Find Yourself a “Squeeze Box” – And Think In It;

Spend Less – and Innovate Better!

By Shlomo Maital

 

  

   Thinking “outside the box” is vastly over-rated. (I’ve written about this before). The best creative thinking is done INSIDE the box – but the right box.  By ‘box’, I mean the things about reality you CANNOT ignore because they just won’t go away.  Like time, money, and feasibility.

   A new book by author by  Vijay Govindarajan’s   Reverse Innovation: Create Far From Home, Win Everywhere (HBS) makes this point.  Despite the MBA/Harvard type title, Govindarajan is right.  (An excerpt appears in the latest Bloomberg Business Week issue).

  “Innovation in the rich world is based on the approach “Spend money and innovate.” In the U.S., you can see this clearly in health care. We push the frontiers of medical science and technology with very little attention paid to cost. Our health-care system is prohibitively expensive, yet does not guarantee the highest quality; nor does it provide universal coverage.  There is an alternative model of innovation: “Spend less and innovate.” This is the only feasible model in poor countries that are resource-constrained. As some companies have discovered, constraints can be liberating. This notion is at the heart of reverse innovation. General Electric (GE) was able to come up with an ultralow-cost electrocardiogram (ECG) only when it bumped up against many constraints in rural India.”

 

  Remember former Curitiba (Brazil) Mayor Jaime Lerner’s dictum?  If you want to truly innovate, slash two zero’s off your budget!   

   So, think different about thinking differently.  In wealthy countries, VC’s and MBA professors caution, “you always need more money than you ask for – ask for more, and then raise money when you can, not when you need it”.  Problem is, as all of us know, when you have money in the bank, you tend to spend it; you tend not to respect it. And then high burn rates kill the innovative companies. They run out of money because having money means you have time (to doddle) – but you don’t! Because time to market is crucial and urgent, and having money kills it. 

    So, find a ‘squeeze box’.  Find a tight constraint, a challenging one.  Make sure it is credible. Use it to create urgency, the first step in transformative change.  And then work hard inside that box. When John F. Kennedy made his famous “we will go to the moon by the end of the decade” speech before a joint session of Congress, on May 25, 1961,  he did precisely that. And just eight years later, in 1969, American put a man on the moon.  The ‘squeeze box’ definitely helped.  If he had said, well, we’ll go to the moon, sometime before the year 2050, would it have happened? 

    Here’s how GE innovated the electro-cardiogram device affordably for rural India.

  GE’s premium ECG machines were nonstarters in rural India, because patients didn’t have the money to pay for the test and small clinics and physicians couldn’t afford the machine or the support costs.  These constraints defined the sandbox for GE Healthcare to develop an $800 ECG machine for rural India that is portable, battery-operated, easy-to-use, and easy-to-repair.  GE found many ways to cut costs. The high-end machine was custom-designed, so GE built a machine using commodity components, realizing huge cost advantages. For a cost-effective printer, GE used the kind of ticket printer found on public buses and in movie theaters. Since these printers are produced in the millions, GE could enjoy significantly lower costs due to economies of scale.  The small printer reduced the weight of the machine—less than a can of Coke—and helped make it portable. By eliminating the monitor, GE reduced the need for huge power consumption. This, in turn, contributed to longer life for the rechargeable battery.

http://www.businessweek.com/printer/articles/20236-the-case-for-frugal-thinking

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