Innovieren für preisbewusste Kunden: Analogieeinsatz als Erfolgsfaktor in Schwellenländern

An artfical heart developed by IIT Kharagpur based on an analogy to a cockroach’s heart. Photo courtsey: Times of India

Neue Publikation vom Center for Frugal Innovation @TIM/TUHH: Ein neues Arbeitspapier von Rajnish Tiwari und Cornelius Herstatt (Working Paper No. 75, TIM/TUHH) untersucht den EInsatz von innovativen Produktanalogien in frugalen Innovationsprojekten und kommt zum Schluss, “dass frugale Innovationen aufgrund der hohen Bedeutung von Risikominimierung in Produktentwicklungsprojekten häufig eine größere Offenheit für externes Wissen und Analogien aus ihrer Umwelt aufweisen, und davon auch viel profitieren. Den interessierten (potenziellen) frugalen Innovatoren kann diese Methode daher zwecks Reduzierung von Entwicklungskosten und –risiken aber auch zur Steigerung der Prozesseffizient empfohlen werden. Nicht zuletzt zeigen die Fallstudien aber auch, dass der Analogieeinsatz in frugalen Innovationen wichtige Erkenntnisse fürs Management von Innovationsprojekten in nicht-frugalem Bereich liefern kann.”

Continue reading

Der Erfolg frugaler Produkte ist nicht aufzuhalten!

Pressemitteilung / Hamburg, 21.10.2013

Center for Frugal Innovation @ TUHH„Deutsche Baumaschinen zu gut für den Weltmarkt“ titelte Die Welt am 17.4.2013. Deutsche Maschinenbauer werden dem Bericht zufolge trotz Innovationstrophäen von den Märkten der Schwellenländer verdrängt. Die Gründe sind sowohl die fehlende Zahlungskraft als auch die abnehmende Zahlungsbereitschaft lokaler Kunden. Anstelle hoch komplexer („over-engineered“) und damit einhergehend teurer Produkte fragen sie erschwingliche und robuste Technik nach, die häufig aus anderen Ländern und insbesondere aus den Schwellenländern selbst kommt. Solche „good enough“ Produkte, Lösungen mit ausreichender Funktionalität bei guter Qualität und einem sehr wettbewerbsfähigen Preisniveau, kennzeichnen den Innovationsansatz „frugaler Innovationen“.

Continue reading

“Cheap razor made after P&G watches Indians shave”

A report of the Associate Press appearing on the Internet site of India’s NDTV.com (October 6, 2013), says:

File pic: A man gets during the annual cattle fair in Pushkar, Rajasthan

File pic: A man gets during the annual cattle fair in Pushkar, Rajasthan. Photo: Associated Press. Coutsey: NDTV.com

New York: Procter & Gamble executives say it was striking the first time they witnessed a man shave while sitting barefoot on the floor in a tiny hut in India.

He had no electricity, no running water and no mirror.

The 20 US-based executives observed the man in 2008 during one of 300 visits they made to homes in rural India. The goal? To gain insights they could use to develop a new razor for India.

“That, for me, was a big ‘a-ha,'” said Alberto Carvalho, vice president, global Gillette, a unit of P&G. “I had never seen people shaving like that.”

The visits kicked off the 18 months it took to develop Gillette Guard, a low-cost razor designed for India and other emerging markets. Introduced three years ago, Guard quickly gained market share and today represents two out of every three razors sold in India. The story of how Guard came to be illustrates the balance companies must strike when creating products for emerging markets: It’s not as simple as slapping a foreign label on an American product. […]

This report also underlines the “lead market” function of India for frugal innovations that has been researched by our team and has been dealt with in greater detail in our forthcoming book “Aiming Big with Small Cars: Emergence of a Lead Market in India” (Springer). We are organizing a symposium on frugal innovations to cover upcoming key questions on global growth in both emerging as well as developed markets through affordable and good-enough solutions and to disseminate the results of our research. Meanwhile interested readers might like to read our article “Assessing India’s lead market potential for cost-effective innovations“, published in the Journal of Indian Business Research.

Report: “7 companies with over-average rural exposure fare better in stock market”

According to a report appearing the Economic Times (Mumbai, Oct. 4, 2013), “India Inc’s rural champions have probably never had it so good.” A good monsoon is seen as having “kindled hopes of a turnaround in demand for key products”.

A Hero SPLENDOR-NXG

A Hero SPLENDOR-NXG. Photo courtsey: Hero Motocorp

The ET report citing an unnamed study by the Deutsche Bank says: “At a time when the rest of India Inc is either groaning under heavy debt or struggling to sell in a sluggish market, companies with heavy rural focus are literally licking their lips in anticipation of a surge in demand in India’s villages and towns. Already, two-wheeler sales are inching up, tractor sales are booming and banks are hiring employees in far-flung regions, hoping to benefit from a monsoon that has increased the kharif area by 5% and water reservoir levels by 15%.”

The 7 firms examined in the study are Hero Motocorp, Emami, Maruti Suzuki, Mahindra & Mahindra, M&M Fin Services, and ITC. All of these companies can be regarded as champions in having mastered the “frugal challenge“.

New publication from CFI-Team: A Case Study on GE

Lessons from low-cost healthcare innovations for the Base-of the Pyramid markets: How incumbents can systematically create disruptive innovations

By. Aditi Ramdorai and Cornelius Herstatt

Working Paper No. 74, TIM/TUHH

Frugal innovations, characterized by their focus on affordability and retaining key functionalities of products/services, are emerging in the healthcare sector from India- ranging from low-cost healthcare delivery by hospitals like Aravind Eye Care that provides cataract surgery to around 300,000 patients at a cost of 18 USD per patient to product innovations such as the Jaipur Foot, a low-cost prosthesis. These frugal innovations represent disruptive innovations, innovations that are typically simpler, more convenient and more affordable. Disruptive innovations create growth potential for companies while opening up access to products and services that were previously beyond peoples’ reach. Low-income markets or Base-of-the-Pyramid [BOP] markets present new opportunities to Multi-National Corporations [MNCs] and scholars are calling MNCs to leverage BOP markets to create disruptive innovations.

Established incumbents generally fail to successfully commercialize disruptive innovations. Their internal processes and values force them to focus on their existing customers, thereby ignoring projects targeted at new emerging markets that lack a customer base.

An exception to this is the American incumbent GE Healthcare, which has been creating several low-cost innovations targeted at emerging markets for the past years. In this research, we will look at organizational structures and processes that GE Healthcare has in place, which enables it to create disruptive innovations systematically. With this we hope to contribute towards building disruptive innovation theory, where questions pertaining to selective success and failure of incumbents to create disruptive innovations remain unanswered. Literature on disruptive innovations recommends incumbent firms to create a separate entity for commercializing disruptive innovations. However, scholars have been calling upon firms to explore new markets and exploit existing opportunities simultaneously.

The ability to successfully drive disruptive innovations from within the organization will be analyzed through the lens of organizational ambidexterity. Ambidexterity is the ability of organizations to successfully balance exploration and exploitation. The manifestation of this act of balancing exploitation and exploration is the companies’ ability to initiate multiple innovation streams, in this case sustaining innovations and disruptive. Key proponents of organizational ambidexterity, O’Reilly and Tushman, consider it a “solution to the innovator’s dilemma”, however present their thesis only conceptually. This work will look at the mechanisms of ambidexterity at GE Healthcare to help explain its ability in successfully hosting sustaining and disruptive innovations from within its boundaries.