Disruptive Innovation for SocialChange By Christensen, Baumann, Ruggles, and Sadtler Presented by Group 8 with Indian Illustrations Harshvardhan Nikhil LilaniPGPM 2012-14 Varun ChopraCSR Prateek DuttaDate: 14- Mar- 2013 Mayur KumarMDI, Gurgaon Santosh Garbham
Is Money Everything? Indian firms collectively spend Rs. 8700 Crore on CSR initiatives every year It’s projected to shoot up to Rs. 27000 Cr But are they effective? No. Reason: Targeted towards a narrow segment in society and Not targeted towards the right segments of society
Suggestion by Authors: Expanding support for organizations that are approaching social-sector problems: 1. In a fundamentally new way 2. Scalable 3. Sustainable 4. System – changing “catalytic innovation”
Catalytic Innovation A subset of Disruptive Innovation Unlike Disruptive Innovations, focus is on Social change Sustainable Disruptive Catalytic Additional Features Simpler, more convenient solution A subset of Disruptive Innovation Better quality Less expensive Breakthrough Products Social Change is Directed towards new Primary Objective Directed towards or less demanding existing customers customers
Catalytic Thinking Problem for Incumbents : Status Quo 1. They create systemic social change through scaling and replication 2. They meet a need that is either overserved (because the existing solution is more complex than many people) or may not be served at all 3. They offer products and services that are simpler and less costly than existing alternatives and may be perceived as having a lower level of performance, but users consider them to be good enough 4. They generate resources, such as donations, grants, volunteer manpower or intellectual capital, in ways that are initially unattractive to incumbent competitors 5. They are often ignored, disparaged or even encouraged by existing players for whom the business model is unprofitable or otherwise unattractive and who therefore avoid or retreat from the market
Catalytic Innovation StrategyThe motive of this strategy is to prove as follows: “Organization’s spending is not good enough for an effective CSR, investing in catalytic innovations would make their initiative more meaningful”
Aakash – the World’s cheapest tabletDataWind, in association with IIT Rajasthan, haslaunched worlds cheapest 7 inch tabletThe tablet was officially launched asthe Aakash in New Delhi on 5 October 2011.The device was developed as part of thecountrys aim to link 25,000 colleges and 400universities in an e-learning programOriginally named “SAKSHAT”, the device aimsto bring Indias masses onto the informationhighway.Mainly known as •Students Tablet with Extra Loaded Features •aam admi ka ipad •The World’s Cheapest Tablet “Aakash”
Aakash – the World’s cheapest tabletSocial Changes through scaling and replication• Computer is considered as one of the most efficient and useful device when it comes to facilitating education to students from all social and economical strata of Indian subcontinent so is Internet• With the use of internet and computer knowledge can be digitalize and student can have access to unlimited notes and study material at very less cost• This can also help in learning new things, improving creativity and knowing about career options• This will also help in reducing gap between poor and rich children and rural and urban students
Aakash – the World’s cheapest tabletUnserved needs of Society that were met• Even the poor students dream of getting better learning opportunities through access to Internet• Aakash brings those dreams to reality. After subsidy by GOI, the tablet costs Rs. 1130.• That would allow even the offspring of maid servants and 4th grade staffs can imagine buying a knowledge device like Aakash tablet for themselves and that too by saving their pocket money• These kind of needs CANNOT be met by incumbent players in the market because they have see no incentive to pursue and they feel it would not be viable to serve these poor segments
Aakash – the World’s cheapest tabletSimpler and less costly than existing alternatives • Though Aakash technical specifications are not on par with Apple’s ipad, many were willing to use it. Because for them it serves the purpose. • Datawind became third largest tablet seller in India at one point in time Generation of funds • Aakash project has support from GoI • The prototype development was done by IIT, Rajasthan • After the device was unveiled, OLPC chairman Nicholas Negroponte offered full access to OLPC technology at no cost to the Indian team
Aakash – the World’s cheapest tabletIgnorance by existing players• A BBC report stated “To develop its latest gadget, the ministry said it had turned to the elite Indian Institute of Technology, and the Indian Institute of Science, after a lacklustre response from the private sector”.
Aravind Eye HospitalUnserved segments served who are ignored by existing players • The problem of avoidable blindness rapidly escalating remained a major cause of concern in the Indian healthcare scenario • In a developing country the government alone cannot meet the health needs of all owing to a number of challenges- growing population • inadequate infrastructure • low per capita incomeThe hospital performs high-volume and high-quality eye surgeries inexpensively to address the needs ofthe 12 million blind people in India.
