时间：2022-04-30 06:02:32
In the first part of this article, which Business Today published in its May 15 issue, the authors described the factors that have led to a new kind of innovation in emerging markets like India. The concluding part of the article describes the models of Gandhian innovation and lists the principles that every company must adopt to get innovation right today.
Innovations That Synthesise Technology
Some Indian organisations have combined cutting-edge technologies to create new capabilities, in certain cases for the first time in the world. They are scaling rapidly but keeping costs low by using innovative financing methods such as public-private partnerships. These companies often draw on the knowledge base of specialised institutions overseas and set the standards in India even as they develop unique research capabilities. Consider medical emergency management – in particular, the 911 service in the US that prompts an ambulance to arrive at your doorstep the moment you need it. Several ambulance companies operate in large cities like New York and Los Angeles, and while they serve people well, they remain small and invest little in innovation. Because no such private entity existed in India, the Raju brothers – now in jail for embezzling funds from Satyam Computer Services – set up the Emergency Management and Research Institute, or EMRI, in 2004. Taken over by GVK, another Indian business group, EMRI has woven together the latest telecommunication, computing, medical and transportation technologies to provide affordable (read: mostly free) emergency services in tribal, rural, and urban areas.
Given India’s environment, the organisation has innovatively tackled the physical, cultural, and language barriers that impede its ability to deal with emergencies. Getting Indians to recognise an emergency and call 1-0-8 for assistance is a major hurdle. For example, when a woman goes into labour in India, seeking medical care may not always be the knee-jerk response, since many women give birth at home. Through its research, EMRI has learned that 10 per cent of Indians face emergencies but either don’t recognise them as such or have nowhere to call. In addition to providing a number to call, the organisation has developed programmes to teach Indians to recognise and react to emergencies.
Unlike its Western counterparts, EMRI has designed its ambulances, trained its paramedics, and most important, built a unique information and communications technology infrastructure. At the heart of that infrastructure is a computer network supported by a call centre in each state, where 200 operators receive 1-0-8 emergency calls and direct 4,000 field staff members to respond to them. The Emergency Relief Operators follow a clear process to determine if a call is an emergency and, if so, whether it is a medical, police, or fire emergency. The goal is to help victims survive the golden hour, the first 60 minutes, since 80 per cent of deaths in hospitals take place in the first hour of admission.
India doesn’t have reliable GPS-based mapping, so the primary critical task is to pinpoint the emergency’s location. The Emergency Relief Operators route ambulances using dynamic optimisation algorithms based on the nature of the emergency, its severity, and the ambulances’ locations. After an officer dispatches an ambulance, she or he calls the medical technicians in it to give them healthrelated data, connects one of the technicians with the caller, and leaves them talking so the distraught caller is never alone before the ambulance gets to the spot. The operators execute this task in 80 to 90 seconds, but the organisation hopes to reduce that time to 60 seconds. EMRI keeps innovating: One recent experiment consists of sending a team ahead on a two-wheeler, which slides through traffic faster than an ambulance could, enabling critical care to start sooner.
EMRI started out on the assumption that a public-private partnership would be essential for its functioning. In India, the government owns most hospitals, so EMRI has to work with the state as well as the fire and police departments. Furthermore, it recognises the importance of government support in educating people. To ensure that policy makers and bureaucrats don’t interfere, EMRI is a private foundation in legal terms, although 95 per cent of its funding comes from state governments. Partnerships and alliances are a strategic focus. EMRI collaborates with organisations in the US such as the National Emergency Number Association, the American Association of Physicians of Indian Origin, Carnegie Mellon University, Shock Trauma, the American Academy for Emergency Medicine in India, and Stanford University (with which EMRI has developed a two-year postgraduate degree in emergency care), as well as Singapore Health Services and Germany’s Geomed Research.
Over the past four years, EMRI has expanded rapidly, offering its services to 366 million people in Gujarat, Uttarakhand, Goa, Chennai, Rajasthan, Karnataka, and Assam, which makes it the world’s largest emergencymanagement entity. EMRI handles 60,000 to 80,000 calls a day, has a fleet of 2,600 ambulances, attends to 7,000 emergencies a day, saves 110 lives a day, and employs 11,000 people. Against a target of reaching patients in 30 minutes, EMRI reports an average response time of 14 minutes in cities, 31 minutes in rural villages, and 28 minutes in tribal areas. EMRI spent only 50 cents per person treated to build the infrastructure in India, compared with $100 in the US. The expense per ambulance visit is less than $15, versus $600 to$800 in the US.
