If India is really the grassroots of Low-Cost Innovation?
Innovation in India has recently achieved worldwide attention, as its low-cost products made a worldwide success, led India to globally recognized for the low-cost innovations.
As simple as it is, with the limited resources and environment, countries like India, China, Brazil are developing low-cost products and solutions.
These products score high on price to performance ratio, i.e., for a given price, the value created is high.
Low-cost innovation in these countries, specifically India, has received various names.
These developments in the global market entice us to investigate as to what is low-cost innovation, how is it being achieved in emerging markets like India, and why has it gained importance now. These developments in the global market entice us to investigate as to what is low-cost innovation, how is it being achieved in emerging markets like India, and why has it gained importance now.
Types of Low-cost innovations:
- Reverse Innovation: Immelt, Govindarajan, a. flow of product and services from developing markets to developed markets. b. This happens because the low-cost products and services provide ‘good enough’ solution to the needs of customers in developed countries.
- Frugal Innovation: Radjou, Prabhu & Ahuja: a. Frugal innovation refers to those innovative products and services which are developed under conditions of resource constraints.
- Value Innovation: Kim & Mauborgne: when firm pursues both low cost and differentiation strategies simultaneously. Somewhere between both low cost and differentiation strategies.
- Jugaad Innovation: Jugaad innovation such as frugal innovation implies doing more with fewer resources, but unlike frugal innovation, it is not scalable and sustainable.
Jugaad means “Do it yourself” in the USA Why Low-Cost Innovation in India:
1) We are capable to sell our product in India as well as Global market.
2) We have a good team of scientist who works for MNCs.
3) We are doing all outsourced projects of foreign companies.
4) We are having R&D centers of big companies.
Indians use their frugal mindset and skill set to introduce process innovation and hence raise efficiencies in cost of production.
Diffusion of Innovation: According to Rogers’ diffusion of innovation theory, radical innovation flows from the top class of the society to the lower income group of the society. Low-cost innovation does not involve any new radical invention, but only innovative ways of using already existing technologies to develop affordable products for masses. low-cost innovation is the last stage of diffusion of innovation. Thus, low-cost innovation cannot take place, unless path breaking or new technology has been invented and diffused over a period of time. Delineation approach: For low-cost innovation, it is vital that firms focus on eliminating and reduce the aspect of the product, so that cost can be reduced to the minimum. Focus on ‘good enough’ rather than over engineering: Generally firms in the race of making the product sophisticated end up providing too many functions and features to the product. Remodeling capabilities: Low-cost innovation is not only delineated, but they are also remodeled to suit the needs of the target market.
Leverage on multiple uses of same technology: Managers need to use only existing technologies but in an innovative manner to launch new products and solutions. Focus on innovation rather than invention: Low-cost innovation calls for improvised innovation (Govindarajan & Ramamurti, 2011, p. 192) which is based on process innovation or architectural technology (i.e., integrating and using already existing technologies in different ways).
Originally published at vishwaraj.info on August 27, 2017.