Download Providing appropriate technology for the Base of the Pyramid markets

Providing appropriate technology for
the Base of the Pyramid markets
Jianghua Zhou
Guidelines
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Introduction
Theoretical background
Methodology
Findings and discussions
Conclusions and implications
The trade-off between growth and
equitable distribution
• Technological progress and innovation have impact on
both productivity and distribution
• Dominant innovation trajectory in the past century
which increasingly favors the use of labor-saving
technological progress, assumes high-quality and
pervasive infrastructure, and produces products for
high-income consumers at a large scale
• When the global division of innovative effort is shifting
to BRICS, is it possible to align these two
developmental objectives?
– simultaneous promoting growth and more equitable
distribution with technological progress and innovation
The rise of the AT movement and the
BoP markets
• The call for Intermediate technologies (small
scale and labor intensive innovations) for low
income countries (Schumacher, 1973)
• The huge potential of the BoP markets
(Prahalad and Hart, 2002)
• Could the integration of AT movement and the
BoP markets provide implications for the
direction of technological progress?
The research on appropriate
technology (AT)
• Technologies appropriate for low income
countries
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Labor-intensive
Simple to operate and repair
Products for low income consumers at small scales
Minimally-harmful impact on the environment
• New technology must also be compatible with
income levels, resource availability, existing
modes of production, existing technologies and
costs corresponding to the community (Stewart,
1977)
Critiques on AT
• Only NGOs and some bilateral aid agencies
respond to the call for AT (Kaplinsky, 2010)
• Possibly consign poor countries to a state of
perpetual underdevelopment, locked into the use
of low productivity, undynamic and inefficient
techniques
• The notion of ‘appropriateness’ of innovations for
the poor should be broadened to look beyond
the ‘design of the technology’ to ‘the design of
business models and delivery mechanism’
(Prahalad, 2005; Hart, 2005)
Research on frugal innovation /disruptive
innovation/reverse innovation
• A potent combination of constraints and ambitions could ignite a
new genre of innovation (Prahalad and Mashelkar, 2010),
• Redesigning products and processes to cut out unnecessary costs,
and the ability to manufacture low cost versions of goods for mass
markets with frugal use of resources (Woolridge, 2010)
• Leap to BoP for disruptive opportunity (Christenson et al., 2001)
• Starting with the needs of low income mass consumers in
developing countries to produce solutions which have global
application (Immelt et al., 2009)
• "Design for Extreme Affordability" programme in stanford
• Requires a paradigm shift in innovation strategy
Review of the literatures
• What is lacking are comprehensive in-depth
studies on development of appropriate
technologies, especially by local enterprises and
their successful diffusion into mass markets in
emerging countries.
• This study explore in depth an innovation model
of local enterprises that are successful in
designing and diffusing an appropriate
technology for the masses at the BoP with
profitable production.
Methodology
• Case study
• Select low-cost cell phone, low-cost medical
equipment and solar thermal as targeted
cases
Findings
• Modular designs to meet user demands of
affordability and functionality through
architectural innovation
• Design for manufacturability and scale
• The exploitation of the local knowledge base
and the creation of local innovation clusters
• Enabling inclusive participation
Modular designs through architectural
innovation
• An architectural innovation and a modular
design enabled minimizing costs to develop
new products
• Modularity in product design expands the
range of possible product varieties and allows
engineers to create families of parts that share
common characteristics
Design for manufacturability and scale
• Standardized and modularized the core
components of the product, and made the
production process into a standardized
assembly process.
• Simultaneous consideration of cost reduction,
tempo and scale
The exploitation of the local knowledge base
and the creation of local innovation clusters
• The exploitation of local talent pool to develop
and implement the appropriate product design
further reduced costs
• Labor-intensive and capital-sensitive processes
along the entire value chain starting from R&D
through to manufacturing, assembly, distribution,
or service functions minimized the cost of
development by maximizing the use of
abundantly available low-cost resources
• Develop and train a large pool of local
manufacturers to whom it transferred
technologies
• Create a locally sustainable innovation
ecosystem to pursue low-cost innovation for
the masses
Enabling inclusive participation in
innovation diffusion
• Diffusion of innovation are enhanced by
structuring the value chain activities to
maximize engagement of local agents and
supporting their need for income generation
A theoretical framework
Thanks