The power of Mega and Intellectual capital: Innovation comes from BOP markets

A new article on the Wall Street Journal illustrates the new flow of innovation from BOP markets to the global economy.

As C.K. Prahalad anticipated in his 2004 book The future of competition: co-creating value with customers, BOP markets invite and force to review and reinvent products and services moving out of the box of conventional business wisdom paradigms.

As we explained in previous articles (Bernardez, M. (2009) Sailing the winds of creative destruction: using educational technology during economic downturns. Educational Technology), in economic downturn times, a Mega focus must take over.

Under the concept of Globality (Sirkin et al, 2008), "companies have no centers. The idea of foreigness is foreign. Commerce swirls and market dominance shifts. Western business orthodoxy entwines with eastern business philosophy and creates a whole new mindset that embraces profit and competion as well as sustainability and collaboration." (Sirkin et at., 2008, Page 2)

Reengineering must be turned on its head: "outside-in": instead of focusing on saving money to the company at the expense of poorer service and reduced value to the customer, products and services cost- and performance-improvement must operate the other way around: saving oney and adding more value for each buck to the customer.

Here are some examples of Indian engineering ingenuity combined with the new BOP business paradigm:

Reducing healthcare costs - the BOP/ Mega way

The GE Mac 400 heart monitor works on batteries, can be transported to wherever the client is and costs just $ 1,000 -a tenth of standard models cost-

GE is planning to take the new technolgy developed by 300 Indian engineers to the US and the developed world to help bring down healthcare costs. there as well.






"Cooking with (less) gas" and CO2:

The portable, 23 $ dollar Oorja stove reduces CO2 emissions for indoor cooking by using gasifier technology developed for new plants miniaturized.

A fan helps keep a steady flame ti deliver air to the burning pellets with less CO2 emissions and at at three times more efficient performance.

3 million consumers in India already use these ovens in slums and modest homes.


Water purifier for the poor

Unilever's Pureit purifies water for domestic consumption for just $ 43 dollars -a third of the $ 150 minimum previous systems costed to Western consumers-.

The most interesting feature is not the product, however, but the innovative distribution chain: instead of costly machine-based, uniform distruibution chains, Indian Unilever uses 43,000 women-dealers that can reach the most remote villages, keep distribution costs low and increase the social impact by self-sustaining themselves.
The idea of direct sales initiated in the 1950s by Tupperware and Avon in the US is reutilized and redefined to bring down costs and add quality of life (and health) to 3 million families.

BOP cool -smarter and cheaper-

Using just 20 pieces -instead of the 200 in average for standard refrigerators- and reducing the size to 1.5 feet tall by 2 feet wide, Chotukool (Indian for "Small cool") brings portable refrigeration that lasts longer without electric power for 70 $ dollars to Indian villages -instead of the $ 200+ that conventional, heavier refrigerators require-.

Indian engineers replaced the noisy and prone to failure compressors with fans and chips like those used to cool computers' CPUs.



Zero "zeroes" on costs and access to banking: ATMs for BOP

Using the power and ubiquity of 20 dollar-cell phones technology, Zero -named to honor Indian invention of the zero in the 6th century- is an alternative Automatic Teller Machine (ATM) that can reach the remotest villages in rural India and provide BOP dwellers with instant access to cash and banking transactions 24/7 at the lowest cots.

Like in other innovations, supplyh chains are in charge of women that visit villages with the cell phones and help BOP customers to set up banking accounts using the cell phone screen and digital fingerprinting identification.

Once the account is on, BOP consumers can draw or deposit money in their accounts using their phones -or those rented per call by Grameen's "phone ladies"- . The banking ladies go to the nearest conventional bank branches to retrieve and carry back the rupees every day.



These and others are good examples of the power that can be unleashed by combining Mega vision, client-focused reengineering and innovation and using BOP markets as testing grounds.

How could we apply these lessons to our PII projects?

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References

• Bellman, E. (2009) Indian firms shift focus to the poor. The Wall Street Journal
• Prahalad, C.K. (2004) The Future of Competition: Co-Creating Unique Value with Customers
• Prahalad, C.K. & Kirshnan, M. S. (2008) The New Age of Innovation: Driving Cocreated Value Through Global Networks.
• Sirkin et al (2008) Globality: Competing with Everyone from Everywhere for Everything .Business Plus
• Bernardez, M. (2009) Sailing the winds of creative destruction: using educational technology during economic downturns. Educational Technology
• Bernardez, M. (2008) Capital Intelectual: Creacion de valor en la sociedad del conocimiento. Global Business Press
• Bernardez, M. (2009) Desempeno Humano: Manual de Consultoria, Vol, 1. Global Business Press

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