Advantage affordability

Tarun Khanna        Print Edition: Jan 9, 2011

Octavio Paz, the Mexican ambassador to India and Nobel Prize-winning poet, referred in his 1995 collection of essays, Vislumbres de la India, to Hinduism as a large, "metaphysical boa," devouring all influences that came its way. He was referring to India's tendency to assimilate and absorb hordes of foreign cultural and societal influences over the centuries.

I found myself thinking that, in the next generation, Indian entrepreneurs will also have to be like boas and quickly assimilate the skills honed by their counterparts around the world. This includes the assembly-line manufacturing attributed to Henry Ford, the scientific management techniques first popularised by the likes of Frederick Winslow Taylor in America, the more recent attention to style from Europe and the quality revolution from Japan. Each of these groups of entrepreneurs - American, European, and Japanese - has brought something new to the global entrepreneurial table, as it were.

But the boa simile is insufficient to articulate what India's entrepreneurs have yet to accomplish. The assimilation phase must be followed by the contribution of a momentous set of ideas to the rest of the world, comparable in significance to what others have done.

What might these ideas be? One candidate for such a set of ideas has to do with what I have heard referred to as the affordability revolution, that is, rethinking products and services so as to make them much more available to the masses. After all, the number of people living below India's official poverty line is still in the hundreds of millions. A service that caters to the masses, in any area of human endeavour, ought to find a use among lower income consumers worldwide, and perhaps also lead to the rethinking of how services are provided to all consumers.

What are good examples? Tata's Nano, the first so-called '1 lakh Rupee' car ($2,200, or close to this) and its Ace, the mini-truck, are surely impressive attempts to create affordable transport for India's masses, with immediate resonance for several consumers worldwide. The Nano might well find a home in other countries, and the re-engineering and tabula rasa design approach taken by the company might also prompt the rethinking of automotive design. The results will be useful products and services that expand the range of choice for lower income users worldwide.

Consider a very different area, paediatric heart surgery, at Narayana Hospitals in Bangalore. The hospital has a much lower cost structure than its counterparts in the West because of its greater scale, which also means its staff are more proficient because of the much larger number of operations performed by them. Beating-heart surgeries, where portions of the heart muscle are operated on while the heart continues to function, are more common there than in the best hospitals in the West, where surgeries require stopping the heart and sustaining the patient on a complex heart-lung machine.

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