Frugal Innovations @ GE Healthcare Low cost ECG, Baby Warmer, and Ultrasound Scan

General Electric (GE) developed an ultralow-cost electrocardiogram (ECG), an $800 ECG machine for rural India that is portable, battery-operated, easy-to-use, and easy-to-repair. Normal GE ECG machine costs about $5,000 and $20 for a scan and the equipment is highly complex, heavy, bulky, and needs a skilled technician to operate it, as well as highly technical service support. GE built the machine using commodity components, realizing huge cost advantages and produced millions of units that reduced cost further with economies of scale and for the sake of reducing the power consumption and increase battery life eliminated monitor and used printers found on public buses and in movie theaters.

Another innovation from GE is the baby warmer, known as “Lullaby,” which was designed focusing on the requirements of maternity homes and hospitals (80 percent of which use baby warmers). This device which costs $12,000 in United States but the frugally innovated  device will only costs $3,000, which is a big boon for emerging countries like India, China, Brazil, etc. The Lullaby is now reportedly sold in 62 countries, including Brazil, Russia, Egypt, Dubai and Italy.

GE’s drive to miniaturize technologies in order to make them more mobile couldn’t be better illustrated than with the breakthrough Vscan technology. Roughly the size of a smart phone, it houses powerful ultrasound technology that potentially helps redefine the physical exam and improve patient care by enhancing a doctor’s ability to quickly and accurately make a diagnosis. For critical care clinicians, Vscan can offer an immediate look beyond patient vital signs with the potential to identify critical issues, like fluid around the heart. Vscan high-quality imaging is indicated for abdominal, urological, cardiac, obstetric and pediatric scanning.

Reportedly, there are over 30 products in GE’s Indian pipeline that are targeted at “the Indian and the emerging global markets” and will be launched by GE’s Bangalore Centre within the next three years. In 2001, General Electric set up a $175 million facility (the John F. Welch Technology Centre in Bangalore, India), which houses state-of-the-art laboratories and facilities to conduct R&D for GE businesses worldwide. The center supports 4,200 scientists, researchers and engineers who frugally innovate in the healthcare, energy, transportation, aviation, financial and entertainment businesses. At this facility GE conducts advanced state-of-the-art medical research and innovation, working on breakthroughs such as molecular imaging and diagnostics, micro ultrasound machines and next-generation MRI systems.

For businesses to survive in the emerging markets they need to do adopt the frugal innovation making the products or redesigning the highly complex and costly products into affordable, easy to use products to be used easily particularly in rural markets where there will be problems like power shortages, lack of highly trained healthcare professionals and lack of infrastructure like roads, power, buildings etc. GE Healthcare has been successfully adopted frugal innovation and India based R&D center is at the heart of its strategy. 

Case Study - Frugal Innovation – Renault/Dacia Logan played a major role in Renault Group Growth & continues to be critical part of product portfolio

In 2006, Carlos Ghosn, the CEO of the Renault-Nissan Alliance coined the term “frugal engineering” by  which he meant achieving more with fewer resources. Carlos Ghosn was referring to unique ability of engineers in India to innovate cost-effectively and at a faster pace when faced by severe resource constraints. As Ghosn said, “In the West, when we face huge problems and we lack resources, we tend to give up (too) easily. Jugaad is about never giving up!” Renault-Nissan has successfully adopted frugal engineering and the fundamentally jugaad mindset—and turnaround itself into a major global manufacturer of both low-cost vehicles as well as electric cars—two of the fastest growing segments in the global automotive market. According to Wikipedia, in India, the words "Gandhian" or "jugaad", Hindi for a stop-gap solution, are sometimes used instead of "frugal". Other terms with allied meanings include "inclusive innovation", "catalytic innovation", "reverse innovation", and "BOP innovation", etc. Business organizations across the globe are forced to offer products and services to frugal consumers as the global business environment turns volatile due to the 2008 financial crisis and the European Sovereign Debt crisis which led to businesses facing tough conditions to maintain their sales and profitability.

