Strategy guru asks MNCs to develop low cost products
Management guru asks MNC's to develop low cost, but high quality innovations to tap the large number of poor consumers.india Updated: Feb 02, 2006 18:47 IST
An India-born management guru has asked multinational companies to develop very low cost, but high quality innovations to tap the large number of poor consumers, who make up the bottom of the pyramid in a market economy.
Giving the example of Jaipur Foot, a low-cost prosthesis developed by an orthpaedic surgeon and an artisan that has helped transform thousands of lives, University of Michigan (Stephen M Ross School of Business) Prof CK Prahalad said on Thursday that the next big source of innovation would be the bottom of the pyramid (BoP).
But to tap this vast consumer base, he said MNCs need to create capacity to consume by giving people access to credit, create capacity to produce and co-create value by developing locally relevant solutions.
MNCs also need to stop viewing civil society groups as their adversaries, because NGOs had deep local knowledge that could help design relevant products, he said, addressing the Delhi Sustainable Development Summit 2006 organised by TERI.
This partnership could not only multiply returns on investment to companies, but help address poverty as well, the revered strategy guru felt.
He said while a prosthesis limb cost not less than 10,000 dollars in the US, the Jaipur Foot was available for less than $25.
While the Jaipur Foot was indigenously developed, he said MNCs should use their imagination and come up with better and high quality innovations at a fraction of the cost to capture the huge untapped BoP market.