Reversing the Flow of InnovationДЇor decades glocalization, whereby innovations flow from rich to poor markets, has been a key part of multinationalsвЂ™ strategy.

(See the sidebar вЂњReversing the Flow of Innovation.вЂќ) The scaled-down infotainment systems had performed poorly. Harman had previously tried to move into these markets through glocalization, adapting its premium products for lower-priced segments. (Harman also has a consumer audio business and a division that makes sound systems for stadiums and auditoriums.) But because the high end had little room for growth or margin improvement, Paliwal sought new opportunities in emerging markets, where IndiaвЂ™s Maruti Suzuki and other manufacturers had achieved price points that would have been unimaginable in the developed world. The division had a 70% share of the market and accounted for two-thirds of the companyвЂ™s $3 billion in revenues. When Paliwal became the CEO of Harman, in 2007, its infotainment division, which makes factory-installed systems that integrate GPS navigation, music, video, cell phone, and internet, led in the luxury-car segment. The company is now looking at infotainment systems for motorbikes-a burgeoning market that represents a startling departure from anything Harman has ever attempted before. This approach ultimately enabled Harman to offer an unprecedented range of products along a continuum of markets, from low-end to luxury. Paliwal, rebranded the companyвЂ™s future, shifted the corporate center of gravity to emerging markets, ensured that legacy units continued to thrive, and averted conflict between old and new. A small team based in India and China set audacious goals, created a new organizational structure, and adopted new design methods, while the chief executive, Dinesh C. Harman did this using a two-part approach: radical change from below combined with astute leadership from above. (To understand why reverse innovation is on the rise, see вЂњHow GE Is Disrupting Itself,вЂќ HBR October 2009.) The U.S.-based business, known for ultrasophisticated dashboard audiovisual systems designed by German engineers, developed a radically simpler and cheaper way to create products in emerging markets and applied that method to its product-Вdevelopment centers in the West. That is why the reverse innovation in the automobile-infotainment division of Harman International is so impressive. Typically that involves major changes: throwing out old organizational structures to create new ones from scratch, revamping product-development and manufacturing methods, reorienting the sales force. It requires a company to overcome its dominant logic, the institutionalized thinking that guides its actions. The limits imposed by its traditional operations become surmountable, and the company can rethink all its products and attack new markets in search of growth.Д«ut few companies experience this kind of renaissance, because reverse innovation-developing ideas in an emerging market and coaxing them to flow uphill to Western markets-poses immense challenges. When a multinational corporation learns to generate successful innovations in emerging markets and then exports that knowledge and those innovations to the developed world, new business possibilities suddenly burst forth. Paliwal, rebranded the companyвЂ™s future, shifted the corporate center of gravity to emerging markets, made sure that legacy units continued to thrive, and averted conflict between old and new. The U.S.-based business, known for ultrasophisticated dashboard audiovisual systems designed by German engineers, developed a radically simpler and cheaper way of creating products in emerging markets and then applied what it had learned in the process to its product-Вdevelopment centers in the West. ThatвЂ™s why the experience of the automobile-infotainment division of Harman International is so impressive. Reverse innovation-developing ideas in an emerging market and coaxing them to flow uphill to Western markets-poses immense challenges, because it requires a company to overcome the institutionalized thinking that guides its actions.

Some kind of wonderful reverse