Marco Zeschky

Frugal Innovation in Emerging Markets

OVERVIEW: The quality and number of innovations developed by multinational companies from emerging countries is increasing dramatically. In particular, frugal innovations—“good-enough,” affordable products that meet the needs of resource-constrained consumers—have created tremendous demand in emerging markets. While the development of such products has largely been the domain of local corporations in emerging countries, Western corporations have recently started to engage in frugal innovation as well. This is a difficult task for Western firms, however, because their business models and organizational structures are traditionally designed for the development of advanced products for the affluent few at the top of the economic pyramid. Using Swiss weighing-instrument manufacturer Mettler Toledo as a case example, this article suggests that frugal innovations are largely developed by local R&D subsidiaries of Western firms in emerging countries. A substantial degree of autonomy for those local R&D subsidiaries, including product-portfolio responsibilities, can facilitate the development of frugal innovation.

Opening Up the Solution Space: The Role of Analogical Thinking for Breakthrough Product Innovation

The purpose of this paper is to investigate the approach of analogical thinking for product innovation. We collected data on projects from four engineering firms where analogical thinking was successfully applied for the development of breakthrough innovations. Results show that abstracting the problem by in-depth technical and contextual analysis is pivotal when searching for analogical solutions. Furthermore, the chances of identifying highly novel analogous solutions are increased if the problem is abstracted to the level of its structural similarities to other settings. We also found that the identification of structural similarities is supported when firms not only rely on the cognitive abilities of the individual but also employ an active search based on abstract search terms. Based on these insights, we propose a process model for the development of product innovations by means of analogical thinking.

Organising for reverse innovation in Western MNCs: the role of frugal product innovation capabilities

The burgeoning phenomenon of reverse innovation – i.e., innovations which are adopted first in the developing world – has attracted much academic and managerial attention. However, while existing literature has extensively discussed the risks and opportunities of reverse innovation for Western multinational companies (MNCs), there is little empirical insight into the question of how reverse innovation is organised in the firm. This article investigates how Western MNCs of the healthcare and electronics industries organise their international R&D for reverse innovation. Based on the insights of four case studies, we find that the location of the product mandate (i.e., at the headquarters or the subsidiary) is independent of the MNC’s ability to generate reverse innovation. In contrast, we find that the design and development of reverse product innovations are always located in the MNC’s subsidiary based in a resource-constrained environment. We argue that the development of frugal product innovation capabilities is a critical success factor in the development of reverse innovation. The article holds important implications for theory and management practice.

The Innovation Process: Sparking Creativity by Cross-Industry Analogies

From invention to innovation – the distinction of the two concepts is critical if firms are to successfully introduce new products into the market. Invention, that is, a new solution to a problem – be it a technical concept, an outline of a manufacturing process, or a service concept – only transforms into an innovation if it takes the form of a product for which the market is willing to pay. The innovation process is a structured approach that links invention and innovation and helps developing early stage ideas and concepts (i.e., inventions) to marketable products, processes, or services. Today, the innovation process is a constituting part of every successful company. With respect to the St. Gallen Business Innovation framework, the innovation process is the vehicle by which products and services as well as entire processes and business models can be systematically innovated.

Out of Bounds: Cross-Industry Innovation Based on Analogies

Individual and collective creativity are vital preconditions for new ideas in the early phase of the innovation process, and therefore, for any physical product development activities. The cross-industry innovation process is an approach effective at stimulating creativity and making systematic use of already existing solutions from other applications or industries in order to develop entirely new ideas. Analogical thinking is a creative method applied to a problem that needs a solution and takes place if a familiar problem is used to solve a novel problem of the same type. Near analogies are much easier to identify than far analogies, as near analogies often entail obvious surface similarities. However, the combination of more distant pieces of knowledge, such as structural similarities, often results in a higher degree of novelty. Four real-life cases demonstrate how cross-industry innovation has been applied successfully for the development of technological breakthroughs and radical innovations.