Analysing Reverse Innovation: A Theoretical Appraisal and the SAP Hybris Case

Elisa Ballerio

Student thesis: Master thesis

Abstract

This Master Thesis is takes into consideration the new strategies that are being developed in order to enable multinational companies to profit from untapped and ignored markets at the Base of the Pyramid of developing countries. In particular the main focus is on Reverse Innovation, a theory developed by Immelt, Govindarajan and Trimble in 2009. In this work, the theory is taken into consideration as a new way to innovate using a different market perspective and meeting specific and peculiar needs of people living in poor conditions. However, considering the fact that many theories have been conceived in the past few years addressing the problem of innovating for developing countries, Reverse Innovation can be easily confused with other concepts, such as Frugal, Jugaad and Disruptive Innovation. This is the reason why the first aim this Master Thesis pursues is to try to define similarities and differences among the concepts of Reverse, Frugal, Jugaad and Disruptive Innovation, developing a framework that allows to distinguish between the different conceptions. In particular, after analysing the different aspects of the aforementioned theories, the following conclusions are reached. Reverse Innovation has a double disruptive potential, as it can be new-market disruptive for emerging economies and, at the same time, low- end disruptive for developed ones. In addition to that, according to the similarities in the development processes, it might be stated that Reverse Innovation can be defined as a subset of Frugal Innovation. Jugaad Innovation theory might also be seen as a subset of Frugal Innovation, but it is very different with respect to Reverse Innovation as the former highlights the creative and innovative approach of local, resource-constrained entrepreneurs, whereas the latter focuses on strategic paths undertaken by big, multinational companies. The second aim of this Master Thesis is to try to address the lack of convincing evidence to prove that Reverse Innovation can actually create new markets and profits in developed country. The so-called “closing the circle” part, is argued, cannot be thoroughly assessed because it is based on a very strict market-based view, as it only relies on the exporting of the new technology from developing to developed countries. In order to support the theory presented by von Zedtwitz, Corsi, Veng Søberg, and Frega (2015), who argue that the whole innovation process should be taken into consideration when assessing whether an innovation is Reverse or not, a case study regarding India Consumer Product is presented. This aims at supporting the idea that Reverse Innovation is a global innovation that, during the process, has a reversal of the flow of innovation from an emerging to an advanced economy. Thanks to a new focus on SAP Hybris YaaS, an open micro-service platform developed by SAP Hybris, it is possible to prove that SAP enables other businesses to pursue their own Reverse Innovations by allowing a continuous reverse, throughout the whole innovation process, of the flow of innovation from an emerging to an advanced economy in the ideation phase, in the development phase and in the market phase. Indeed in the case of India Consumer Product, the company exploited the reversal of the flow of knowledge and information on SAP Hybris YaaS to develop an e-commerce platform specifically tailored to the Indian market. This made India Consumer Product able to rely on local shops to sell its products even in remote areas, facilitating price and product strategies depending on market conditions and competitors’ moves observed. Such an e-commerce platform can be defined as a Reverse Innovation developed through SAP Hybris YaaS as both in the ideation and in the development phases there were several and frequent reversal in the exchanges of information and knowledge among people from developed and from emerging countries.

EducationsMSc in Management of Innovation and Business Development, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages79