Business innovations

1. BUSINESS INNOVATION
By Susmita Pruthi
NU 522 | Assignment 4 | Business Innovations

2. Susmita Pruthi
My Questions from the Pre-read
1. In your opinion, give the two most critical positive impacts and
two reverse impacts of migration in the current changing
market scenarios. Give your justifications for being ‘critical’.
2. What are the different dimensions of ‘frugality in business’
that can generate value in businesses?
3. What is making emerging world to lead in business
innovations rivaling the rich countries?
4. “Talent retention strategies are helping emerging markets
manage innovations.” –Justify the statement.
5. What is the difference ‘scaling out’ brings versus ‘scaling up’?
6. What does Sandwich theory mean?
7. What has shazhai got to do with innovation?
8. Does reverse M&A make sense in emerging world?
NU 522 | Assignment 4 | Business Innovations

3. Susmita Pruthi
Questions for Me to Answer
1. “Application of mass-production techniques to sophisticated services” - Do
you think this has been a successful innovation . Justify.
2. Adapt and survive policy is applicable for developed and developing
countries - Comment
3. “Concept innovation leads to innovation in management” – Explain
4. “The West is ripe for frugal innovation” - Justify
5. Why are countries that were until recently associated with cheap hands now
becoming leaders in innovation?
6. According to you which country is leading in the emerging market. Justify
with an example.
7. Why do you think Japan is leading the automobile industry today?
8. Innovation have made medical treatment cheaper across the world – Justify
9. “ Adapt and survive” or “innovate and survive” – which approach is more
applicable in today’s market environment.
NU 522 | Assignment 4 | Business Innovations

4. “Application of mass-production techniques to
sophisticated services” - Do you think this has been a
successful innovation . Justify.
 I believe it has been a successful innovation considering the
benefits it derives to the business – lower costs and equitable if
not better service.
 In many cases, it has turned out to be better also as the skills
were of higher level. Take the example of the BPO sector in India
which is still seeing a growth inspite of US President and
Congress taking negative stand to the same. It is further being
extended to many other services that are IT based like tech
support, back office support to other services like tele
marketing, customer care, medical transcription, legal
services, medical consult services etc. While these are supported
by technology backbone, there are additional areas like medical
tourism, affordable domestic healthcare system.
NU 522 | Assignment 4 | Business Innovations

5. Adapt and survive policy is applicable for developed
and developing countries - Comment.
 Whether it is the State-owned or private, both types of businesses are
facing the dire need to adapt to be able to survive in these challenging
times. And it is applying to all types of markets and countries. For
example, the energy sector is primarily controlled by
governments, while many tech companies in China are state-backed.
But there are private companies that are getting a pie of their share by
leveraging their connects and getting a big share of these resources.
These private companies are diversifying to adapt to the market
scenario – lack or emerging needs. They also have the capability to
hone additional resources, entrepreneurs, talent, trained manpower
and capital to manage themselves.
 It is a necessary evolutionary change for any company to compete in the
global marketplace and succeed. Western multinationals would find
them the easiest way to enter markets that were difficult to penetrate.
While China has State backed companies like the China Telecom and
Lenovo, they are active in other areas also.
NU 522 | Assignment 4 | Business Innovations

6. “Concept innovation leads to innovation in
management” – Explain
 Innovation is not mechanics, it is a theory that a human being evolves. As
innovation is human driven, talent management has become a major HR
focus area in most of the leading companies. A variety of tools, and
techniques are being used by the management to encourage concept
innovation.
 Recruitment and retention thus have an overriding HR principle – Talent
Development. For simple productivity, there have been many carrot and
stick policies rolled out by companies. For retention, there are HR policies
that give more to the person, for example Dating allowance, Anniversary
allowance, Wedding allowance, paternity leave and so on. But for
innovation to happen, there has to be the right encouraging environment
for the people to innovate – and get rewarded accordingly.
 Innovations could be generated for existing problems or unforeseen risks
or new trends in the market. Companies are giving opportunities for
employees to develop by trying different strategies – creating and
educational ‘ecosystems’, opportunities to show case their talent outside
the company and treating them to scholarships or exposure to
Workshops/seminars etc.
 It is a continuous investment in human capital.
NU 522 | Assignment 4 | Business Innovations

7. “The West is ripe for frugal innovation “- Justify
 Given the current scenario backed up with their earlier economic
policies, Western world has no choice but to embark on frugal innovation.
 Emerging markets have been aggressively growing with business
innovations like a spray. Their economies are more stable than the Western
world primarily due to the stringent way it has been controlled till now.
The Western world has been riddled with debts as they have been fuelled
by a debt- ridden spending without any focus on debt realization. A rise of
an American household debt from 65% to 95% in itself is alarming.
Recession had to happen.
 If these markets need to grow and come out of the recession, frugal
innovations with lesser or no cost driving higher volumes in business is the
only model to take forward. Austerity is one measure but that only lowers
growth, which may lead to retrenchments. Cutbacks in public spends are a
given. But “cost innovation”—redesigning both products and processes
from scratch to take out costs—is a much more productive strategy for the
Western world.
 For example, GE has started focusing on the ‘cheap’ China market ultra
sound device. Hair is into cheap fridges. Nano has influenced car makers to
produce small, inexpensive vehicles.
NU 522 | Assignment 4 | Business Innovations