Aravind Eye HospitalSocial Changes Created:• It is a social organisation committed to the goal of elimination of needless blindness through comprehensive eye care services• It is also an international training centre for ophthalmic professionals and trainees who come from within India and around the world• It is an institute for research that contributes to the development of eye care and to train health-related and managerial personnel in the development and implementation of efficient and sustainable eye care programmes• Aravind also is a manufacturer of world class ophthalmic products available at affordable costs through the Aurolab
Aravind Eye HospitalSimple Infrastructure and Low cost Solution• No extravagant expenditure with aesthetic ambience•• Aravind keeps its surgical equipment in operation 24 hours a day, which reduces the cost-per-surgery• Doctor’s time is utilized with highest effectiveness. So, doctors focus only on performing surgery, and nurses handle pre-op and post-op care, which increases doctor productivityThese actions allow the company to give away freesurgeries to the poor while still earning a profit
SELCOIntroduction • SELCO India was founded in 1995 by Dr.Harish Hande with INR 15,000 funding from its co-founder Mr. Neville Williams.Social Changes Created • Solar Electric Light Company, India or SELCO India has played an instrumental role in improving living standards of poor households in rural India especially in the state of Karnataka through solar energy based interventions and low smoke cook stovesUnserved Segments that were served • When Hande established SELCO-India in Bangalore, he was looking to dispel three myths: • Poor people cannot afford sustainable technologies • Poor people cannot maintain sustainable technologies • Social ventures cannot be run as commercial entities
SELCOGenerated resources from other sources- • Financial backing was received in December 1996 from Winrock International which released a conditional loan of $150,000 under the USAID Renewable Energy Commercialization project. • This was however on a condition that SELCO INDIA created couple of solar service centers and install a minimum number of systems.Simpler low cost solution: • SELCO started with a financial model in which each customer would pay 25% of the cost upfront as down payment and will further pay a monthly installment which is affordable and within the average monthly budget of a family in the region. • Along with this, the SELCO INDIA also provided a years guarantee to the warranty of the manufacturer along with free service for a year and a 90-day money back guarantee. • The loan to Winrock was paid back by 2000. SELCO INDIA got good backing with E+Co initially investing US $107,500 to become SELCO Indias first investor.
SELCOAchievements:• SELCO has so far installed solar systems in more than 125,000 homes. This is in spite of two-thirds of its customers surviving on less than $3–4 per day.• Some of Selcos customers include poor daily-wage labor and institutions like schools and seminaries. Everyone is charged the same rate for the solar panel; about $450 for a 40-watt system that can light many 7-watt bulbs for 4 hours between charges.• Fewer than 10 percent of the companys customers default in their payment and about $20 million has been made available by lenders to finance this venture.
SELCOSome Ripple Effects of Social Changes brought by thisinnovation • SELCO has also created other small entrepreneurs who use the solar panels to charge numerous small batteries which they then lend to street vendors for a nominal daily price. • This has boosted their monthly incomes from Rs. 4500 to Rs. 13000 • Other people who have benefited from SELCOs venture are the rose pickers in a village in Bangalore who earlier used to hold a lamp in one of their hands and pick roses from the other as part of their daily pre-dawn routine. • SELCO has helped them in acquiring solar powered headlamps which the workers can now wear. • With both hands now being free, the productivity of the workers has doubled resulting in a direct improvement in their income.
Examples -LifeSpring Hospitals Pvt. Ltd 52% of baby delivery market or 1300 deliveries in karnataka -Mirakle Couriers -employs 63 deaf people and 2 managers Village Laundry Service Pvt. Ltd
Learning:Catalytic Innovations make CSR initiatives to:• Effectively address the social cause by serving a huge segment that generally stays out of focus from regular CSR• Have ripple effect in the economy by the fundamental social changes it brings aboutIt’s high time for organizations and social investorsto invest in Catalytic Innovations by identifyingthem
Identifying Catalytic Innovations After choosing a particular social challenge, look for preexisting catalytic innovators It is difficult to find them in mainstream business, so following steps that reflect catalytic innovation would help: A new entrant providing low cost solution to an alternative segment that is either over server or underserved by market Dominant player moving away from new entrant’s offerings towards a more profitable segment New entrant and his imitators emerge rapidly Not all sectors grow rapidly. Sectors regulated heavily by Government or influenced by politics may have reduced effect of innovation
Identifying Catalytic Innovations Evaluate the innovation: Whether it is aligned with those 5 steps Implementation of the innovation: Is it scalable and sustainable Can it be shifted to another location Tax benefit is not an indicator i.e. for profit vs non-profitRecommendation of the Article • Seek out and Support Catalytic innovation because they not only have Immediate Social Impact but also inspire social entrepreneurs to think catalytically • Catalytic thinking addresses of social problems in a more fundamental manner by creating a social change