Logan Sales by year ( Volumes) Source:   http://en.wikipedia.org/wiki/Dacia_Logan
Year	Dacia	Renault
2004	22,833	−
2005	135,184	9,915
2006	184,472	63,134
2007	230,294	136,742
2008	218,887	206,059
2009	160,120	150,603
2010	126,598	189,898
2011	95,365	253,698
2012	102,175	221,752
Total	1,275,928	1,231,801

In September 2004, Renault launched Logan, an affordable, robust, and well-designed car with many simplified features to keep costs down (has 50% fewer parts than a high-end Renault vehicle and has a limited number of electronic devices) and priced at 5,000 euros (Current retail price is US$10,000). The Logan is based on the B0 platform used for the Renault Clio II and for other Renault and Nissan models. The Logan's design lines are simple and straight and cheaper to repair. Some parts are also much simpler than those of its competitors like rear-view mirrors are symmetrical and can be used on either side of the car, the windshield is flatter than usual, and the dashboard is a single injection-molded piece. The car was developed with a focus on developing countries as the climatic and road conditions significantly vary from the developed countries like strong and soft suspension, and height of the chassis is high when compared to most other compact cars so that it can run effectively on dirt roads and negotiate potholes on ill-maintained asphalt roads. The engine is specially designed to handle lower quality fuel and the air conditioning has to be powerful enough to lower the temperature by several degrees (temperatures above 40 °C are common in the Middle East and the Mediterranean Sea). Despite the fact the car was made exclusively for emerging markets, the Logan has become Renault’s cash cow and big success in recession-hit European markets particularly in developed markets like France.

The Dacia Logan is a small family car produced jointly by the French manufacturer Renault and its subsidiary Dacia of Romania. It is manufactured at Dacia's automobile plant in Mioveni, Romania, and in Colombia, Brazil, Russia, Morocco, Iran, India and South Africa. It is also marketed as the Renault Logan, Nissan Aprio, Mahindra Verito or Renault Tondar 90 depending on the existing presence or positioning of the Renault brand, according to Wikipedia. In India, the Logan was launched in 2007 and marketed as the Mahindra Renault Logan. In April 2010, Mahindra &Mahindra ended the joint venture when it bought Renault's 49% share and according to the deal Logan would be marketed with the Mahindra-Renault logo until the end of March 2011. Mahindra retained the rights to produce and sell the Logan under its own name of Mahindra Verito with minor alterations to the front but retaining Renault petrol and diesel engines. The car is sold as the Dacia Logan in the markets where Renault has presence, such as European, African and Asian countries (i.e. Romania, France, Italy, Belgium, Netherlands, Germany, Greece, Hungary, Poland, Serbia, Czech Republic, Croatia, Slovenia, Morocco, Turkey and many others) and marketed as the Renault Logan in South Africa, Argentina, Russia, Ukraine, Colombia, Ecuador, Israel, Egypt, Brazil, Chile, Perú and Venezuela.

The Renault group is continuing its focus on improving the Dacia Logan range of passenger cars and the company revealed the second generation Dacia Logan in 2012 Paris Auto Show. Dacia Logan has a more modern shape with flowing lines that confer an elegant appearance while retaining the conventional styling that is its strength. The new front face, designed around Dacia’s new styling identity, suggests quality and strength. The Dacia logo on the grill and the broad headlamps make for a more expressive front end. The perceived quality of the previous generation has been enhanced through the choice of materials and improved fit and finish. This model features a new dashboard with an updated appearance (including chrome dial surrounds) and more ergonomic controls. Dacia Logan is built at the plants in Pitesti (Romania) and Casablanca (Morocco), both of which are ISO 14001 certified. In France, prices for New Dacia Logan start from €7,700 and come with a three-year/100,000km warranty. Four engines will be available for New Dacia Logan from launch, including the 1.2 16V 75 petrol power plant and the brand new TCe 90 petrol engine, which marks a significant saving in terms of fuel consumption and CO2 emissions. (Source: www.renault.com )