8. Why are countries that were until recently associated
with cheap hands now becoming leaders in
innovation?
 In the changing hard times, the emerging markets’ product
and service lines are far more lucrative – cheap and better
services = value for money. The local business
entrepreneurs have re-invented business models, systems
of production and distribution, supply-chain
management, recruitment and retention policies to ensure
mass distribution and service to derive the economies of
scale. They are now dreaming big – going pan India, going
global.
NU 522 | Assignment 4 | Business Innovations

9. According to you which country is leading in the
emerging market. Justify with an example.
 There seems to a tug of war between China and India in the
emerging markets with 40% of the world’s growth being
expected form these two countries due to economic growth
and high quality brain power. I would rate China as the
current leader due to the following reasons:
 higher numbers of people graduating with degrees in
engineering and computer science every year – 75,000 – versus
India’s 60,000
 98 R & D facilities by Fortune 500 companies versus India’s 63
 Microsoft’s largest R&D center outside US – in Beijing
NU 522 | Assignment 4 | Business Innovations

10. Why do you think Japan is leading the automobile
industry today?
 Japan now makes more cars than both Germany, where the horseless carriage was
invented, and America, where mass production of the automobile began.
Moreover, Japan even outsells American cars on their home turf, which happens to
be the largest car market in the world.
 Japanese automakers earned their reputation making fuel- efficient, reliable well-
made, small cars. As the Japanese automobile industry grew they began producing
all kinds of vehicles, including some gas guzzlers. By the 2000s, fuel-
efficient, reliable well-made was not sexy enough and there was more emphasis on
making cars with flashy designs and lots of horsepower.
 Brands such as Toyota and Honda have become household names, synonymous
with quality.
 Japan became the world’s largest vehicle producers in 2007, surpassing the United
States by producing 11.48 million vehicles, compared to 11.36 million in the United
States.
 As of 2005, Japanese automakers had 95.8 percent of the market in Japan, 33.8
percent of the market in the United States, 13.7 percent of the market in Europe.
 Sources:
 http://www.autoracingdaily.com/news/industry-news/japan-leading-the-world-in-
automotive-industry/
 http://factsanddetails.com/japan.php?itemid=930
NU 522 | Assignment 4 | Business Innovations

11. Innovation have made medical treatment cheaper
across the world – Justify
 Innovative Business models have made medical treatment certainly
cheaper. To begin with, medical tourism has now become so popular
that India and some of the other South Asian countries have started
benefiting from that – Thailand, Malaysia, Indonesia and Phillipines.
The reverse benefit is perceived by the consumer from the Western
world who ends up paying lesser for the same or even better quality and
service. Even emerging markets are looking at these medical tourism
benefits rather than rushing to the Western world for treatment which
would anyway be costlier. Many companies are encouraging their
employees to seek these benefits as it reduces their burden.
 Case Study: Refer next slide
NU 522 | Assignment 4 | Business Innovations

12. Innovation have made medical treatment cheaper
across the world – Justify
 Case Study:
 Howard Staab, a 53-year-old carpenter living in Carborro, North Carolina, learned
that he needed heart surgery to replace a flailing mitral valve. He had no health
insurance. They were told the total cost of the procedure would be around $200,000.
With an expected hospital stay of five days to a week, the hospital bill alone was
estimated to be $100,000. Fees for the
surgeon, cardiologist, anaesthesiologist, replacement mitral valve and other expenses
would double the cost of care. If complications occurred they would lengthen the
period of hospitalization and increase the total price tag. According to the CFO, the
hospital required a $50,000 down-payment prior to surgery. The remainder of the bill
could be paid in installments after the operation.
 At the Escorts Heart Institute and Research Center in New Delhi, Dr Naresh Trehan
replaced the mitral valve. There were postoperative complications and a second visit
to the operating room, but after a month in India Howard and Maggie returned
home. The total cost for the procedure and all related expenses including a three-
week stay in the hospital and airfare was just under $10,000.
 Many a times, the complete package is arranged from stay to operations, medicines
to other medical support required. Sometimes, a little bit of real tourism is also
packed with it, if the nature of ailment allows.
 Our own stalwarts – Dr Shetty and Dr Aravind - have added another dimension of
cheaper domestic medical care system which talks of generic medicines against
brands, volumes based specialized medical care – assembly like fashion – ensuring
quantity and quality service & care.
NU 522 | Assignment 4 | Business Innovations

13. “ Adapt and survive” or “innovate and survive” – which
approach is more applicable in today’s market
environment.
 The game today has moved from “Adapt and survive” to
“Innovate and survive”. The demand on adaptation is so
high that it is not a standard adaptation but unique
innovations that will make the company survive.
Adaptation is over a time period but Innovations demands
radical shift in stance, attitude, behaviorism business
modeling and market.
NU 522 | Assignment 4 | Business Innovations