The art of management of reverse innovation - A complexity-based interpretation

By Harri Jalonen.

 

Reverse innovation is an innovation for the poor that potentially transforms the lives of the people in rich countries (Govindarajan & Trimble 2015). A car that costs only 2000 USD or a portable ECG for less than 1000 dollars are tempting value propositions, which will also be noticed in economically developed countries. Innovation is called ‘reverse’ as it challenges many assumptions related to science-intensive and technology-oriented innovations. It does so, because it praises “less is more” thinking. A history of innovation tells a story where scientists make breakthroughs by continuously and rigorously exploring the unknown. Though serendipity (i.e. the accidental discovery of something valuable) occasionally plays important role, the innovation process itself has been seen as consisting of sequential activities such as knowledge gathering, persuasion of key stakeholders, making ‘go’ or ‘no-go’ decision and in case of ‘go’ decision the implementation of innovation (Rogers 2003). The underlying assumption is a relatively clear distinction between the creation of innovation and the adoption and diffusion of innovation. The problem arises when the creators’ mindsets contradict with the unique economic, social and technological contexts of adoption and diffusion of innovation (Winter & Govindarajan 2015). Concepts of open innovation (Chesbrough et al. 2006) and user innovation (von Hippel 2005) share some similarities with reverse innovation, for example, as they both pay attention to the role of end users and the interactions between ‘innovators’ and their environment. However, this chapter builds on the conviction that the black box of reverse innovation cannot be opened with the concepts developed mainly for the world of scientific and technological innovations. Therefore, in order to shed light on the black box, this chapter leans on complexity thinking and particularly on its metaphorical and critical pluralist schools (Richardson 2008). Complexity thinking refers herein to a multidisciplinary approach in which comprehensive, holistic thinking replaces a worldview where simplifying causal relations and reductionism as well as a linear reasoning, control over matters and predictability are emphasized (cf. Mitleton-Kelly 2003, Krakauer 2019). Complexity thinking provides useful approach to (reverse) innovation, for example, as it helps to understand the emergence (the whole which is more or less than the sum of its parts) of innovation through the process of self-organization (spontaneous process consisting of phases such as production of uncertainty, chaos, reduction of uncertainty and, finally, new organization). It also helps to understand why (reverse) innovation usually do not spread like diseases (Centola 2018) and why good intentions may even sometimes lead to detrimental consequences (e.g. the emergence of evil, Bella 2006).

The chapter is organized as follows. Section 1 introduces the concept of reverse innovation and identifies its ecological niche in the innovation literature. In addition, Section 1 provides some real-life examples of reverse innovations from various domains. Section 2 provides introduction to complexity thinking and its core concepts (i.e. self-organization, emergence, connectivity, interdependency, co-evolution, attractor, nonlinearity, diversity and feedback). The Section 2 also includes a brief review of literature on how complexity thinking has been used in innovation studies. Section 3 suggests a complexity-based framework on the art of the management of reverse innovation. The aim is not to create theoretically robust framework to be tested empirically, but to explore through the ‘complexity lenses’ how to spur innovation that meet the users’ needs, but not end up on the shelves of companies’ flagship stores. Adapting Sarasvathy (2001) the framework builds more on effectuation than causation logic. Effectuation means the process where a set of means are given and focus is on selecting between possible effects that can be created with that set of means, while in causation a particular effect is taken as given and focus is on selecting between means to create that effect.

The framework consists of several propositions such as

1. i) trust promotes sharing both what is known and what is not known,
2. ii) diversity builds both on attributes and relations,

iii) survival is the acid test of adaptability and it can be supported through creating a culture of learning by doing,

1. iv) strategic use of metaphors manifest themselves as attractors that can reveal potentially fruitful connections,
2. v) adoption and diffusion of reverse innovation is a complex process which is influenced less by the information available and more by social norms common in particular context,
3. vi) the focus of management should be shifted away from a delivery capability to interaction capability and vii) of particular attention should be paid on the emergence of evil.

The Section 4 concludes the chapter with some practical suggestions and key takeaways.

References

Bella, D.A. (2006) Emergence and evil. Emergence: Complexity and Organization, 8(2,) 102–115.

Centola, D. (2018). How Behavior Spreads. The Science of Complex Contagions. Princeton University Press, Princeton, NJ.

Chesbrough, H., Vanhaverbeke, W. & West, J. (2006). Open Innovation: Researching a New Paradigm. Oxford University Press, Oxford.

Govindarajan V. & Trimble, C. (2012). Reverse Innovation. Create far from Home, Win Everywhere. Harvard Business School Publishing, Boston, MA.

Krakauer, D. C. (Eds.) (2019). Worlds Hidden in Plain Sight. The Evolving Idea of Complexity at the Santa Fe Institute 1984-2019. The Santa Fe Institute Press, Santa Fe, NM.

Mitleton-Kelly, E. (2003). Ten princuples of complexity and enabling infrastructures. In Mitleton-Kelly, E. (eds.) Complex Systems and Evolutionary Perspectives on Organizations: The Application of Complexity Theory to Organizations, 23-50. Pergamon Press, Amsterdam.

Richardson, K. A. (2008). Managing complex organizations: Complexity thinking and the science and art of management.  Emergence: Complexity and Organization, 10(2), 13–26.

Rogers, E. (2003). Diffusion of Innovations. (5th edition, 1st edition 1962). Free Press, New York, NY.

Sarasvathy, S. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of Management Review, 26(2), 243-263.

Von Hippel, E. A. (2005). Democritizing Innovation. MIT Press, Cambridge, MA.

Winter, A. & Govindarajan V. (2015). Engineering reverse innovations. Harvard Business Review, July-August 2015, 80 – 89.