Innovation is one of those things that is prized, but not always seen if it shows up in low or middle income countries. Or at least that is part of the argument in a recent paper by the Organization for Economic Cooperation and Development that looks at innovation in the context of the pandemic.
The paper gives three real world examples of solving COVID 19 problems which were developed locally “thanks to the novel ideas, approaches and methods of people in the countries where the problems arose.” Then it talks about how western funders and agencies can find and support such innovation. Which is, apparently, not so easy as one would think because there does seem to be a bias toward assuming innovation happens in the global north.
Story One: A health official in a large Indian city must find high quality masks – but supply chains and manufacturing have shut down. Online, he finds videos of a maker group in Mumbai that is repurposing its facilities to quickly produce quality masks. It invites institutions dealing with COVID 19 to get in touch. He does. “Within a few weeks, there is a national network of makers responding to such requests and producing over one million masks.”
Story Two: In the middle of lockdown, a senior social inclusion specialist in the Peruvian government needs to be able to track the welfare and livelihood of elderly and vulnerable populations. The solution? Peru’s first massive online volunteer scheme, which successfully mobilises 20,000 young people as digital track and tracers to connect to and learn about the health conditions and needs of almost half a million elderly and most vulnerable people.
Story Three: In Nairobi, where more than 50% of people use public transport each day, contact tracing could be a challenge. The bus fleet owner gets its public drivers and operators to sign up to a locally-developed app, mSafari, using their vehicle registration numbers. All passengers upload their details onto the app, which traces future cases and clusters, triggers automated warnings to exposed passengers, and sets and monitors how many passengers can safely travel on each vehicle.
The researchers are not the first people to struggle with this question of how to find and support innovation, of course. The paper reminded me of two stories I am fond of telling. The first is the story of how the late economist C.K. Prahalad came up with the idea of the ‘Bottom of the Pyramid’, an idea initially rejected by development journals but hugely influential in the corporate world, which could indeed recognize a brilliant new idea when it appeared. The second is the story of how Anil Gupta developed his famous Honey Bee Network in India, seeking out and supporting innovators in useful ways.
The Bottom of the Pyramid
It was at Christmas 1995 that Prahalad found himself troubled by a nagging question. Why, with all “our technology, managerial know-how, and investment capacity”, is there still global poverty and disempowerment?
Answering that question turned out to be a long, and lonely journey – he found himself confronting all the traditional ideas about how to work with the poor. But after two years of research in India, he came to see the very poor as “resilient entrepreneurs and value-conscious consumers” with whom an “inclusive capitalism” could be “co-created” if businesses, governments, civil society organizations, development agencies and the poor worked together.
This idea seemed so radically different from everyone else’s ideas of poverty alleviation that in 1997, when he and Stu Hart wrote The Strategies for the Bottom of the Pyramid, no one would publish it. Journals said the paper “did not follow the work of developmental economists.”
Prahalad and Hart’s BOP model showed the world’s economy as a pyramid divided into five tiers based on the purchasing power of households. At the top were the 75 to 100 million people who made more than $20,000 US per year. Tiers 2 and 3 were made up of the 1.5 to 1.75 billion people who made between $1,500 and $20,000 a year. At the bottom of the pyramid were the four billion people who made $1,500 a year or less; most of these people lived on $2 a day or less.
He argued that turning the bottom of the pyramid (BOP) into an active market was “essentially a developmental activity” that started with respecting BOP consumers as individuals and needed new and creative approaches. And that caught the attention of the business world, even if the journals wouldn’t publish the paper.
In 2006, Prahalad published The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, which gave more than a dozen examples of how such ideas were already being put into practice around the world and which exploded many myths about poverty and the role market-based solutions could play in alleviating it.
One myth was that the poor had no purchasing power. Not only was this not true – but it turned out that the poor paid more than the rich for everything from credit to rice. Prahalad called it the ‘poverty penalty’, and it seemed to be universal.
Another myth was that the poor spent money on luxuries rather than necessities. But they didn’t own their land, so investing in sanitation, clean water and a better house was pointless. But appliances were portable, and in investing in them, the poor were brand-conscious. Brazilian companies that extended credit to consumers with low and unpredictable income expanded their sales of high-end brands and found the poor had an excellent repayment record, he said.
