How Trickle-Up Innovation Will Change the World

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How Trickle-Up Innovation Will Change the World

The traditional model of innovation in business is that new products are created and distributed in the West.  When the market for the product matures, or even declines, the product is finally distributed in the Third World, often in some less desirable form.  But as a recent article in Fast Company1 highlights, a new phenomenon called trickle-up innovation is emerging.  BusinessWeek2 recently described it as "creating entry-level goods for emerging markets and then quickly and cheaply repackaging them for sale in rich nations."  That, of course, is an abrupt reversal of the traditional model.

For example, General Electric developed a cheap, portable electrocardiograph machine for use in remote areas of India and China.  Released in 2008, the $2,500 device weighs 50 percent less and costs a fraction of typical ECG machines.  In 2009, it began introducing the machine, called the MAC 800, in the United States. 

That's just one example.  As noted in the book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits3 by C.K. Prahalad, several companies, including Microsoft, Nokia, and Procter & Gamble, are jumping on the "trickle-up bandwagon."

One version of this model relies upon harvesting ideas from low-income nations and then adapting them to Western marketplaces.  For example, Xerox hires so-called innovation managers who seek out products from start-up companies in India.  Hewlett-Packard owns a research lab in India that is working to adapt African and Asian mobile phones for developed countries. 

Consumer goods designed for developing markets are migrating up-market, too.  Nestlé makes a dried noodle meal called Maggi for low-income areas of rural Pakistan and India.  It has recently started selling Maggi as a money-saving, nutritious food in Australia and New Zealand, as well.  Procter & Gamble, which developed its Vick's Honey cough syrup for the Mexican market, is now introducing the product in Europe and the U.S.

Not every organization, though, is flexible enough to embrace trickle-up innovation.  According to an article in Strategy + Business,4 legacy companies are often hampered in this new type of innovation because of an ossified mind-set.  They remain fixated on the business practices that have been successful in the past and believe that only those methods will work in the future...

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