Bottom of the pyramid innovations

Bottom of pyramid innovations

By Roopen Roy Jan 24 2012

Tags: Op-ed

There is no doubt that innovation is the mantra for survival in a constantly changing and uncertain world. And, yet, the best brains innovate and research for causes that do not change the world for those who are economically disadvantaged.

When Bill Gates came back to Harvard Business School (HBS) to pick up his degree, he had to sing for his supper. He delivered a keynote speech on October 8, 2008, at the centennial of HBS, which I had the privilege to attend. He said in his now famous sp­eech, “Ten times more mo­ney is spent developing a cure for male baldness than developing a cure for malaria, despite the fact that malaria kills one million children per year. The reason: There is a profitable market for male baldness but no such market for malaria drugs.”

Clearly, innovation is at the heart of success. But we are not directing our best resources to the biggest problems of our generation. The invisible hand of the market is misallocating resources.

Innovations are much bragged about in the financial services industry. Paul Volcker, the former chairman of the Federal Reserve Board had sarcastically said that the ATM was the only financial innovation he can think of that has improved society. He went on to say, “I hear about these wonderful innovations in the financial markets, and they sure as hell need a lot of innovation. I can tell you of two — credit-default swaps and collateralised debt obligations — which took us right to the brink of disaster. Were they wonderful innovations that we want to create more of?”

How are we doing in innovating for people at the bottom of the pyramid in India? Let us hear our prime minister Manmohan Singh’s opinion on the subject: “In recent times, we have made several innovations in areas such as space technology, atomic energy and automobiles. But, innovation in our country has by and large focused mostly on the needs of the upper income groups and not adequately on solving the problems of the poor and the underprivileged.”

In the developed world, a large proportion of research dollars is spent on inventions that are directed simply at saving or displacing scarce and expensive labour without impacting in any other way the product or service offering. In our societies, human capital is available in plenty and at a competitive cost. The goal of our innovations should be to bring down costs and make products and services available and affordable to a larger section of the population. Our frugal innovations should focus on meeting our basic needs of nutrition, clothing and housing (roti, kapda, makan) and a minimum infrastructure for civilisation providing energy (including renewable energy), rail and road infrastructure and potable water and irrigation (bijli, sadak, pani).

In a planet where natural resources, and not labour, is in short supply, the thrust of our research should be on optimising the use of resources like water, energy and natural resources.

Of late, Sam Pitroda has been evangelising innovation. He is being called upon to play the brand ambassador for many “mission mode” projects that are being launched both at the centre and in the states on subjects as diverse as railways, information technology, education, water conservation and healthcare.

Pitroda played a commendable role in initiating the transformation of India’s telecom sector during prime minister Rajiv Gandhi’s time. But, he is no magician. Meetings, minutes, ministries and councils, committees and commissions are unlikely to create large-scale innovations for the poor.

The latest project that Pitroda is being asked to lead is a $1 billion innovation fund to be launched by the government of India in July 2012. This fund will invest in innovations that can generate services and products to uplift the poor. Pitroda has been quoted in the media as saying, “We need to provide money to those who have ideas but no seed capital.” The fund, named India Inclusive Innovation Fund, will invest in sectors, such as agriculture, water, energy and healthcare.

What has been the record of India in government spending for the poor? Sadly, not very impressive by its own assessment. The disparity graph shows that our record of achieving inclusive growth has been at best mixed. Massive subsidy programmes for the poor are not yielding the desired results due to leak

ages and governance failures. Throwing money at the problem and setting up “task forces” and “mission-mode projects” consisting of eminent people have not created much impact due to poor governance, red tape and weaknesses in implementation.

Can we not be innovative about innovation? First, let us cast away the ideas of pouring old wine in a new bottle. How about unleashing the energies and implementation capacity of non-government organisations (NGOs), the private sector and our centres of learning? Like Gates, Warren Buffett and Michael Dell, individuals like Azim Premji in our country have donated their own money for causes like education. Why not team up with them to co-invest and ignite innovations? Let us encourage and celebrate the culture of philanthropy in business. Why not invite a Muhammad Yunus or a Sewa to come and innovate in replicable social business models? Why not create a collaboration between the scientific community, industry and academia for innovations led by those who have generously donated their time, money and enterprise, rather than those who want to oversee the spending of taxpayers’ money? Let us innovate by being different. Albert Einstein said, “Insanity is doing the same thing over and over again and expecting different results.”

(The writer is managing director of Deloitte Consulting, India. These are his personal views)