in India they were launched in Australia. Maggi in Australia also has flavours which are not available in India ex. beef or pork.
P & G Mexico launched a honey based cough syrup called VickMiel, it was then introducted to other countries in Latin America and finally in was launched in US as Vicks Casero.
GE Healthcare’s Mac 400 electrocardiogram machine was developed for rural India and China. It is a low cost, portable, battery operated ECG machine. Later GE launched it in US, where it found new application ex. using this portable device at accident sites