Reverse innovation — a concept coined in a 2009 Harvard Business Review article co-written by GE Chairman and CEO Jeff Immelt and GE’s chief innovation consultant Vijay Govindarajan — has entered the global business lexicon. Practiced by GE in recent years, it is now becoming a standard approach for other global companies, even earning a slot on HBR’s most influential management ideas of the decade. GE views reverse innovation as something bigger than a business strategy — it’s a unique vantage point into human need, and an important aspect of corporate citizenship.

Traditionally, global companies have developed high-end products and adapted them for emerging markets. However, reverse innovation turns this model around, instead building local technologies within developing regions, then distributing them globally. Rather than just selling to a growth market, reverse innovation allows companies like GE to participate in the market directly. This augments our ability to determine and address real human needs — creating local jobs and developing human capital in the process.

The process of reverse innovation begins by questioning the assumptions typically associated with richer countries, and instead determining what matters most to an emerging market. In countries like India and China, where per capita incomes are smaller, customers often prefer decent performance at an ultralow cost. This insight led a GE Healthcare team in China to develop a U.S. $1,000 handheld electrocardiogram device and a U.S. $15,000 portable ultrasound — each a fraction of the respective technology’s typical price. Given these markets’ infrastructure challenges and high rural populations, such products have helped meet critical human needs — and demand has followed.

Following the success of these technologies, the second half of reverse innovation has emerged: the marketing of such products to developed countries. In the United States, with increased access to care and reduced reimbursement likely on the horizon, healthcare technology at a lower price point will be in high demand. Products like a heated bassinet, developed by GE in India, also has potential in inner-city America, where cold-related infant deaths remain a concern.

For reverse innovation to work, a company needs a thorough understanding of human need within an emerging market. At GE, that means all resources and people devoted to such a project must be located and managed within that market. The decisions involved — which products to pursue, how to make and sell them, and how to provide ongoing service — all depend on a deep knowledge of how a culture operates and does business. So local teams create the necessary structures, make the decisions, and own the responsibility for their products’ success.

In turn, reverse innovation benefits the communities where GE does business. GE attracts top talent in growth markets, while developing human capital within sophisticated realms of management and technology. The creation of thousands of jobs in the GE Shanghai and Bangalore research centers are testament to this local benefit.

While examples of reverse innovation have already shown promise, its ultimate potential remains unseen. However, when viewed as both a business strategy and an opportunity to be a more informed and engaged corporate citizen, the concept holds promise for developed and growing regions alike.