A few Indian pioneers have ﬁgured out how to do more with fewer resources— for more people. by C.K. Prahalad and R.A. Mashelkar
132 Harvard Business Review July–August 2010
C.K. Prahalad was the Paul and Ruth McCracken Distinguished University Professor of Strategy at the University of Michigan’s Ross School of Business. He wrote this article, his 16thfor HBR, before he passed away on April 16, 2010.
R.A. Mashelkar is a CSIR Bhatnagar Fellow at the National Chemical Laboratory in Pune, India, and a former director general of India’s Council of Scientiﬁc and Industrial Research. He serves on the boards of Reliance Industries and Tata Motors, one of the companies cited in this article.
ILLUSTRATION: JESPER WALDERSTEN
Innovation, aftervanishing from corporate priorities during the recent recession, is slowly making its way back onto to-do lists in corner offices. In most companies, though, the innovation process is coughing and sputtering like a rusty old engine. Not unlike internal combustion, traditional innovation is heading for obsolescence—because parameters have completely changed—and it will take unsuspectingorganizations with it. Most innovation programs are built on the assumptions of affluence and abundance. The more, the better. Striving for bigger margins is B School 101. However, we see shaken consumers in the United States and Europe asking for inexpensive or valuefor-money products and services. We see billions of first-time consumers in China and India—where economic growth is surging and 2 billion to 3billion people will join the middle class in the next decade— who can afford only the cheapest offerings. We see the rich and the young in both the developed and
July–August 2010 Harvard Business Review 133
INNOVATION’S HOLY GRAIL
“Earth provides enough to satisfy every man’s need, but not every man’s greed.”
the developing worlds demanding environment- radical businessmodels to penetrate the country’s mass markets. They have done this by transformfriendly products and services. Affordability and sustainability, not premium pricing and abundance, ing almost every element of the value chain, from supply-chain management to recruitment, and creshould drive innovation today. Companies can respond to the challenge by de- ating novel business ecosystems. Somedescribe this phenomenon as an extension veloping strategies that allow them to create more products with fewer resources and sell them cheaply. of the Indian tradition of jugaad: developing alternatives, improvisations, and make-dos to overcome The search for lower manufacturing costs and fresh a lack of resources and solve seemingly insoluble sources of talent will increase pressure on them problems.However, the term “jugaad” has the conto globalize, leading to more-complex knowledge chains, supply chains, and cross-border interdepen- notation of compromising on quality. We prefer dencies. At the same time, the new processes will “Gandhian innovation,” because at the core of this type of innovation lie two of the Mahatma’s tenets: make products and services accessible to a greater number ofconsumers the world over. Learning to do “I would prize every invention of science made for the benefit of all,” and “Earth provides enough to more with less for more people, we believe, should satisfy every man’s need, but not every man’s greed.” be the innovator’s dream. While this undertaking is proving to be a night- Affordability and sustainability were Gandhi’s touchstones six decades ago,and Indian companies have mare for many Western companies, our research suggests that a few pioneers in developing coun- recently discovered their power. In the following pages, we will describe the factries are showing the way. They design inexpensive tors that led to this genre of innovation in India, products and manufacture them with so little capital unveil a framework that will help...