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HBR’s 10 must reads on innovation
Dis uptingHow GE is
itself
Vijay Govindarajan Chris TrimbleJeffrey. R. Immelt
Tuck School of BusinessDartmouth College
Tuck School of BusinessDartmouth College
GeneralElectric
Authors
The full article is available at Harvard Business Review
Technology commercialization managerExploit Technologies Pte Ltd (ETPL)Agency for Science, Technology and Research (A*STAR, Singapore)
B. Eng & Ph.d (Engineering)Nanyang Technological University Singapore
M.B.A.INSEADFontainebleau, France
Presentation by
LI Wei
Chapter one: “Reversed Innovation”
2009General electric announced
$3 billion
100Healthcareinnovations
lower costsincrease access improve quality
handheldelectrocardiogram
device
portableultrasound
machine
$1,000 $15,000
They are revolutionary
not just because
small size lower price
But alsobecause
their innovation process
they are originally developed for rural area of India and China, and are
now being sold in the United States.
This process is called
“Reversed Innovation”
For decades, GE and other leading technology companies developed high-end products at home countries
and distributed them globally with some adaptations to local markets
$$
$$$
$
a process known as
“glocalization”
$$
$$$
$
in “reversed innovation”, products were created specifically for emerging markets
and brought back into wealthy markets
$
Chapter two: “It is not optional, it’s oxygen”
Glocalization has helped GE grow dramatically outside the United States
GE’s revenuesoutside US
1980 2008
$97 bil
$4.8 bil
> 50% of GE’stotal revenue
However, glocalizationlimited the company to skimming only the top of emerging markets
Photo credit: iamcitrus ©123RF
and ignored their even faster growing middle or lower-end
customer segment
Photo credit: iamcitrus ©123RF
More importantly, new competitors from emerging market will innovate and take their product global
By introducing products with a new price-performance paradigm
the emerging giants could even destroy GE
isn’t optional, It’s oxygen Reversed innovation
Chapter three: “Five critical principles”
GE has evolved to
maximize
Power and P&L responsibility were concentrated in the developed world
It is extremely difficult to implement a successful
reversed innovation
GE overcame the difficulties
$278 millionglobal product line
A portable ultrasoundmachine for China
rural market
GE achieved that by using
local growth team model
GE achieved that by using
local growth team model
critical principles
5
Shift power to where the growth is1
Wu Xi, ChinaA new unit was created, which is independent from the existing three ultrasound business units
The team was given the power to develop their own strategies, organizations and products
Wu Xi, China
Build new offering from the ground up2
The compact ultrasound
from scratch was developed almost
although it was having support from an existing
project in Israel
The concept of the Israel project gained little interest in GE
but the team in China was encouraged to pursue the concept further for the compact ultrasounds.
Build the local team like a new company3
011glocalization010010100010111010101000101110010glocalization010101000101010101010101010100glocalization0101000101111101111010100101000100010glocalization10001111010010101111101001glocalization01010101000100101110100111001000111100100011glocalization010010100010111010101000101110010glocalization010101000101010101010101010100glocalization0101000101111101111010100101000100010glocalization10001111010010101111101001glocalization01010101000100101110100111001000111100100011glocalization010010100010111010101000101110010glocalization010101000101010101010101010100glocalization010100110111101110
GE’s organizational “software” all evolved to support glocalization
Leaders of Local Growth Team need to rewrite the software to support
zero-based innovation
They managed its own complete value chain
local recruitment
used local dealers to reach china’s vast and fragmented rural markets
built in-country teams to provide quicker and less costly service
Customize targets and metrics4
different criteria are used to evaluate Local Growth Team in China
Product has shorter government approval process in china
Shorterproduct development cycle
more staffsBecause of lower salaries
and more demanding service
relative to the number of installed machines
report to someone high in the organization5
Even when it was tiny, the team in China reported
directly to CEO
He was the key person to mediate conflicts between the team and the global business
connect the team to
resource
and to build global market for the portable ultrasound
Chapter four: “There is still a long way to go”
GE now has established a dozen local growth teams in China and India
India China
While some businesses have been delivering the expected results
others have been less enthusiastic
The vast majority of GE’s resources are still devoted to initiatives for
developed countries
Changing the mind-set of managers is GE’s biggest challenge