The poor shopped differently from the well off, he found. They normally shopped in the evening, after their work day ended, and at stores within walking distance because they could not afford transportation. They earned money by the day and bought what they needed only for that day, and only when they had cash.
As a result, low-priced single-serving packets of everything from biscuits and spices to shampoo, skin cream and toothpaste had become so popular in India that even the most expensive brands were marketed this way, Prahalad said. As well as giving consumers more choice, this forced companies to pay attention to BOP needs because, with single serving packets, consumers could change brands every day if they wanted to.
Prahalad realized that the poor paid a penalty for everything because they lived within systems that took advantage of their powerlessness, lack of information, and isolation in rural areas. But the innovative business strategies required to reach out to them as a market could help the poor change that, he argued.
Creating and then expanding womens’ self-help groups, for example, turned out to be the best way for new banks to build a customer base, and empowering women entrepreneurs was the most efficient way for consumer products companies to sell their products in villages. Mobile phones, internet kiosks, and even videoconferencing had given villagers a whole new power. Farmers in small villages in India could use the internet to find out the price of soybean futures in Chicago rather than having to accept what was offered by the local merchant, or decide where to land their fish after first checking via cell phone where the best price was being offered.
Innovations in technology, products and services that were developed to meet the needs of BOP consumers could also benefit people in developed states, he said. India’s Aravind Eye Hospital had standardized cataract surgery so it could be offered free to more than half of its patients and very cheaply to the rest; the secret lay in standardization and careful attention to each step of the process. By copying this approach, some cardiac hospitals in India had reduced the cost of bypass surgery to as low as $4,000, compared with $50,000 in the United States, he said.
Such innovation was an absolute requirement for companies that wanted to work in BOP markets, he argued. Everything had to be rethought, from price to marketing, and had to be designed so it worked in fragile infrastructures.
Companies began to adopt his ideas with alacrity, sending staff out to live in poor areas of cities to learn about the BOP consumer. Although he is no longer with us, Prahalad’s ideas changed the whole perspective on the poor and how to work with them to design and market products that suited their needs – and helped to change their circumstances.
The Honey Bee Network
Anil Gupta was just starting a research career when he went to Bangladesh in 1986 to work with the Bangladesh Agricultural Research Council and Institute, to study the work of disadvantaged farmers. They were successful, but the farmers didn’t benefit, and that made him uncomfortable.
Back home in India, he solved it in a way that led to a most remarkable outgrowth of Indian rural inventiveness and creativity that spread from India to other parts of the world, including Brazil, China and South Africa. Struck by the image of the honey bee connecting flowers through pollination by removing nectar without harming the flowers, he created the Honey Bee Network to find, develop, sustain and reward grassroots innovators. Over two decades, the network documented 50,000 innovations and traditional knowledge practices, inspired a venture capital fund, and spawned the National Innovation Foundation (NIF), which held nation-wide contests for inventors.
The first challenge Gupta faced, having created the Honey Bee Network, was how to find that traditional knowledge. It was a rural farmer who came up with the scouting method for which the network was best known – the Shodh Yatra, or “journey of exploration”, which took academics out into the countryside to meet and talk with local farmers and villagers and which helped uncover some of the most successful rural inventions.
In what became an annual tradition, Shodh Yatras typically took a route far away from regular roads, meeting villagers, farmers and artisans individually and looking for innovations and homegrown solutions. They held biodiversity contests, recipe contests, and evening meetings – all ways of gaining local knowledge. One of the challenges, at first, was to get scientists to explore local innovations seriously rather than dismissing it as superstition.
The Honey Bee Network led to the creation of other related organizations in India. In 1993, the Society for Research and Initiatives for Sustainable Technologies and Institutions (SRISTI) was created and became a forceful voice internationally for intellectual property rights of individuals and communities, including at meetings of the World Intellectual Property Organization. Among other ideas, it proposed an international network that would allow people to share ideas and provide a low-cost clearinghouse for connecting innovations with investment and entrepreneurial support.
The NIF was the result of extensive lobbying by the Honey Bee Network, which had by 1998 documented about 10,000 innovations and examples of traditional knowledge and felt there was a need for a more formalized structure with dedicated funding. Formally created in early 2000 with a budget of about US$5 million, it had, by 2008, helped file 77 patents, including six filed in the US and three granted in the US, and 14 in India, and organized awards ceremonies for grassroots innovators and holders of traditional knowledge.