Renault Group is keeping the price of the Dacia Logan cheap compared to its competitors in some markets where in the cheapest version of the car is €5,900, and the price can reach €11,200, depending on equipment and customs duty. (The base model for Western Europe, where it is badged as a Dacia but generally sold in Renault dealerships, is somewhat more expensive). For Renault group Dacia Logan is a critical part of its revenue growth strategy particularly with a focus on emerging markets as the developed markets are facing tough economic conditions. Even customers in developed markets particularly in European region are also looking to buy Logan as its price is low, easy to maintain and also provides good comfort. Logan started as a no frills sedan focused majorly at the emerging markets but it saw most of its success in developed markets where customers received this car well. The car did not perform to the level of expectations and the joint venture with Mahindra group ended in matter of three years and the only car that came out of this joint venture is Logan. In other emerging markets Logan was well received and Renault too has launched many variants of Logan and also has launched an upgraded version at the end of 2012. Logan is also a case where in over a period of time the frugal innovation of low cost no frills version can also be supported by launching higher cost versions of the base version. Customers would definitely buy the higher cost variants also as evident in the Logan case. Also the portfolio of offerings can also be expanded by launching various other types of vehicles like in the case of Logan there are Light Commercial Vehicles, Sports Utility Vehicles, Vans, and Pick-up trucks along with base version low cost sedans.

Discussion points:

1. How important is Renault/Dacia Logan for the growth of Renault group?

2. What should Renault do to increase sales further in emerging markets?

3. How effective has been the Dacia Logan Product strategy?

Case Study - Innovation @ HCL Technologies – Employees at the heart of Innovation Strategy

The only way you can bring innovation to the centre stage of the company to grow faster in the economic turbulent time is to get innovation going at the bottom of the pyramid to employees quoted Vineet Nayar, ex-CEO of HCL Technologies in an interview given to Business Today magazine. HCL Tech is one of the most innovative company in India that relies on innovation not only to help a customer solve a clear business problem but also develop a new way of doing business and create competitive differentiation for both itself and for their clients through innovative ideas. At heart of HCL innovation strategy are its employees and company through its “Employee First and Customer Second” approach channelizes the energies of 90,000 employees and employees develop innovative ideas through collaboration and communication across boundaries as the company has operations in 35 countries. This innovation strategy has helped HCL Tech to grow its revenues and profits during the economic turmoil post 2008 and provide innovative services to their clients. “Innovation is a must-have for service engagements to be more relevant to customers and to grow one’s market share,” Krishnan Chatterjee, vice-president and head, strategic marketing, HCL Technologies told The Telegraph.

Value Portal

HCL Tech believes the ‘value zone’ or the interface between the employee and the customer gives birth to the ideas, innovation and ultimately truly transformational value. HCL’s employee idea exchange platform Value Portal was created to channel the innovative energy of 90,000 employees, specifically grassroots level employees to collaborate, innovate and lead the implementation of their ideas that deliver value to the customers. Collaboration between the employees of HCL and the employees of customer organizations is facilitated through this platform to share knowledge, ideas and solutions to address common goals/problems which resulted in value co-creation. HCL employees were able to deliver ideas, and create value in line with the strategic objectives and direction of the customer’s they were working with and employees got feedback on their ideas and also received rewards once it was implemented in the customer organization.

