for say, the American mass market, make a few changes,

and make it work for the Indian mass market.

But that hasn't stopped multinationals from trying.

That's the model global companies have followed

for decades, to appeal to customers in emerging markets,

they water down products designed for developed markets.

However, a better way is for global companies

to develop brand new cost effective products

inside the countries where they'll actually be used.

For example, General Electric developed

several medical devices in emerging markets

that were a little simpler and a lot less expensive.

In China, they developed a compact portable ultrasound

machine from scratch.

It cost just $15,000 compared with over $100,000

for their high end model.

Although it didn't have all the bells and whistles,

it was a hit in China's rural clinics.

That's when G.E. realized that American doctors could use it

too.

Not to compete with the more expensive product,

but for new uses.

In situations where portability was important

or space was tight.

This is what Vijay Govindarajan and Chris Trimble

call reverse innovation.

Not only does it result in products

that address market needs in emerging economies,

it also creates new sales opportunities

in developed ones.

Reverse innovation can be tough to pull off

but there are two reasons to try.

First, because emerging markets have larger populations

and lower per capita GDP's they're

especially sensitive to many of the forces affecting

competition in global markets today.

Products built for emerging markets

are more likely to be well suited

to issues that ultimately affect every market.

Second, as emerging market companies grow,

they'll be looking to export their own products often

at much lower prices, which incumbent firms will

find tough to beat.

Practicing reverse innovation today

will help protect incumbent firms

from being disrupted by low cost competitors tomorrow.