Use Reverse Innovation to Inspire Ethonomics

Last week I wrote about reverse innovation. We often witness this in other countries where the local conditions--whether due to political uncertainty, low local income levels, or unfavorable geography-- seem like a hindrance to innovation to the "established players" but serve as a source of unusual inspiration to the local entrepreneurs who use these conditions to come up with ideas that are truly unorthodox.

This reminds me of a company I started covering back in August 2009, Husk Power Systems, which is bringing light to rural people in India by using locally grown rice husks to create electricity. Two young entrepreneurs saw a need, developed the technology and found ethonomics, a profitable way to serve a greater good.

In the book "Start-Up Nation" by Dan Senor and Saul Singer, of the many "economic miracles" they identify taking place in Israel, a story of a company called Better Place captured my attention.

Better Place creates systems and infrastructure that support the use of electric cars. The company was built on the premise that just because the current car battery technology is still in its infancy, it doesn't mean it has to stop us from buying an electric car. The company's founder Shai Agassi realized the problem wasn't in the battery; it was in the way we were thinking about the logistics.

By creating a "smart grid" of battery-charging terminals and battery-switch stations in Israel, the shortcomings of the current battery would become a non-issue, making electric cars not only an attractive alternative but a preferable option for the consumer.

Soon after its founding a few years ago, Better Place raised $200 million in funding, making it the 5th largest start-up in history. It now has presence in China, Japan, Australia, the U.S., Canada, France and Denmark and is on its way to deliver on its initial mission: to free the world from dependency on oil.

And this brings us back to our initial questions: why was Better Place born in Israel? Why didn't the car maker Tesla Motors, for example, with a deep tradition in electrical engineering, come up with this idea?

Clearly, freeing Israel from a dependency on neighbor-produced oil got many people in the country excited. The next reason was size. Due to the country's small size and its hostile relationship with its neighbors, Israelis are unable to drive beyond their national borders. This makes Israel the ideal setting to implement Better Place's idea. The number of battery swap stations the company would have to build-out early on would be limited and manageable for a start-up. According to Agassi, "Israel's adversaries had actually created the perfect laboratory to test ideas."

On Tesla Motors' Web site it says, "If [Nikola Tesla] were alive today, [he] would look over our 100 percent electric car and nod his head with both understanding and approval."

Tesla Motors came up with many innovative ideas in their own right ... but I have a feeling if a visionary like Tesla were alive today, he would have moved on from trying to design the best battery in the world to a more pressing problem--creating a distribution grid that would make the logistics of driving electric cars not only feasible but also seamless and preferable.

Ask yourself the questions below to see how you can think of unorthodox business ideas that will catch your competitors by surprise:

  1. What are the three things that are the biggest challenges to your industry and what innovation could you come up with if you were asked to break all three?
  2. Where are your competitors pointing their eyeballs and what would you discover if you looked the other way?
  3. What greater problem do you see facing your clients, and how can solving another issue alleviate your customers’ concerns?

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1 Comments

  • Fred Patowski

    Better Place was actually started in Palo Alto, CA by an Israeli-American. Please fact check your claims