As the only emergency responder in the world with a research institute, EMRI is at the forefront of identifying ways to improve knowledge and practices and is becoming the best source of information for emergency care. It archives all the calls it gets and has analysed the data to compile regional public health profiles. For the first time in India, data on the seasonality, timing, and nature of medical emergencies are available. EMRI is also developing ways of passing information from ambulances to hospitals before victims arrive, particularly in the cases of cardiac problems, traffic accidents, pregnancies, snakebites, and suicide attempts. Indeed, its research capabilities are changing the way many countries think about emergency-care management.
Innovations That Yield New Technologies
Many Indian companies have invested in developing new products or services, but their goal is usually to create inexpensive offerings on shoestring budgets. They succeed only because they challenge conventional techniques.
Traditionally, the development of pharmaceuticals starts in a laboratory and moves to a clinic through a complex system of validation and testing, as we all know. This can take 10 to 12 years and can cost more than $1 billion. In order to identify medicines more quickly and cheaply, Indian policy makers and scientists are trying to reverse the process. They are asking what would happen if, instead of going from laboratories to clinics, companies went from clinics to laboratories and then back to clinics. The idea is to use clinical and qualitative data to develop target formulations that undergo preclinical and clinical research trials.
For example, around two per cent of the world’s population suffers from psoriasis – a recurring inflammatory skin disorder – and patients spend approximately $5 billion a year on treatments. Monoclonal antibody treatments, which cost $15,000 to $20,000 for a course, are effective but beyond the reach of most Indians. When Lupin, one of India’s wellknown pharmaceutical companies, announced its interest in developing herbal-based medicines, a practitioner of a traditional branch of Indian medicine called Siddha approached the company with a cure for psoriasis. On the basis of knowledge handed down in his family for generations, he claimed that the juice of the Argemone mexicana (Mexican poppy) would cure the disease completely.
There was no clinical evidence for the claim, but Lupin collaborated with the practitioner, developed a formulation, and started the first trials in early 2000. Dermatologists used quantitative measures such as the Psoriasis Area and Severity Index to assess success. Patients who took the herbal medicine not only were cured but also did not suffer a relapse for the next three years. In January 2003, the government offered to fund the next stage of the project and arranged partnerships with two state-owned research organisations, the Central Drug Research Institute and the National Institute of Pharmaceutical Education and Research.
These organisations developed the drug in three phases, according to US Food and Drug Administration guidelines. The first step was to identify the active elements to gain insights into how the treatment worked and to create a safe oral antipsoriatic formulation that would lead to curative and preventive therapy. Once the safety and toxicity studies were complete, the Drug Controller General of India approved the drug for trials. The key objective at that point was to determine the right dosage levels. The drug went through a clinical study that used healthy adults in the first phase. In the second phase, which ended in April 2007, the safety and efficacy of three different dosages were tested on patients with moderate to severe psoriasis. Lupin completed the third phase –the final multicentric, randomised, parallelgroup studies – in March 2010, and it plans to launch the drug before the end of the year.
So far, the Indian company has spent $10 million and eight years to develop a cure for psoriasis – a fraction of the money and time it would have normally taken. Moreover, treating the disease with Lupin’s drug will cost $100 per patient, compared with $15,000 in the US. In general, the Indian market is large in volume and low in value compared with the US. For example, Pfizer sells Lipitor for 90 cents in India, as opposed to $2.70 in the US, because the Indian equivalent, Ranbaxy’s Atorvastatin, sells for 90 cents. Unsurprisingly, reverse pharmacology is gaining ground, with local companies chasing multiple leads for treating cancer, arthritis, hypertension, diabetes, and osteoporosis, among other health problems.
Rules for Gandhian Innovation
Contextual factors have undoubtedly facilitated the growth of Gandhian innovation in India. One, the country’s political leaders experimented with socialism for more than four decades, which kept out foreign capital and technologies, particularly from the US, but spurred local invention. Indian engineers, backed by government funding, developed nuclear weapons, rockets, imaging techniques, super computing, and weather modelling by depending only on their own ingenuity. Two, the Indian economy did not start growing until the 1990s, so local companies are small. For example, in 2008 India’s then-largest pharmaceutical company, Ranbaxy, made$800 million in revenues – 60 times less than the $48.2 billion Pfizer brought in, and nine times less than what the US giant budgeted for research. Indian entrepreneurs have a penchant for undertaking small projects and using capital carefully. They have changed their approach to scale since 1991, but they maintain an unwavering focus on capital efficiency. Three, local companies know that while India has both rich and poor people, catering only to the rich limits their market. Most target the aspiring middle class family, which lives on$5,000 a year. As a result, they are forced to develop value-for-money products and services by changing the price-performance equation. And four, entrepreneurs, the most important driver of India’s innovation mind-set, have had the audacity to question received wisdom. With increasing frequency, these leaders are rejecting established ways of doing business in favour of new practices. The mix of minuscule research budgets, small size, low prices, and big ambitions has created the need to think and manage differently.
