economicmultipliers_84

Economic Multipliers (84)

Do you know what these are?

They help CREATE wealth in systems.

Reverse innovation is an economic multiplier if it makes economic sense.

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Human beings have been innovating and reverse innovating for centuries. Whenever the world starts to get ‘too complex’ for any individual or group, they start to migrate towards times and technologies which seemed ‘simpler.’

Thinking about reverse innovation today though is a bit different. Many times an action or product looks simpler (and it usually is for the user) but the product development, manufacturing and technology that ‘stand behind’ the simplicity are quite complex.

One example is ‘organic farming.’ While testing soil and water conditions, assessing weather patterns and accessing all the latest information on equipment, processing and natural feeds, fertilizers, pesticides, herbicides and beneficial insects, these (technically hi-tech) ‘farmers’ produce crops that the ‘end user’ might consider low-tech.

Another example is a large button cell phone with limited features which is designed for individuals who don’t need a lot of applications and/or who have difficulty seeing or pushing buttons and/or individuals who grew up with phones but not a lot of technology. All of today’s cell phone and manufacturing technologies stand behind a phone like this: The phone just looks basic.

Today you can also buy a phone handset (like originally used with older model landline phones) to plug into your cellphone (check to ensure compatibility if you ever get one). You wouldn’t expect to carry the handset in your purse or pocket but might find it much more user-friendly if you received a call at home. An ‘old design’ gets partnered with ‘new technology.’

Reverse innovation also bridges another gap: As a design strategy, it helps companies maintain profitability as they work to produce products that meet the needs of individuals who want those products but at prices that reflect their specific income stream. For any community or individual, a product has no value if it is not affordable and therefore cannot be bought and used.

The world is full of people today who have income levels all over the map: All of them want to be able to produce and/or purchase products which make their lives easier. All of them have different definitions regarding what ‘easier’ means.

Fortunately today, many, many people and businesses are ‘rethinking’ products and how they fit into the world and asking:

• • ‘Could a simpler, less costly design work while still offering excellent performance?’ If so …

  • ‘Would it be desired and give more people opportunities?’ And …

  • ‘If we produced it, could we still make a profit?’

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The word ‘reverse’ is usually associated with going backward. But there is nothing ‘backward’ about applying common sense:

• • Japan’s school lunch program (keywords: Japan school lunch home cooked meals Washington Post) was patterned after a western style diet from the 1940’s. It worked, still does and the Japanese population today is healthier on average than our American population: We (as the westerners) ‘innovated’ and now we are innovating back.

  • Just two years ago, I thought elementary school kids should use all those old 3.5 inch floppy discs with their word processing applications but USB storage has now become so inexpensive (and many kids have MP3 players, eReaders and cellphones with storage), the computer hardware doesn’t even make sense (unless you’ve got access to an unlimited supply of older computers).

  • With all the ‘waste to energy’ work being done today, more mini sewage treatment facilities with waste to energy and fertilizer not just for farms but for residential areas in smaller and developing communities and nations could be on the horizon.

  • ‘Smaller’ and ‘simpler’ products are creating extraordinary economic value because their product sizes and features are closely matched to specific individual and community needs.

  • Smaller and less expensive devices that provide ‘preliminary screening’ for health care, the environment, processes, etc. are offering expanded opportunities to evaluate and improve all sorts of systems.

‘Reverse innovation’ IS ‘innovation’ and to me, there is nothing backward about it: It is not about ‘cheap’ or ‘outdated’ or ‘less than’ what’s needed. It is about ‘targeted’ to the user and application and ‘high quality’ and ‘affordable’ to the user.

‘Reverse innovation’ is a relatively new ‘buzzword’ but the concept shows up (in various forms) all the time. If you think that you will ever work on the design or marketing of any kind of product or service, ‘Reverse Innovation’ (by Vijay Govindarajan, Trimble and Nooyi) is an excellent book, particularly if you are interested in global markets and want to gain a greater understanding about:

• • how multinational and locally-grown businesses are leveraging their existing talents and manufacturing bases to develop new products for both developed and developing markets while changing the abilities of individuals and communities throughout the world to raise their standards of living and

  • how size reductions (and ultimately price reductions) of many high end medical devices are increasing accessibility to higher quality diagnostic capabilities and care in rural areas while changing market dynamics everywhere as individuals and small clinics become able to purchase equipment that was previously ‘too expensive.’

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In the ebb and flow of life, the only ‘constant’ is ‘change.’

(Author unknown)