The Innovation Sandbox

Based on research by:C K Prahalad/Michigan Univ

2

Topics The Bottom of the Pyramid The Innovation Sandbox The Innovator’s Ecosystem Sandbox Premises

3

700 mn people Bottom of the Pyramid

3

30

300

SuperRich

Rich

MiddleClass

4

Tata Peoples Car: Rs. 100,000 in 2008

5

Combi Chula: Cost Rs. 1000

Cow dung or Bio mass ( grass/

sticks) Natural gas

6

7

Western Style Hotel: $ 250-300/ night versus……Ginger

$ 20/ night GM= 65% (vs luxury hotels @ 35%) w/less broadband, LCD TV ++++ Scalable Business Model

8

Prerequisites for Innovations that change peoples lives Product/ service shd be world class

Significant price reduction (say 90%) wrt existing comparable products in west

Scalable in different geographies

Affordable at the bottom of the pyramid.

9

The next diag. Shows the “sandbox” of constraints & experimentation for the Health Care Industry. The 4 sides of the box represent the core reqmnts for successful healthcare delivery in a mkt such as india. Within those constraints, significant creativity is possible in the 7 inter-related business model innovations shown in the sand.

10

Health Care Industry

11

The Innovation Sandbox

This approach involves complex free-form exploration and playful experimentation (the sand with its flowing, shifting boundaries) within extremely fixed, specified constraints (the walls, straight and rigid, that box in the sand)

12

Constraints are like the limits on an ecological niche, prodding the evolution of new products & services.

13

There is no generic sandbox design

14

The Healthcare Scene in India High costs Stultified traditions Variety of regulators Dissatisfied customer

base Difficult venue for

business innovation 1 physician/ 100,000

popln(US 1 in 300)

Public health admin-dismal

HIV/AIDS Infant mortality hi 6 mn blind 50 mn malnourished

children Type 2 diabetes:

100mn by 2015

15

No constraints/ Constraints…

In US

A customised lower-limb prosthetic fitting takes several fittings over weeks

In India

The same in one 8-hour sitting, so that patient and family can return home before their money runs out.

16

World Class in India Jaipur Foot

Arvind Netralaya

Narayana Hriduyalaya

Cost, Quality, Delivery!

17

Public Sector Subsidy and Philanthropy

lead to

“line extensions” rather than new products or services

18

19

Define Constraints-then think unconventionally

1. Specialization2. Pricing3. Capital intensity4. Talent leverage5. Workflow6. Customer acquisition7. Values & organization

20

The Innovator’s EcosystemArvind Ecosystem 5 hospitals in TN Medical Rsrch Foundation Rsrch Institutes Aurolab Community outreach progs Relationships with: govt/

univ/ tech providers

Narayana Hrudyalaya ICICI bank Low cost suppliers State govt. ISRO

21

Western medical equipment manufacturersmay soon face severe competition fromIndian “format invaders” that will use cost advantages to reframe an industry

22

23

24

Requisite premises for Sandbox Approach

1. Radically rethink entire biz model2. Not mkt rsrch. Immerse in cust

lives(challenge: access, awareness, affordability, availability)

3. Accept constraints4. Don’t innovate in isolation5. Commit to a Strategic Intent

25

Spanish Clothing Chain - ZaraTraditional

Forecast Produce large lots Dump on retailers Several months lead

time

Zara

Constraint: immediate responsiveness

Small batch size Short lead times Excess capacity in

fabrication & trucking

26

Dominant Logic

The zone of comfort drives away the zone of opportunity

27

The bottom-of-the-pyramid customer base is the best friend an innovative company everhad, because of the limitations that it forces.

28