Innovation for the Developing World

Posted by Aric Rindfleisch at 9:41 AM


When I hear the word, "innovation" I typically think of high-tech and expensive new offerings such as the iPhone, Dyson vacuum, and the GM Volt. Indeed, these are the types of innovations that grab headlines and engender high levels of consumer awareness. However, these offerings appeal to only a small subset of consumers (i.e., those living in advanced consumer economies). According to Mahajan and Banga (2005), nearly 90% of our planet's inhabitants live in nations with a per-capita GDP of less that $10,000 (US). Clearly, these individuals have a much different set of consumer needs and desires than the typical American and are highly unlikely to be able to afford (or even need) an iPhone, Dyson, or Volt. Consequently, there is a tremendous need for low-tech innovations geared to this vast population of consumers. While this need appears to have been ignored by most corporations, it has attracted the attention of Professor Amy Smith, who directs MIT's D-Lab, which focuses on creating innovative solutions for inhabitants of developing nations. This lab has produced a number of interesting innovations such as non-toxic charcoal made from corn husks and sugar cane. The importance of affordable low-tech innovation has also been recently recognized by Nokia researcher Jan Chipchase, who has discovered that in developing nations such as India, local street vendors who recycle and reuse old cell phones are posing a major competitive threat. Given current growth projections, over the next decade, the population of developed nations will shrink and get older, while the population of developed nations with grow and get younger. Thus, innovation directed towards the developing world is likely to be the main growth are for most firms. Is your firm prepared to meet this challenge?



 

Labels: , ,

3 comments:

  1. John Rotheray said... September 4, 2008 at 10:46 AM

    It's striking that businesses would focus on developing new low-tech products for the developing world when there is such a glut of barely out of fashion used high-tech goods flowing out of first world nations.

    With the rapid pace of technology innovation, even 2007-2008 iPhone v1.0 will be sold on a secondary market in a couple years when it's no longer cutting edge.

    Considering the incentives to upgrade to new technology, it just doesn't make sense for most first world consumers to stick with aging devices. We have images to maintain and it's much cooler to trade up to something we can brag to our friends about!  

  2. japeri said... September 13, 2008 at 8:15 PM

    Low-tech innovations aren't just for developing nations. The latest PDA, Peek, is built solely for email - no calendars, games, music, etc. - and was designed to appeal to non-techies. (http://www.nytimes.com/2008/09/11/technology/personaltech/11pogue.html?_r=1&oref=slogin)

    Appears to be a smart move given marketers will need to prepare for the US aging trend. Most Baby Boomers are probably less than impressed with frills and bells and just want to use the damn thing.

    Peek is taking the approach used by Nintendo and Wii of targeting neglected consumer segments (non-techies and the aging) and their unmet needs. Pretty basic marketing really.  

  3. Schwald said... December 1, 2008 at 7:09 PM

    When I was doing my internship at Target this summer in Minneapolis, there was a great outdoor exhibit called "Design for the Other 90%" at the Walker Art Center that focused soley on innovations for third world countries. They were very profound and changed lives. I believe it is a travelling exhibit. Everyone should get out and see it if you are in the nieghborhood! More information at: http://other90.cooperhewitt.org/  

Post a Comment

Subscribe to: Post Comments (Atom)
 

Est. 2008 | Aric Rindfleisch | Wisconsin School of Business | Banner Image by Bruce Fritz