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Inclusive Innovation Is In Vogue
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After a decade of excess and the sins of the financial crisis, it is not surprising to see interested parties take positions. Politicians, worried about the growing gaps between the rich and poor emphasise the need for growth to reach all segments of their nation's populations. CEOs of multinationals, eager for growth after the shocks of the crisis, see the rising middle class in emerging markets as the panacea for reenergising profits. Business academics, always searching for the next magical mantra, see potential in extolling the reinvention of innovation strategies.
The business logic for emphasising inclusiveness is sound. After all, inclusive growth brings the bottom of the pyramid into the mainstream economy as customers, employees and intermediaries. Companies that are able to cater to and attract the loyalty of these emerging masses are laying the foundations of their future growth and success. However, creating and executing on inclusive innovation strategies has proven to be hard for corporations.
Many executives wrongly assume that inclusive growth simply means making lower quality products at lower price points. This they argue is either against their corporate goals or simply incompatible with their existing capabilities and production processes. However, entrepreneurs in many emerging markets such as India and Brazil have shown that inclusive innovation requires a fundamental rethinking of business models. How else could they offer mobile phone calls for less than one cent a minute or perform high quality cataract surgery for thousands of needy individuals at around $25 dollars per head. In fact, the motto adopted by the National Innovation Council in India, inspired by the philosophy of Mahatma Gandhi is doing more good with lesser resources for more people.
Affordability and sustainability have come to the fore of innovation and they will have to be achieved while maintaining or even improving quality. This poses a non-trivial challenge for even the most successful corporation. While business models will have to be rethought bottom-up, having the right mindset and culture are even more important. Business leaders will have to commit in unambiguous terms to making inclusive innovation part of their corporate goals. There has to be a fundamental desire to serve more people, in fact many more people, with relevant and affordable products as opposed to being content with serving more products at premium prices to current customer segments.
The winners in inclusive innovation will reap big benefits in a changing world where the fastest growth in consumer spending is coming from the bottom of the pyramid in emerging markets. However, winning in this new arena will not be easy and cannot be taken for granted by incumbents.
Are you ready for this challenge?
The author is the Roland Berger Chaired Professor of Business and Technology at INSEAD, France. He has authored several books on technology, policy and innovation. He can be reached at: soumitra dot dutta at insead dot edu