L10: Innovation in BOP Flashcards
Definition of non-profit organization
- An organization whose attainment of its prime goal is not assessed by economic measures.
- Goal: to overcome global challenges - education, employment contribution to tax, aging population, disease, etc.
Characteristics of non-profit organizations
1) Expectation by the public: Ethical, Non-competitive salaries, Not too commercial
2) Missions: Change the public attitudes, and Evoke strong emotional responses
3) Challenges: a) Unmeasurable goals with unmeasured outputs. b) Stronger impact of environment turbulence. c) Ambiguity over who are the customers.
Social innovation definition (Mulgan et al., 2007)
Innovative activities and services that are motivated by the goal of meeting a social need, which is “meeting pressing unmet needs and improving people’s lives”.
Fields for social innovation (Mulgan et al., 2007)
Rising life expectancy, Growing diversity of countries and cities, Stark inequalities, Rising incidence of L-T health conditions, Behavioural problems of affluence, Difficult transitions to adulthood, and Happiness.
4 Barriers to carry out the social innovation? (Mulgan et al., 2007)
1) Efficiency: any new approach may appear inefficient compared to the subtle interdependencies of a real social or economic system.
2) Interests: risks of change compared to the benefits of continuity.
3) Minds (assumptions, values and norms). The more system appears to give people security and prosperity, the more it is entrenched as part of peoples’ sense of identity.
4) Relationships: personal relationships between the movers and shakers in the system create an additional stabilising factor (social capital and mutual commitment).
4 Stages of innovation (Mulgan et al., 2007)
1) Generating ideas by understanding needs and identifying potential solutions
2) Developing, prototyping and piloting ideas
3) Assessing then scaling up and diffusing the good ones
4) Learning and evolving
One of five world-changing social innovations (Mulgan et al., 2007)
1) The Open University (Education)
2) Watsi (Health)
3) Food Recovery Network in Uni of Maryland (Environment)
4) Grameen (Bank)
5) Wikipedia or Google Map (Internet-based)
3 Reasons for failure of social innovations (Mulgan et al., 2007)
1) Too expensive, not good enough or flawed by unforeseen side-effects.
2) Lack of adequate mechanism to promote them, adapt them and scale them up.
3) Impeded by structures and systems.
3 Ways to support scaling-up the social innovations (Mulgan et al., 2007)
1) Capabilities to grow: In terms of management, money, leadership and governance; Straddle different sectors; Ability to communicate - persistence, catch the imagination of communities of supporters
2) Methods: franchising and licensing, federations and gov, sharing credit of the ideas between the bees and trees.
3) Condition of environment: Public to pay, Funder to provide subsidy, Public agency to provide contracts.
3 drivers for innovation (Van der boor et al., 2014)
1) Needs as a driver for innovation
2) Reduced technological lag between 2 countries
3) The importance of platform’s openness and flexibility
1) Needs as a driver for innovation (Van der boor et al., 2014)
- Ind. need is often a more important driver of innovation than potential market size. In developing markets, there are more unmet needs.
- Customers can create solutions to meet their own needs. High need ↑ the number of user innovators and diffusion rates.
- Ex: M-Pesa => M-Kesho (saving accounts in the mobile wallet for the Kenya users).
2) Reduced technological lag between developing countries and developed countries as a driver for innovation (Van der boor et al., 2014)
- The global convergence in communication costs and technological lag is a result of increasingly ubiquitous technology platform. So, users and producers can innovate the global frontier using the latest technology in developed countries. Ex: Philippines use SMS to vote presidency.
- Technology is being leapfrogged instead of being displaced. Ex: Using mobile phone subscriptions instead of a fixed phone line.
3) The importance of platform’s openness and flexibility as a driver for innovation (Van der boor et al., 2014)
- Users devise their own solutions by building on existing platforms and leveraging its functionality in novel ways, which was not envisioned by the platform provider.
- Incumbent firms engineer ideas to be more convenient and broadly available, or adding features to product.
- Ex: scratch card send money for distant relatives instead of topping-up
4 ways to encourage users play the role of innovators in developing countries (Van der boor et al., 2014)
- Innovation policies should be sufficiently flexible and support open standards to allow for trial and error.
- Leverage the versatility of general-purpose technologies to address specific needs.
- Actively choose to search externally to identify successful and radical user innovations.
- Engage in inventive collaborations with users early by crowdsourcing
The characteristics of BOP market (Prahalad, 2012)
- > 4 billion people who live on less than $2/day.
- Within-country diversity (multiple cultures, ethnicity, literacy, capabilities and needs).
- Large and untapped market
- Served by the unorganized sector that is inefficient and controlled by local monopolies.
4 “A”s model of BOP (Prahalad, 2012)
- Creating awareness of the product: consumers and producers know what is available and on offer, and how to use it.
- Enabling access: consumers in remote locations are able to get access to the products
- Ensuring the affordability: provide world-class quality at prices that = 1/50 or better.
- Focusing on availability: Ensure an uninterrupted supply of products to build trust and a loyal base at the BOP.
The process for developing the business specifications (Prahalad, 2012)
1) Immersion into customer life and work styles to get Consumer insights
2) Developing broad specifications and the Sandbox
3) Building the core delivery system
4) Creating the ecosystem for Continuous innovation: cost-effective, scalable and provide needed skills and knowledge (gov, NGO, etc.)
=> Business model innovation, of which product is only a subset.
Innovation sandbox (Prahalad, 2012)
- The innovation must meet the criteria that could not be violated.
- Ex: Biomass stove in India: an easy-to-use stove, global safety standards, scalable production, and affordable.
2 steps to build innovation in BOP (Prahalad, 2012)
1) Recognizing BOP as a legitimate market consisting of microconsumers, microproducers, microinvestors and innovators.
2) Accepting the constraints and building an innovation sandbox within which innovation will take place.
4 Challenges in the emerging markets context (Ernst et al., 2015)
1) Lack formal institutions, physical infrastructure and stable regulation
2) Acute scarcity of resources
3) Highly price-sensitive consumers
4) Served by the informal sector with competition coming from unbranded products and services.
Affordable value innovation and performance (Ernst et al., 2015)
- Affordability: significantly lower price than in developed markets.
- Value: attributes such as quality, robustness, intuitive use and multi-functionality.
- Both dimensions have to be present to fully meet customer expectations.
3 Antecedents of affordable value innovation and performance (Ernst et al., 2015)
1) Bricolage
2) Local embeddedness
3) Adaptation to local market
Bricolage as an antecedent of affordable value innovation and performance (Ernst et al., 2015)
- The ability to combine scarce existing resources in order to find new solutions to problems and discover new opportunity.
- The ability to overcome resource constraints and institutional voids.
3 Elements of bricolage (Baker and Nelson, 2005, pp.334-36).
1) “making do”: willing to experiment and try new ways to accomplish goals w/o worrying about whether they have the “right” tools, resources, or skill.
2) “the resource at hand”: both internal and external resources available cheaply; find value in inputs that other firms view as worthless.
3) “the creative combination of resources for new purposes
