Download - The innovation sandbox
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