Reverse Innovation

Where are the opportunities for the physical therapy industry?

By Jeffrey R. Immelt, Vijay Govindarajan, and Chris Trimble | Reviewed by David Park, MBA

I have often wrestled with this question after listening to the keynote address at an executive forum delivered by Vijay Govindarajan, a business professor at Dartmouth and a New York Times and Wall Street Journal bestselling author.

Reverse innovation is the process of developing ideas in an emerging market and coaxing them to flow uphill to Western markets. In the seminal article, “How GE Is Disrupting Itself,” Govindarajan opens with General Electrics’ May 2009 announcement to invest $3 billion over the next six years to create at least a hundred health care innovations that would dramatically decrease costs, increase access, and improve quality. During the announcement, General Electric (GE) showcased two products—a $1,000 handheld electrocardiogram device and a portable, PC-based ultrasound machine with an entry price of $15,000—developed in India and China, respectively.

These two products represent a paradigm shift from multinational companies’ traditional model of developing high-end products at home and adapting them for other markets around the world. GE understood that in China, 90 percent of the population relies on poorly funded, low-tech hospitals or basic clinics in rural villages; therefore, its high-end ultrasound equipment in sophisticated urban imaging centers provide no value if patients are too sick to travel or if centers are not easily accessible. Consequently, GE developed low-cost, portable, ultrasound equipment specifically for the local Chinese market, which valued the aforementioned requirements over highest image resolution and other features originally developed for Western markets. Six years after their launch, portable ultrasounds were a $278 million product line for GE, growing at 50 percent to 60 percent per year, while many of its other product lines are growing at single digit rates.

We can learn the most about how profits are created by studying profitable companies—by figuring out their business models and then thinking about how they might apply elsewhere. The key to executing Reverse Innovation for GE was to create local growth teams that have profit and loss responsibility and power to determine which products to develop and how to make, sell, and service them, as well as access to its global resources. Local growth teams are the agents that seek to understand their specific market needs and provide value to its customer segment. This is how GE managed to create brand-new markets for the rest of the world. What business insights can we take away from GE’s Reverse Innovation?

I see the similarities between local growth teams and private physical therapy clinics. As business owners, we need to seek to understand the specific needs of the population that we serve. For example, what are the top three needs of the community that we serve? How can we market ourselves and provide our services? Are our clients too frail to travel or is access to our clinics too inconvenient? Should we take our services to where our clients are?

One possible application of this concept and a brand-new market (or expansion) for private practices is movement analysis for athletes. With increasing popularity and adoption of Sabermetrics, Moneyball concepts, the annual Massachusetts Institute of Technology Sloan Sports Analytics Conference, etc., data analytics is now an integral part of sports. Executives, trainers, and athletes are seeking a competitive edge by incorporating technology to produce and analyze relevant data for valuable insights.

Chris Powers, an associate professor in the Division of Biokinesiology and Physical Therapy at the University of Southern California, stated in his “Integration of STEM in Physical Therapy” presentation at the Combined Sections Meeting (CSM) 2015 that the ability to offer biomechanical analysis in clinics is a huge opportunity. As the director of the Musculoskeletal Biomechanics Laboratory at University of Southern California, he uses high-speed motion capture camera systems and other high-end technology equipment to research how altered kinematics, kinetics, and muscular actions contribute to lower extremity injury. While physical therapists at some universities and large performance centers can afford to spend hundreds of thousands of dollars for the highest resolution, research-grade motion capture systems, most private practices do not have access to similar objective movement analytics.

High-quality, high-priced motion-capture systems were designed for research or performance centers with large budgets. In the vein of reverse innovation, instead of using only live observation, we can now use tablets, smart phones, force plates, and other technologies to capture movement to diagnose, treat, assess, approve return to play, and improve performance in our sports clients. Using tools that provide much of the benefit to our patients at a lower cost to your practice is in keeping with the GE approach to innovatively building your market and growing your business.

David Park, MBA, is chief executive officer and co-founder of VirtuSense Technologies in Peoria, Illinois. He can be reached at davidp@virtusensetech.com.