Watch the vlog for “Reverse Innovation & Darwin”:

For decades, GE has sold modified Western products to emerging markets. Now, to preempt the emerging giants, it’s trying the reverse.

Thus starts an article entitled “How GE Is Disrupting Itseld” in this month’s Harvard Business Review by Jeff Immelt, Vijay Govindarajan, and Chris Trimble.

The article argues urges companies to “reverse innovation”, to develop products in emerging markets to distribute globally.

I commented on the theme in-depth in my book on fund distribution (www.globalfunddistribution.com). For some time now, the asset management industry globally has seen most of its product innovation originate in emerging markets, with the most successful and most creative solutions being exported globally.

GE takes it a step further by arguing that “if GE doesn’t master reverse innovation, the emerging giants (China, India et al) could destroy the company.

IBM CEO Sam Palmisano a few years ago promoted a “Globally Integrated Enterprise” (Foreign Affairs, Vol 85, No.3), which requires a fundamentally different approach to production, distribution and work-force deployment.

He warned against headquartered-centered views and “hierarchical, command-and-control” leadership.

They are on to something.

As recently pointed out in another blog, Europacorp, founded by Luc Besson, plans to produce more “melting-pot” movies, mixing actors and cultures in non-traditional ways, as a growing proportion of box office revenues come from emerging markets.

The shifting global landscape and growing influence of emerging markets more broadly defined (see “Bismarck”) is palpable on multiple fronts.

Emerging markets are leading a rebound in global consumer confidence, according to a new study by market research group Nielsen. Q2’09 confidence was strongest in Brazil, China, India, Indonesia, the Philippines and Australia, while confidence in the US, Germany, France and the UK was below average.

Brazil is on a role (and I am not influenced by my recent visit to Sao Paulo, Rio and Florianopolis in any way). It is hosting the 2014 World Cup, the 2016 Olympic Games (edging out Tokyo, Madrid and Chicago, all “developed” markets) and just discovered huge reservoirs of offshore oil.

“Rio is ready. Give us a chance and you will not regret it”, said Brazil’s president Lula da Silva in his speech (a former auto plant worker with a fourth-grade education). While geography played a big role in sending the Olympics to South America for the first time, it indeed seems to be the time of so-called “emerging markets”.

Sotheby’s reports that Hong Kong has surpassed London and NY as its largest wine markets, with mainland China on track to surpass all of them as the world’s largest buyer soon. Interesting, to say the least, especially given most Asians’ ALDH2 deficiency.

Financial services and other companies must adapt – fast – in order to survive these structural changes.

By 2013, according to Capgemini, Asia-Pacific will overtake North America as the largest region for HNWI financial wealth – China this year surpassed the UK, Brazil overtook Australia and Spain.

Jay-Z, who recently surpassed the Rolling Stones in album sales, offers advice on his latest release: “Whatever you’re about to discover, we’re off that.” Darwin 2009.