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Mobile’s Place within Reverse Innovation – The Oxygen for Future Growth

August 20, 2010

Oxygen-Cylinder

“The oxygen for future growth”, that is how Vijay Govindarajan describes Reverse Innovation in an article on Bloomberg Businessweek.

As described on Wikipedia, reverse innovation is:

A term referring to an innovation seen first, or likely to be used first, in the developing world before spreading to the industrialized world.

Mr. Govindarajan elaborates in the Bloomberg article that it’s not only needed to capture growth in emerging markets, but also to fuel growth in home- and developed markets.

What is an enabler and sustainer that can achieve reverse innovation from a
marketing point of perspective?

Exactly, mobile.

On the blog of Nielsen a recent article has shown that the demand for information and communication is being reshaped around the globe.

Relationship Internet-Mobile Penetration

The difference in Internet and mobile phone trends between developing and emerging economies is striking. As set forth on Nielsen:

Internet penetration for established economies follows a fairly typical pattern, rising with income levels, and requiring a threshold of around $20,000 of per capita GDP to achieve 50% penetration.

But this doesn’t go up for mobile, because:

First, mobile penetration often exceeds 100% because people own multiple mobile phones.

Second, while mobile phone penetration also rises with per capita GDP, it happens earlier, and faster, than Internet adoption. Instead of a $20,000 threshold, in many countries mobile phone penetration exceeds 50% with a per capita GDP as low as $5,000.

In middle income countries such as Russia and Saudi Arabia, mobile phone penetration rates are even higher than those of more advanced economies such as the U.S. and Canada because mobile is an affordable, accessible alternative to the Internet.

Altogether, the analysis on every dimension suggests that mobile communication is a truly disruptive phenomenon, acting on a global scale.

The following image shows the strategic role of Mobile and Internet in developed and emerging markets.

Strategic Role Internet and Mobile

It’s important to understand the substitutional character of the Mobile in emerging markets, whereas in developing markets, Mobile and Internet are complementary. Executing strategies via underdeveloped/unused channels, has implications for results and positioning.

In a previous article which I wrote on the core position the mobile is taking within marketing strategies, reverse innovation can be seen as the overarching business development/transformation.

Opportunities such as mCommerce, mobile banking, communication and more must be explored, just as Mr. Govindarajan mentions, to enter emerging markets but also being able to compete within developed markets.

In emerging markets these mobile developments are necessary due to the lack or slow growth of the Internet.

Because of this necessity, a refined application of mobile opportunities can be applied in the competitive, more multichannel focused developed economies.

Mobile (communication) is a disruptive phenomenon, acting on a global scale.

Two global leaders are Amazon and eBay, excelling in mCommerce and deriving more and more revenue from the mobile channel.

With such high figures coming from mCommerce, understanding and possibly executing reverse innovation is key.

From the reverse innovation point of perspective, there are numerous examples which you can find here.

Noteworthy examples are:

Nokia – New business models

Nokia’s classified ads in Kenya are being tested as new business models. Nokia also incorporated new features in its devices meant for U.S. customers after observing phone sharing in Ghana.

Renault – Logan

Renault designed a low-cost model of its brand Logan for Eastern European markets. It also sold in the Western European markets later on.

Microsoft – Starter Edition

Microsoft is using its Starter edition’s (targeted at not so technically savvy customers in poor countries and with low-end personal computers) simplified help menu and videos into future U.S. editions of its Windows operating system.

Whatever your business is, if you want to go global you need to understand Mobile. Be it from a revenue point of perspective or enabling point of perspective.

What’s your opinion on mobile and reverse innovation?

About the guest author

Gianluigi Cuccureddu

Gianluigi Cuccureddu SMP is a co-founder of Appmarket.tv and Chief Marketing Officer (CMO) at Agora Media Group LLC and a consultant for Traffic4u, one of Europe’s largest Online Marketing companies. He is recognized as a Senior Marketing Professional (SMP) titled by the European Marketing Confederation (EMC) quality label for experienced and qualified international Marketers. His area’s of specialty include Marketing Management, E-Business, Business Development, Internet Marketing, Corporate Blogging/ePublishing, Web 2.0/Social Media, Media Convergence, Augmented Reality and Social TV. Hook up with him at LinkedIn.

Author: Gianluigi Cuccureddu

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