However, it would be wrong to conclude that only companies in India can develop Gandhian innovations. Enterprises anywhere in the world can do so by modifying the philosophical underpinnings of their innovation processes. CEOs must follow five cardinal principles to get innovation right today. They must say:
My goal is inclusive growth. CEOs must develop a deep commitment to inclusive growth, which will force them to think of unserved customers, be they rural poor who don’t have access to telephones or urban poor who don’t get emergency medical services. A focus on inclusion challenges executives to push price-performance envelopes to ensure affordability, and to think about increasing scale to lower costs. The starting point has to be the desire to serve more people, though. Companies often start by asking: “Given our cost structure, which segments can we serve?” They should ask: “Given that we need to cater to the unserved, what should our cost structure be?”
My vision should be unambiguous. Leadership is crucial to building Gandhian innovations in organisations. In all the cases we’ve studied, leaders such as Ratan Tata (Tata Group), Sunil Bharti Mittal and Manoj Kohli(Bharti Airtel), and D.B. Gupta (Lupin) have articulated clear visions of what they want to accomplish. In addition, their visions always have a human dimension: for example, helping poor Indians travel safely and affordably with their families; using connectivity to improve people’s work and lives; and enabling patients to buy cheap medicines. These leaders also engage with project teams constantly, providing a safety net that protects the teams from self-doubt during despondent times and moderates overconfidence.
I must set stretch targets. CEOs must establish ambitious goals and clear time frames for achieving them. Companies should ask:“What is our man-on-the-moon project?” Or, as they do in India’s boardrooms: “What is our Nano project?” By creating aspirations that lie beyond the company’s existing resources or current approaches to the delivery of products, CEOs will compel executives to be innovative and entrepreneurial. The mismatch between aspirations and resources is the essence of entrepreneurship. Executives then have only two choices: Leverage existing resources in new ways, or change the rules of the game entirely. This process of setting ambitious goals is what C.K. Prahalad has called strategic intent (see Strategic Intent, co authored with Gary Hamel, HBR, May-June 1989).
We must learn to innovate even when faced with constraints. Gandhian innovators start by accepting that there are constraints that won’t go away. For example, the Tata Nano team as- sumed several strict parameters – about price, safety and environmental standards, space, and design. Taken together, these formed the Nano’s“innovation sandbox”: the space within which the design and development teams had to exercise their creativity. (For more on the innovation sandbox, see The New Age of Innovation, by C.K. Prahalad and M.S. Krishnan.) Leaders must force project teams to work within self-imposed boundaries that stem from a deep understanding of consumers. That will result in a novel, outside-in view of innovation.
Our focus should be on people. None of the innovators in our research explicitly discussed shareholder wealth or profit maximisation. Their innovation projects had to be profitable and build shareholder wealth, of course, but the focus was always on customers. The language inside their organisations was about consumers as people, suppliers as partners, and employees as innovators. Consider one constant managerial complaint: “At the price levels in these markets, we cannot make profits.” This assumes that companies can’t lower cost structures, that they can’t reduce operating margins, that there’s no price elasticity, and that poor people don’t have much use for high-tech products. The Indian innovators simply said: “What if we change the way we operate to reduce costs and focus on return on capital employed, not just on operating margins? If we reduce prices enough and make our products available to the poor, won’t there be explosive growth as they quickly find uses for and buy our offerings?”
METRICS INFLUENCE managerial behaviour.
Gandhian and traditional innovators, we find, use very different measures to evaluate their performance. Most companies focus on profits, operating margins, net present value, time to profit, ownership and control, manufacturing efficiency, intellectual-property-based profits, and known markets. Innovators in developing countries track profits and losses, balance sheets, return on capital employed, cash flow, capital intensity, access and influence, innovation efficiency, volume, and costs – and they concentrate on creating new markets. Which of these two types of companies do you think will win in the new age of global innovation?