„Keine Waschmaschine läuft ohne Strom? Doch, wenn man ein Moped anschließt. Solche Erfindungen sammelt der indische Wirtschaftsprofessor auf Reisen durch die Provinz. Ein tönerner Kühlschrank, eine Flaschenzugbremse und eine Windelmaschine haben es schon auf den Markt geschafft.“
In der neuen Ausgabe von Zeit Wissen (2/2012) berichtet der preisgekrönte Wissenschaftsjournalist Thomas Häusler über ein sog. „soziales Unternehmen“ aus dem Bundesstaat Bihar in Indien:
Die indische Firma Husk Power Systems baut Kleinkraftwerke, die bezahlbaren Strom für die arme Landbevölkerung produzieren – und liefert damit ein Modell für eine neue Entwicklungshilfe durch „soziale Unternehmen“.
In diesem Zusammenhang berichtet er auch über die Chancen, die sich für Unternehmen öffnen, wenn Innovationskraft vor Ort genutzt wird. Der Autor zitiert in diesem Zusammenhang auch Rajnish Tiwari, Leiter des GIRT Hamburg und Wissenschaftler an der TU Hamburg-Harburg, mit den Worten, „dass es sinnvoll sein könne, nicht nur immer leistungsfähigere Produkte herzustellen, sondern auch günstigere, um neue Käuferschichten zu erschließen.“
[…] Bisher kamen die günstigen Produkte, die es bis auf die westlichen Märkte geschafft haben, zwar nicht von sozialen Unternehmen, sondern von herkömmlichen Konzernen im Süden. Doch Innovationsforscher Tiwari sieht im Segment der sozialen Unternehmen eine Innovationskraft entstehen, die künftig in den Norden ausstrahlen könnte. „Dabei darf man nicht nur an Produkte denken, sondern muss auch clevere Geschäftsmodelle in Betracht ziehen.“ […]
Kompletten Artikel lesen:
New publication from the Institute for Technology and Innovation Management, Hamburg University of Technology (TUHH)
Title: Frugal Innovations for the ‘Unserved’ Customer: An Assessment of India’s Attractiveness as a Lead Market for Cost-effective Products
Authored by: Rajnish Tiwari and Cornelius Herstatt
Publication date: March 2012
This study builds on the authors‘ previous work, which had questioned the validity of certain assumptions of the lead market theory in the face of changing ground realities in a globalized world. Sustained economic growth and proven technological capabilities in some “emerging economies” like China and India call for a reassessment of the appropriateness of the “conventional wisdom” that had held true until recently. While our previous study had built a theoretical background the lead market model by introducing new elements, and doing away with certain others, with the help of two in-depth case studies, the purpose of the present study is to specifically assess India’s potential as a lead market for cost-effective frugal innovations.
The study crystallizes the inherent characteristics of frugal innovations, their development process and market success in the domestic and overseas markets by analyzing four successful product innovations from selected industries in India. The factors identified thus are then incorporated in the theoretic model to derive propositions about India’s lead market potential. Whereas affordability and economies of scale have traditionally constituted the primary concern for frugal innovations, an increasing shift towards “value proposition” is identified. Intensifying competition and growing customer aspirations are changing the nature of frugal innovations. The hitherto unserved customer demands attractive designs and modern technologies to come out of his shell of “non-consumption”. Our research confirms that frugal innovations can benefit end-consumers and firms, simultaneously. Better-designed products also have positive impact on the lead market potential, creating a virtuous cycle. The study also discovered that the increasing need for sophistication coupled with continued cost pressures is shifting the product development processes into the domain of “open global innovation”, which also helps reduce the negative country-of-origin effects faced by developing countries. The research would have implications for location decisions in setting up global innovation/R&D activities.
Keywords: Lead Markets; Frugal Innovations; India; Bottom of the Pyramid; Global Innovation; Open Innovation; Emerging Economies.
The Institute for Technology and Innovation Management at Hamburg University of Technology (TUHH) publishes a new working paper on the topic: “India – A Lead Market for Frugal Innovations? Extending the Lead Market Theory to Emerging Economies“. The paper is authored by Rajnish Tiwari and Cornelius Herstatt (Working Paper 67, January 27th, 2012).
India has emerged as a vibrant and versatile source for cost effective, “disruptive innovations” of various varieties. Price-sensitive consumers in a large and growing market keep inducing firms to apply “frugal engineering” for creating affordable products and services without compromising excessively on quality. Because, as The Economist asserts: “Frugal does not mean second-rate”. Such innovations are characterized by high affordability, robustness, and “good enough” quality in a volume-driven market. Resource constraints motivate firms and entrepreneurs to think out-of-the-box. The trick lies in creating solutions that are able to circumvent given environmental constraints in a cost effective way. India’s large and enormously young population faced with limited budgets, but well-endowed with high aspirations, provides an ideal experiment ground for many firms. Solutions created for the Indian market are often suitable for other developing countries in Asia, Africa and Latin America that frequently face similar socio-economic conditions. In some instances they succeed even in developed country markets by enabling significant cost reductions. This emergence as a hub for “frugal innovations” possibly suggests a “lead market” role for India.
On the other hand, lead markets, as understood today, are characterized by high per capita income, great customer sophistication and high quality infrastructure. Such assumptions imply that lead markets, almost by default, can only exist in economically developed countries because only they can finance the development effort. Using two anchor-cases of product innovations aimed at price-sensitive segments in India we generate preliminary evidence to challenge some of the core assumptions of the “lead market” theory and propose that lead markets can emerge in developing countries too because market attractiveness (e.g. volume of demand, export possibilities) and technological capabilities are able to offset many other deficiencies. The supposed absence of customer sophistication is channelized into a challenge for supplier-side sophistication to design cost effective, “good enough” solutions (“low-cost, thin-margin”) that can meet the aspirations of consumers in a highly competitive market. In order to master this challenge companies need access to a competent and sufficiently large technical base with first-hand knowledge of the ground situation of targeted customer groups (“social capital”).
