That is the question posed by Prof. Vijay Govindarajan in Harvard Business Review. A short piece, co-authored with an undergraduate student, its basic premise is that for medical devices and other impedimenta of the health care industry such as diagnostic tests, there are benefits to launching in emerging markets first before entering the advanced first world markets. They end by saying:
Ironically, the fact that companies hesitate before developing for emerging markets creates a source of comparative advantage that startups can use to gain market share. Claro Dx developed a next-generation battery-powered reader the size of an iPhone to detect HIV, syphilis, and hepatitis, for example. Its older reader in U.S.-centered clinical trials for prostate cancer recurrence is the size of a desktop.
Startups can benefit from reverse innovation. Can readers think of other types of startups an emerging-market-first strategy might be applicable to (sic)?
This need not simply apply to cases of reverse innovation alone – that is, bringing innovations developed for emerging markets back to the developed world, take mobile money transfer systems and their region specific success. Considering this gives rise to one key factor that does not seem to be covered in this article. That is the role played by a vacuum in the operating environment. When something is missing in the system there is a gap or an opportunity space for an innovative solution to fill the need. An oft quoted example is the leapfrogging of landlines and communication infrastructure by mobile wireless devices now available in everyone’s hands.
In the sophisticated developed markets there are layers of legacy solutions or an established status quo which often act as barriers to entry, impeding the rapid uptake or even the introduction of some innovative product or service. Frontier markets on the other hand, such as those offered by the rapidly evolving consumer markets in Sub Saharan Africa can offer some unique opportunities such as:
Building a new brand or awareness of an entirely new product category – Huawei is a Chinese telecommunications equipment company well known for successfully taking on established players such as Ericsson and Nokia Siemens Networks. However it has no such reputation in consumer products such mobile phones until the launch of the low cost Android based smartphone, the IDEOS via mobile operators such as Safaricom in Kenya and MTN in Uganda. After seeing significant sales figures in Africa, it has just announced the launch of a low cost smartphone in Germany under the IDEOS name.
Innovative solutions for resource scarcity – Many of the challenges posed by the emerging market environment such as need for low cost, robust solutions with innovative business models and distribution channels also act as a resource constrained crucible for testing new products and services. Samsung has launched a solar powered netbook in Africa first before taking it the developed world.
Leapfrogging infrastructure and services – While MPesa may not be as easily portable elsewhere, its the first and foremost example of a service filling a vacuum while inspiring major global efforts to find similar solutions for other regions. Others are more common in the mHealth space and here the argument is better articulated by this article “Developing countries offer lessons for the West“,
Mobile health applications from developing countries have the same potential to penetrate developed markets. In developing countries, these applications span a wide range of activities, including data collection, disease surveillance, health promotion, diagnostic support, disaster response and remote patient monitoring,” Sandhu writes.
But it is an unrealized potential, according to Sandhu. “Although myriad mHealth programs are operating in developing-country markets, only a few prominent mHealth innovations in the United States have been imported from abroad. Among the most notable are Vitality GlowCaps and GreatCall Medication Reminder Service, both of which are working to improve medication adherence,” he writes. According to Sandhu, both are outgrowths of technology that originated in South Africa. The Text4baby messaging service for pregnant women and new mothers was modeled after VidaNet in Mexico and Mobile 4 Good Health Tips in Kenya, though, like GlowCaps and GreatCall Medication Reminder Service, it is not an exact replica of the original. This is intentional.
The goal should not be to copy programs exactly, but rather to adapt global innovations for the developed-world market,”
But all of these are centered around information technology and mobile communication – do we see the potential for innovations dispersing out of Africa in other areas such as renewable energy solutions or consumer products for the home or are we seeing the first signals where Africa will make its mark globally?