Accelerated Inclusive Growth

through

Inclusive Innovation

R.A.Mashelkar

20 March 2014

Inclusive Innovation Drivers

Emerging Economies

• Rising Incomes & Aspirations

• Rising Inequalities

• Rising Social Disharmony

Income Disparity in China

Gini index of income inequality in

China

Rural-urban disparities in annual per

capita disposable income

World Bank- Inclusive Innovation Summit China

C

Cape Town, 21 Nov 2012

“Inclusive Innovation is any innovation that leads

to affordable access of quality goods and

services creating livelihood opportunities for the

excluded population , primarily at the base of

the pyramid and on a long term sustainable

basis with a significant outreach”

R.A.Mashelkar

21 Nov 2012

Key Words

• Affordability

• Accessibility

• Scalability

• Sustainability

• Quality

• Grassroots Innovation

5 Mantras for Successful Scaling

1. Go for ‘affordable excellence’

2. Build ‘entire ecosystem’ to support scale, not just a ‘stand alone’ venture

3. Focus on ‘end to end’ innovation

4. Remove ‘internal barriers’ to inclusive business

5 Mantras (contd)

5. Remove ‘external barriers’ to inclusive business

• Financial

• Infrastructural

• Regulatory

• Marketing, distribution & sales

• Collective action with Govt, local NGOs….

5 Mantras for Successful Scaling

1. Go for ‘affordable excellence’

2. Build ‘entire ecosystem’ to support scale, not just a ‘stand alone’ venture

3. Focus on ‘end to end’ innovation

4. Remove ‘internal barriers’ to inclusive business

Affordable Excellence

No Dream – A Reality!

Case - Hemoglobin Detection

Affordable

25 fold Reduction in Price!

High cost (~ $ 25 per test) to ultra low cost ($ 0.5 per test )

Excellence

Breakthrough High-tech Innovation:

From ‘invasive’ with needles to ‘non-invasive’ with no needles

Anjani Mashelkar Inclusive Innovation Award- 2012

12

‘Affordable Excellence’ through Cutting Edge Technology

High Technology :

Photoplethysmography + Spectrophotometry +

Sophisticated photon scattering software

A Paradigm Shift

Excellence – More from Less

Affordable – For More (People)

More from Less for More (MLM)

Innovation’s Holy Grail - MLM

C.K. Prahalad

R.A. Mashelkar

Harvard Business Review- July, August 2010

Special Session

More From Less For More

16 Nov 2010

5 Mantras for Successful Scaling

1. Go for ‘affordable excellence’

2. Build ‘entire ecosystem’ to support scale, not just a ‘stand alone’ venture

3. Focus on ‘end to end’ innovation

4. Remove ‘internal barriers’ to inclusive business

Aravind Eye Care Scaling Success through a Whole

Ecosystem

• 2.5 million eye tests and 300,000 cataract surgeries per year

• Low cost ($5) lens manufacturing joint venture

• Extreme efficiency in opex through workflow innovation

• Research and training institutes

• Civil society groups that organize patient screening events in rural villages

5 Mantras for Successful Scaling

1. Go for ‘affordable excellence’

2. Build ‘entire ecosystem’ to support scale, not just a ‘stand alone’ venture

3. Focus on ‘end to end’ innovation

4. Remove ‘internal barriers’ to inclusive business

Mobile Phone Revolution Inclusive Innovation that Scaled

Ensured ‘Access Equality’ despite ‘Income Inequality’

Combination of public policy, technological and business model innovation

Income Inequality 1000 : 1 ?

Access Equality 1:1!

Indian public policy innovation

• Leap frog from going for more land lines

by

laying more copper lines

to

voice over mobile and internet

• And also bold deregulation…….

This policy innovation riggered other innovations! This policy innovation triggered other innovations!

Handset $250 $25

Call Rates 10 cents 0.1 cent

X

X

Technological

Innovation

(Nokia, Ericsson…)

Business Process

Innovation

(Reliance, Airtel….)

| 24

Inclusive Innovation

Technological Innovation

Business Model

Innovation

Workflow Innovation

Organizational Innovation

Research Process

Innovation

System Delivery

Innovation

Policy Innovation

• Wrongly positioned as poor man’s car rather

than a technology marvel

• Affordable excellence but ‘excellence’ should

have been at the front end, not ‘affordability’!

• Nano customer could not go to showroom, the

Show room needed to come to him!

• Innovative marketing and financing strategy for

a first time low income user missed

Why did Nanovation not Scale?

5 Mantras for Successful Scaling

1. Go for ‘affordable excellence’

2. Build ‘entire ecosystem’ to support scale, not just a ‘stand alone’ venture

3. Focus on ‘end to end’ innovation

4. Remove ‘internal barriers’ to inclusive business

Removing Internal Barriers

Technologically sophisticated performance rich products with many features

Remove features to reduce costs

Premium Price-High Margins

Technology Push, Product –Out Approach

Current Markets- Old Money

Use developed world products to transform emerging markets

Frugal, functional but high quality products

Reinvent the product from ground up

Affordable Price- High Volumes

Customer Centric, Market Based Approach

New Markets- New Money

Build new global growth platforms based on emerging markets

OLD MINDSET NEW MINDSET

5 Mantras (contd)

5. Remove ‘external barriers’ to inclusive business

• Financial

• Infrastructural

• Regulatory

• Marketing, distribution & sales

• Collective action with Govt, local NGOs….

• DFID’s Business Innovation Facility

• USAID’s Development Innovation Venture

• Social Impact Funds ( Acumen Fund, Grey Ghost

Ventures)

• Guarantee Facilities (Root Capital)

• Indian Inclusive Innovation Fund ($ 1 b final)

• 2% of PAT reserved in India for Social Corporate

Responsibility (with corporates)

Explore Non-traditional Financing including

Government

The Big Question

Why should OECD be interested in

Inclusive Innovation?

“If we do not come up with innovations in

poor countries and take them global, new

competitors from the developing world –

The Mindray, Suzlon & Goldwind- will.

That is a bracing prospect.”

- Jeffrey Immelt

CEO, GE

REVERSE INNOVATION

Reverse Innovation

ElectroCardioGraph

Machine $10000 $600 X

Reverse Innovation

Ultrasound Machine $30000 $1500 X

GE plans to spend $3 billion till 2015 to

create at least 100 health-care innovations

that would substantially lower costs,

increase access, and improve quality..”

Global Research For Global Good

Nine countries, five continents

GRA member organisations

GRA Inclusive Innovation Project Green & Low-Cost Wireless Communication Network for Africa

Fraunhofer (Germany) - terrestrial wireless infrastructure to bring this satellite connectivity into the wide area

Fraunhofer (Portugal) - applications for targeted deployment

CSIR SA- wireless mesh concepts, in particular community mesh and wireless backhaul

CSIRO - efficient satellite-based infrastructure to reach rural areas

VTT – integration of network management

Macha Works - supporting local deployment, training staff, testing and evaluation

Vietnam Inclusive Innovation Project

(GRA as a Knowledge Partner)

World Bank funded ( USD 55 million)

• Developing inclusive technologies

• Scaling up, and commercialization

• Capacity building

Thank You