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Reverse innovation for the new mobility

In: Draft White Paper Developed for the Rockefeller Foundation (2013), Ross School of Business Working Paper, no. 1193

Authors: Peter Adriaens, Deborah de Lange, Susan Zielinski

The confluence of increasing urbanization with climate change, and the associated need to decarbonize the economy, is driving urgency for the global adoption and diffusion of sustainable scalable solutions. IT-enabled, multi-modal transportation, often referred to as the “new mobility�, is making inroads in developed and emerging economies alike. Local emerging market entrepreneurs as well as multinationals, seeking transformative innovation strategies to open up new markets are engaging in this rapidly growing industry. This has created an opportunity for innovative indigenous firms in emerging economies to either scale internationally on their own or partner with (often Western) multinationals to define frugal products, services, and business models that address recession-constrained Western markets. Part and parcel to this shift in global engagement is the emergence of a new product development strategy, referred to as reverse innovation (RI). Here, we seek to explore the nexus of RI and the new mobility opportunity, by explicitly recognizing the spillover effects of knowledge transfer and economic development through local firms and, more broadly, the supply chains that internationalize. In fact, some Western companies are outsourcing RI to emerging economy partner firms, thus shifting historical cost-based relationships to value-based engagements. At the core, lies a radical shift in how products and processes are designed, to include: stripping out complexity without sacrificing customer experience; a high degree of customization not through features but by re-using underlying platforms; and customization at the latest stage of the value chain so as to not disrupt materials, components, and subsystems. The potential implications of RI designs and business models on the adoption of frugal innovations in the West are explored, and paths to engaging entrepreneurs in emerging economies are highlighted.

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