Systematic Review - Network for Business Sustainability

This strategy is particularly true where the target
consumer is the bottom-of-the-pyramid consumer
who accepts a good enough, or a satisficing, model.
Products in this model are characterized by a limited
and simple functionality, sufficiency (being good
enough), high reliability, ease of use and durability for
intensive use (Zeschky, Widenmayer & Gassmann,
2011).
In Practice
Founded in 1976, Aravind Eye Care is the
world’s largest provider of cataract surgery.
It provides end-to-end eye-care services
and each year screens more than 2.7 million
people and performs 285,000 surgeries.
Avavind has adopted the assembly-line
principle in its operation theatres: operating
tables are set up side by side, and surgeons
operate on adjacent tables, while patients
are lined-up even as the first operation
is being completed. The hospital pricing
mechanism is based on an equitable
“pay-as-you-can-afford” system, and
approximately two-thirds of its patients pay
nothing. Aravind remains profitable through
fees collected from the one-third of patients
who pay plus revenues from eye-related
services and such products as intra-ocular
lenses. The key to the hospital’s success
is its focus on one disease and one major
process and its patient throughput. Adapted
from Avital et al. (2007), Joshi (2010) and
Prahalad (2010).
4. Learn lessons from local firms and from new
innovation platforms such as frugal innovation
Innovators, particularly but not exclusively those
operating in developing economies, learn lessons from
local firms, frugal innovators and reverse innovators.
Reverse innovators focus on bottom-up co-invention
with partners to develop products for local markets
through a low-cost local supply chain (Ray & Ray,
2010). The products may involve novel technologies
(Govindarajan, 2012; Immelt, Govindarajan & Trimble,
2009; Van Der Kroft, 2010).
Frugal innovation re-assesses the cost/performance
profile of product development to create good-enough
products that meet consumers’ basic needs. Frugal
innovators develop relationships across the value chain
and the wider stakeholder community in an effort to
minimize the use of material and financial resources,
overcome resource constraints, devise new methods
of distribution and achieve scalability (Tiwari & Herstatt,
2012). This strategy involves reducing the costs of R&D
by drawing on existing core technologies and modular
designs, eliminating unnecessary functionalities,
leveraging local talent, deploying labour-intensive and
capital-sensitive processes throughout the value chain,
and developing relationships with local partners to
ensure a low-cost local supply chain (Ray & Ray, 2010).
Frugal innovation has much in common with jugaad
innovation, a term recently coined by Radjou et al.
(2012) from the Hindi term for “overcoming harsh
constraints by improvising an effective solution using
limited resources.” Radjou et al. (2012) assert that
visionary leaders can help to reinvent their organizations
around the principles of jugaad innovation, either
in one fell swoop or by adopting it in parts of their
organization.
Frugal, jugaad and reverse innovation are becoming
increasingly common and have systems-changing
possibilities in both developing and developed
economies. By focusing technology and product
Innovating for Sustainability 52