What did I mean? An individual diver's scores for an event are a factor of two things: how well they execute their dive, and the "degree of difficulty" of their selected dive. The more twists and turns you have, the more points you can earn.

You don't get points for degree of difficulty for innovation. You get points for producing profits. Sometimes you do have to take higher risk, more uncertain approaches to produce those profits. But the goal isn't making things any more difficult than they need to be. The goal is to find the quickest, cheapest path to profits. If that involves imitation, then so be it.

My diving quip was an homage to Michael Lewis's book on baseball, Moneyball. It describes how the Oakland Athletics exploited market inefficiencies to compete against baseball teams with more financial resources. Early in the book there was a discussion between A's general manager Billy Beane and his team of scouts. They were discussing a prospect, a University of Alabama catcher named Jeremy Brown. The scouts didn't like Brown, pointing to his "soft body" and "low energy." Beane's analytical team loved Brown, citing some of his performance statistics. A debate ensued. Beane shut discussion down with a succinct phrase that summarized his organizational philosophy: "We're not selling jeans here." Brown became the 35th overall selection in the amateur draft.

Beane's point was that he didn't care about a player's physical attributes; he cared about whether the player would perform. And his philosophy was that statistics provided a better way to identify high performers than a player's physique or mental makeup. In this case, the scouts might have had a point — Brown ended up with a grand total of 11 major league plate appearances (where he did bang out two doubles and a single). Nonetheless, Beane's admonition is a useful reminder that innovation leaders should make sure they are asking the right questions and focusing on the right variables.

I generally ask five questions to determine whether an innovator has the seeds of a transformational idea:

1. Is there an important problem that customers can't address because existing solutions are expensive or inconvenient? In Innosight's parlance, is there a high-potential "job to be done"?
2. Is there a disruptive way to solve the problem in a simpler, more convenient, or more affordable way?
3. Is there a plausible hypothesis about an economically attractive, scalable business model? I don't need a detailed financial model (because I know it's wrong anyway), but I need a sensible story that's at least conceivable — and a plan to turn that plan into reality.
4. Does the team have the "right stuff" to course correct based on in-market learning? Remember, the odds are high that the first idea isn't quite right. A team that is dogmatic and keeps trying to prove it is right is the wrong team for many innovation efforts.
5. Can early profitability be a choice? Ultimate success requires a profitable model. The sooner there is a line of site to profits, the better. You might make a strategic decision to be unprofitable by investing in marketing, sales capability, and so on, but at least you know the core part of the model works.

Have you heard any good innovation one liners lately?

There is an overlap between reverse innovation and disruptive innovation but not a one-to-one relationship. In other words: Some, but not all, illustrations of reverse innovation are also illustrations of disruptive innovation.

A reverse innovation, very simply, is any innovation likely to be adopted first in the developing world. It is so called because historically nearly all innovations have been adopted first in rich countries. We argued that reverse innovation will become more and more common, and that it presents a formidable organizational challenge for incumbent multinationals headquartered in the rich world. We also explained an organizational model for overcoming that challenge.

A disruptive innovation has a particular dynamic that endangers incumbents. The incumbent’s product has two primary dimensions of merit, A and B. (For example, A could be quality and B could be speed of delivery.) Mainstream customers are mostly interested in A but there is a minority customer set that values B more than A. The disruptive innovation, at launch, is weak on A but strong on B. As such, it attracts only the minority. Because mainstream customers don’t want it, incumbents tend to ignore the new entrant and the new technology. But over time, technology improves, and the innovation gets better and better at A. Eventually it meets the needs of mainstream customers on dimension A, and, since they also place at least some value on B, they start choosing the new product. The incumbent is suddenly disrupted; they have ignored the new technology all along.

In Christensen’s famous study of the disk drive industry, A was the capacity of the disk drive and B was the size of the disk drive. Christensen showed that new entrants repeatedly disrupted incumbents by introducing smaller disk drives with lower capacity. Initially, mainstream customers were uninterested. They needed more memory, not less. But, over time, the capacity of the smaller drives went up and up until mainstream customers were interested.

So, what is the relationship between the reverse innovation and disruptive innovation? We see three primary situations that create the possibility of reverse innovation. Only the first is also an illustration of disruptive innovation.

The first is created by the income gap between rich countries and developing ones. Because per-capita incomes are so low in the developing world, conditions are ripe for innovations that offer decent quality at an ultralow price — that is, a 50% solution at a 5% price. At first, the 50% solution is unattractive in the rich world, but eventually, performance rises to the point that it is attractive in the rich world. This is clearly also a disruptive innovation story, where A is performance or quality and B is price.

The second is created by the infrastructure gap between rich countries and developing ones. Most of the infrastructure (energy, transportation, telecom, and so forth) in the developing world has yet to be built. As such, demand for new infrastructure technologies is much higher in the developing world than it is in the rich world, where demand for infrastructure is created primarily by the need to replace existing infrastructure. This is not an illustration of disruptive innovation.

The third is created by the sustainability gap between rich countries and developing ones. Many developing nations are confronted with environmental constraints far sooner in their path of economic development than rich nations were. Desalination technologies, for example, are likely to be adopted in places like Northern Africa before the desert southwest in the United States needs them. This is also not an illustration of disruptive innovation.

Whether an innovation is reverse, disruptive, or both, it is difficult for an established organization to execute. For reverse innovations, companies must overcome resistance to shifting power and control away from headquarters, and they must be willing to reshape the organizational models and expectations of in-country teams. For disruptive innovations, companies must overcome the initial resistance to prioritizing an investment that does not interest mainstream customers. And, even if they do invest, they must overcome the fear that the new product will eventually cannibalize the existing business.

Vijay Govindarajan is the Earl C. Daum 1924 Professor of International Business and director of the Center for Global Leadership at the Tuck School of Business at Dartmouth and is professor in residence and chief innovation consultant at GE. Chris Trimble is on the faculty of Tuck and consults to GE.