Innovations for the Common Man

Indian corporates are fast producing goods which are affordable for the common man.

Over the years it has been observed that many strategic plans of corporate companies to increase their business have resulted in the overall development of particular sectors. For example, the telecom sector in India totally changed owing to the fight for survival between the 14 telecom service providers. Now, many Indian corporates are aiming to reach the consumers at the bottom of the pyramid (BOP) to generate profit by producing goods and services which are affordable for the segment.

In 2006, the common man residing in rural and urban areas of India couldn’t dream of owning a car, refrigerator, electricity, or even access to clean drinkable water. Come 2010 and almost all major corporates in India are coming up with a range of products which can meet the expectations and needs of the common man in all possible ways.

MASS APPEAL

Social entrepreneurs are pursuing a prolonged endeavor of sustainability that better aligns societal and environmental needs with business values. Apparently, innovation runs right across the business model, delivery mechanisms, and resource mobility, and utilization. Interestingly, many social entrepreneurs are pursuing disruptive paths that, while focused on new markets, have potential implications for the mainstream. The Godrej Group has developed the cheapest, environment-friendly refrigeration system, called Chotukool, mainly aimed at the rural Indian market. Unlike the normal refrigerators that run on the traditional compressor-based cooling system, the battery-powered Chotukool cools the raw food products with a specially-developed chip. Currently, the refrigerator is being test marketed in a few selected villages in Maharashtra. The product worth Rs 3,500 will be launched in March 2010.

G. Sunderraman, vice president, corporate development, Godrej & Boyce, says, “All the manufacturers vie each other for meeting the demands of high-end users, but what many forget is that it is the segment of non-users that’s the biggest market in India. With Chotukool, we target the bottom of the pyramid customers who don’t even use refrigerators.”

The Chotukool is a 43-liter cool box that weighs 7.8 kilograms and is loaded from the top. “Our refrigerator runs on a cooling chip and a fan similar to those used to cool computers. It also uses high-end insulation to stay cool for hours without power. It consumes less than half the power consumed by regular refrigerators,” explains Sunderraman, adding, “With Chotukool, Godrej Group is aiming for a unique position in the market in terms of pricing and features. At the same time, we also want to ensure the smiles on the faces of our customers.”

The company has also found the right distribution channel before rolling out the product. It has joined hands with non-governmental organizations, self-help groups, and micro-finance institutions to reach out to the customers in villages.

CHANGE FOR GOOD

Tata Nano is the first major recent example of disruptive innovation in India. According to experts, Tata Nano, “the people’s car,” will change the dynamics of the automobile market and will result in a paradigm shift. The target consumers of the cheapest car in the world are the millions of Indian motorbike and scooter drivers. While each year 6.5 million motorbikes and scooters are sold in India, only 1.3 million cars are purchased every year. The conversion of motorbike and scooter drivers into car drivers, therefore, represents a huge market potential. It is estimated that of India’s present population of more than 1.1 billion, more than 400,000 qualify for the target group as potential buyers of the low-priced car. This disruptive innovation has already opened up the race between the motor companies to manufacture the cheapest car.

Recently, Tata has unveiled another product for the masses. Its latest product called Swach is probably the cheapest compact water purifier to enter the market in January 2010. According to the company, Swach meets the U.S. Environmental Protection Agency standards.

Swach does not require running water, power, or boiling once installed. Each of its filters can produce 3,000 liters of purified water, enough to provide a family of five drinking water for a year. The filters use paddy husk ash as matrix, bound with microscopic particles of silver to kill the bacteria that cause 80 percent of waterborne diseases. Paddy husk ash has long been known for its cleansing properties, and India produces about 20 million ton of it every year. The purifier produces clean water without using electricity or running water, both of which are mostly unavailable in rural areas.

Swach’s fuse has advanced dual function mechanism - pure-power indicator and advanced auto shut mechanism. The pure-power indicator indicates purifying power level and signals when to replace the bulb, while the auto shut mechanism stops the flow of water once the purifying power of the bulb is exhausted. The filter has been designed in a Tata Consultancy Services lab, while the silver nanotechnology was added by Tata Chemicals. Titan, Tata’s watch subsidiary, contributed the precision machine tools to manufacture the filter.

“Safe drinking water is a basic human right. Tata Swach combines technology, performance, convenience, and above all affordability to serve this basic human right to millions of consumers. The company has made affordability an important part of its innovation efforts. Tata Swach can play its part in the national efforts to reduce waterborne diseases,” says R. Gopalakrishnan, vice chairman, Tata Chemicals.

Before launching Swach, Tata Chemicals had carried out pilot tests of the product in 600 households in Maharashtra, Uttar Pradesh, Orissa, and Tamil Nadu. Rallis India, Tata Group’s agrochemical firm, will distribute the two variants of the purifier in India at Rs 749 and Rs 999.

SUSTAINABILITY IS KEY

Executing a BOP strategy with a new product isn’t easy. Even if you can come up with a product which would help improve the lives of the world’s poor, distribution can be difficult due to access barriers in highly segmented lower income markets. When creating innovative products for BOP markets, Sunderaman notes that cost alone is not the issue. “It’s not just about making consumer products cheaper,” he says. “You’ve got to come up with products that actually meet the specific needs at the bottom of the pyramid. How do you design products that people need? You have to actually go and find out, and so we send researchers to find out how people live – how they do their washing, their cleaning, and what their problems are,” he explains, adding, “You have to always find a sustainable solution while catering to the BOP segment. From the demand side, socially responsible business can help inform consumption patterns. From the supply side, product innovation goes to the heart of social and environmental sustainability.”

According to some experts, disruptive innovations are suitable for developing markets because they offer a product to people who would otherwise be left out entirely or poorly served by existing products. There is, however, also a subset of disruptive innovations called catalytic innovations which evolve from the primary objective of bringing a social change.

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The world is already looking at India as a source of value creation by virtue of its large market size and its ability to offer cost savings through its low cost, highly efficient, English speaking skilled labor force. This is enough to record impressive economic growth, but to achieve leadership status, India must give the world “next practices” and be a source of disruptive innovations that are able to radically alter the competitive landscape. Growth impetus can be created only by building up the country’s systematic innovation capacity.

Shyam PV is senior correspondent of Technology Review India.