Learning innovation from India

Japan copied Western cars, then taught us "Lean Manufacturing". The same is happening again, now we will learn about innovation from India, the masters of frugal innovation.
Photo by etrenard Flickr CC

Defining frugal innovation

To use less resources is an opportunity and a responsibility - it is Corporate Social Responsibility and Competitive Strategy rolled into one.

The Economist identifies China and India as the new masters of innovation. They tell the story of how America's car industry were shocked to find out that Japan had overtaken them without cheap labor or government subsidies. The secret was innovative manufacturing processes, later called "lean manufacturing".

In the same way, India and China are now redesigning products not to reduce costs by 10%, but by 90%! India's Tata managed to make a car for the masses priced at USD2.200, it is Henry Ford all over again.

Break the rules

In the days before cars, traffic accidents were much more common than today. You might think that slow moving horse-drawn carriages would be safe, but horses don't brake immediately just because you ask them to, they slow down. The result was towns full of accidents, manure and dead horses decomposing on the side-walks. Cars were an environmental friendly alternative, but too expensive - a little bit like today's electrical cars maybe.

Henry Ford entered the scene with a USD3.000 car, when a horse with straw cost around USD900 yearly, not really a good value proposition. Then, he broke all the rules, increased salaries and involved workers in product improvement and the result was that the model T could be sold at USD1.000 and disrupted the horse business which never recovered.

Putting the rules to practise

In Bangalore the hospital does not have marble floors but it has a fully integrated health information-technology (HIT) system with electronic health records (EHRs). It also attracts large number of patients using marketing, the result is that their surgeons perform four times as many procedures and achieve high levels of specialization.

A USD70 fridge, a USD2.200 car, a USD800 electrocardiogram machine and a USD24 water filter are the results of this new way of looking at innovation, the way of simplification and reduction to the strictly essential.

In another article the Economist identifies three successful strategies:

• Contract out ever more work - and make the suppliers rethink their business processes.


• Use existing technology in imaginative new ways - one example is using mobile phones to connect television sets to the Internet.


• Apply mass-production techniques in new and unexpected areas such as health care - Henry Ford's processes are being reapplied.

Can you apply these rules to your daily work? Can these processes be a part of your daily innovation, what do you think?

Comments

[Cost leadership beats all &laq]

[...] The term Disruptive Innovation was coined by Professor Clayton Christensen and signifies an innovation that totally changes the rules for a market. When the T-Ford pricing came down to levels comparable to keeping a horse, the horse trade was disru.... [...]