Keywords: Lead Markets; India; Frugal Innovations; Frugal Engineering; Disruptive Innovations; National Innovation System; Sectoral Innovation System.
GIRT sees the fourth India Week Hamburg as an ideal platform to further boost bilateral relations
Hamburg (11.10.2011): India has emerged as a hotbed for low-cost, frugal innovations. Buoyed by the entrepreneurial spirit of India’s large private sector and a growing middle class, firms of all sizes and nationalities with a base in India have churned out several affordable and innovative products. “Aakash”, the latest tablet PC priced at about € 35, which has been recently launched in India is an excellent example of such ideas and business model innovations emanating from the Subcontinent.
Many local users in India’s rural areas come up with inventions that are not only innovative and useful but also less expensive than the usual solutions available in the market. Another important feature of grassroot innovations is that they are generally environment friendly and in sync with the given infrastructural conditions. Examples of such innovations include water-based cooling systems that do not require electricity, or non-sticky frying pans made of earth.
Interestingly, India’s emergence as “innovation hub” for low-cost, frugal innovations, often directed at the bottom of the economic pyramid have gone hand-in-hand with increasing exports of engineering goods made in India. The volume of India’s export of engineering goods has increased more than 10-fold in the past 15 years, reaching nearly $ 70 billion. Germany alone imported engineering goods worth $ 11 billion from India in the last fiscal year.
“We see India rapidly emerging as a lead market for frugal innovations”, says Rajnish Tiwari, Head of German-Indian Round Table (GIRT) in Hamburg. Tiwari, who in his capacity as leader of “Research Project Global Innovation” at the Hamburg University of Technology (TUHH) has done extensive studies on India’s innovative capacities and Indo-German business relations, sees the suitability of India’s frugal technologies extending especially to markets in South Asia, Africa and Latin America, where many countries have similar socio- economic and geographical structures. He advocates German firms’ participation to realize what his colleague Dr. Stephan Buse from TUHH calls is a “win-win proposition”.
TUHH and GIRT have therefore decided to hold a symposium on the theme of “Grassroot Innovations: New Opportunities for Indo-German Cooperation?” to explore the possibility of joint commercialization of innovations coming from India’s both formal and non-formal sectors. Grassroot innovations in India have been supported and popularized by untiring and inspiring efforts of Prof. Anil Gupta of Honey Bee Network. Several renowned experts, including Prof. Gupta, will participate in a symposium on 20th October 2011 at the Hamburg Chamber of Commerce. The symposium is being held as a part of the fourth “India Week Hamburg”. GIRT, along with its partners, is co-organizing the following events during the India Week:
- Current Trends Concerning Business with India (17.10.2011)
- Europe’s Relations with India: New Impulses for the Cooperation of Democratic States (18.10.2011)
- Grassroot Innovations: New Opportunities für Indo-German Cooperation? (20.10.2011)
- Dance with the Tiger – Intercultural Challenges Concerning Business with India (20.10.2011)
We invite all interested persons and firms to participate in these events. The participation is free of charge but requires a prior registration for organizational reasons. All further information can be accessed via:
About German-Indian Round Table (GIRT)
The German-Indian Round Table (GIRT) was founded by Rudolf Weiler in 2001 and forms a loose federation of businessmen and entrepreneurs with strong ties and interests in India. GIRT’s objective is to inform about India and to strengthen Indo-German business relations. GIRT’s local chapters are organised regularly in Aachen, Berlin, Düsseldorf, Frankfurt, Hamburg, Hanover, Leipzig/Halle, Munich, Nuremberg, Stuttgart in Germany and New Delhi/Gurgaon, Pune and Coimbatore in India. GIRT connects about 3,000 people from the Indo-German business community. The Chairman, as well as the respective heads of local sections, of GIRT work on an honorary basis. Since February 2010 Dr. Andreas Waldraff from Berlin is the chairman of GIRT.
The Hamburg Chapter of GIRT is headed by Mr. Rajnish Tiwari from Hamburg University of Technology (TU Hamburg-Harburg). Mr. Tiwari works there as a Research Associate at the Institute for Technology and Innovation Management and leads the Research Project “Global Innovation” (www.global-innovation.net). He has done extensive research on Indo-German business relations and is a co-initiator of the India Week in Hamburg (www.indiaweek.hamburg.de). Further information about GIRT in Hamburg can be accessed at: www.girt-hamburg.de.
India Week in Hamburg (www.indiaweek.hamburg.de)
Kontakt GIRT Hamburg:
c/o TU Hamburg-Harburg
Institut TIM (W-7)
Tel. +49 (0)40-42878 3776
Fax +49 (0)40-42878 2869
c/o Indien Aktuell Business Düsseldorf/Bremen
Post: Kaiserswerther Markt 51
D-40489 Düsseldorf, Germany
Tel. +49 (0)421-51660465
Fax +49 (0)421-51660466
Mobile +49 (0)179-60811602
Pressekontakt India Week:
Büro für Medienarbeit
Post: Osterstr. 58
D-20259 Hamburg, Germany
Tel. +49 (0)40-37420352
Fax +49 (0)40-37420353
Mobile +49 (0)176-43005016