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How are emerging nations turning the tables on developed economies? What lessons can be learnt from their success stories?
Frugal Innovation
Constraint-based innovation or reverse innovation Different from fiddling with existing products Taking the needs of poor consumers as a starting point and working backwards I t d of adding more bells and whistles, th strip th Instead f ddi b ll d hi tl they t i the products down to their bare essentials Tata Nano Hand-held electrocardiogram (ECG) called the Mac 400 from GE health care
Frugal Innovation
Frugal innovation is not just about redesigning products It involves rethinking entire production processes and business models Companies need to squeeze costs so they can reach more customers, and accept thin profit margins to gain volume Apart from being cost efficient, frugal products need to be tough and easy to use Nokia handsets flashlights (because of frequent power cuts) multiple phone books (because they often have several different users) menus in several different languages
Frugal Innovation
Frugal does not mean second-rate GEs Mac 400 ECG incorporates the latest GE s technology Frugal often also means being sparing in the use of raw materials and their impact on the environment Three ways of reducing costs 1. Contract out more work - Bharti Airtel 2. 2 Use existing technology in imaginative new ways TCS is looking at using mobile phones to connect television sets to the internet 3. To apply mass-production techniques in new and p unexpected areas such as health care Dr. Devi Shetty - Narayana Hrudayalaya Hospital
Tails
Putting things together in different ways also counts as innovation. Extending Henry Fords Innovation to heart & eye surgery Very Innovative. Similar Challenges Large number of people below poverty line . Similar opportunities- Rapid eco o c growth. Jo t e tu e economic g o t Joint venture - Mahindra a da working with Chinese companies, Huawei has opened research center in Bangalore, GE sells its electrocardiograms as successfully in China as in India India. India & China investing heavily in business schools ISB (16), Hong Kong University of ( ), g g y Science and Technologies (14) Emerging markets firms are leapfrogging there Western counterparts such as Mobile money in Kenya, Mobile for video gaming Shift in interest towards emerging nations for leading business gurus like CK Prahalad
Overselling Emerging Markets - India ranked 133rd out of 183 for ease of doing business. g
Indian Heavyweights
HCL
Acquired Britain s Axon Group for $672 mn Britains
Reliance Industries
Pursuing LyndollBasell Industries for &14.5 billion
Bharti Airtel
Acquiring Zain for $9 billion q g Charges Lowest Fees in the industry Outsourced all its work to Ericsson & IBM Made companies rethink their business models
Hindalco
U d succession of well planned acquisitions Used i f ll l d i iti Revenues grown from $500 mn to $15 bn in seven years
Indian Heavyweights
ArcelorMittal
In 1990, unknown producer in Indonesia Today, world s largest Steel Company worlds
ITC
One of the biggest Indian conglomerates gg g Internet Kiosks called E-Choupals help farmers manage demand & supply efficiently
F t Future Group G
Innovation through organised chaos in its stores
Dachangjiang (China) gj g ( )
Motorcycle maker works with 100s of part suppliers
Lenovo (China)
Did not exist in 1990 Bought IBMs PC business & is now worlds fourth largest PC maker after HP & Dell