MAD Jam

HCL Tech employees created the “MAD Jam” (Make a Difference Jamboree) which is a unique celebration of the best innovators of HCL, that demonstrates the HCL tech unique philosophy of  the Employees First, Customer Second’ philosophy. HCLites worldwide sent in over 377 ideas and business heads of the company finalized 18 of the best ideas in the first round and these 18 ideas were made into 3 minute films that showcased the idea and business impact. These videos were shared online on a portal and 18 finalist teams campaigned for their ideas through various channel so as to garner maximum votes from employees and after 2 months, 9 teams made it into the Grand Finale where the ideas were judged by a distinguished panel of judges - two very senior people from HCL, and one external judge, an associate partner from McKinsey. ‘Customer On-boarding’ – a solution that drastically reduces the on-boarding cycle time of a customer in a financial institution - was picked as the winning idea. ‘Mobility Solutions’, which enabled police officers to instantly send details to the central police system from a crime scene, using their mobile devices, was the winner of the Innovators’ Choice award, according to HCL Tech website.

Wikiportal

HCL Tech employees developed Wikiportal to improve sales productivity, by connecting the global sales team with the right information and people within minutes and this portal is developed internally in collaboration with business process re-engineering (BPR) team to develop this application on Microsoft Office Sharepoint (MOSS 2010). Wikiportal allows access to structured and non-structured data through the support of social and collaborative features such as tagging, wikis, blogs, discussion forums, expertise locations, social networks, etc. This led to increase in sales productivity majorly due to streamlining day-to-day business operations; over 80% of our sales force is able to respond to customer queries faster and there is a 35% reduction in cycle time through collaboration while responding to RFPs. Today the Wikiportal has approximately 5000 users across sales and sales support teams, 1.2 million hits in a quarter and 2000 (average) unique visitors in a day, according to HCL Tech website.

Arkmedes

Arkmedes is a platform created by employees to bring together people with similar interests, passion and ideas and created a critical platform of collaboration and innovation within the organization. These communities of passion had indirectly created a robust, self-sustaining knowledge management portal that was driven by the very people who contributed to it on a daily basis and eliminated considerable costs. Today arKMedes has 112 communities with over 24,000 daily visitors, and 3 million hits per year with search volumes of over 2 million, according to HCL Tech website.

Meme

According to HCL Tech website, Meme was built on the concept of “Decoding Individuality” through Connect, Learn ,Share and Grow, this platform featured many standard applications like network of friends and colleagues, tech forums, posts/comments, pictures, tags, document share and group conversations. Since its inception till January 2012, MEME user base grew at around 111% (from 28, 100 employees in April 2011 to 59,185 employees in January 2012). Within the first 4 months of use, over 25000 HCL employees created strong social network connections with each other by creating 521 groups, posting more than 4300 comments and sharing more than 1030 photographs. Today MEME engages around 75000 employees through 2057 groups, 175 pages and 71,568 posts. Through this platform, HCL employees meet the challenge of building effective relationships which are vital to working in large, distributed enterprises.

Co-Innovation Labs

HCL Technologies has developed a strategy called innovative collaboration, where in it collaborates closely with its clients in all the stages of product development through setting up of dedicated labs. Set up two labs in Singapore — the Mobility Experiences Ready to Lead Business Innovation (MERLIN) lab and the co-innovation lab with pharma major Eli Lilly. The lab with Eli Lilly will develop new technologies and solutions specifically for the drug maker.  Through a collaboration process, HCL Tech has developed the ITSE call (Intelligent Transportation System emergency call), a system installed in vehicles that sends an automated text to emergency services when cars meet with an accident. It provides the date and time of the accident and the GPS co-ordinates of the accident location.

Post the 2008 recession there has been a significant change in the Global business environment and the impact is also being felt by the Indian IT vendors who are seeing falling revenue growths and profit margins. Clients no longer expect outsourcing vendors perform simple cost cutting work but are looking for more valuable work that will have significant impact on their business outcomes. Innovation has become an essential part of the strategy for the Indian IT vendors who realized that the best way to bring innovation is to motivate employees and provide them the necessary tools, technologies and platforms for developing innovative ideas, collaborate with colleagues and their clients on those ideas and implement ideas for the benefit of the customers and their own organizations. HCL Technologies have benefited significantly from the grassroots level employee collaboration and idea generation and its philosophy of Employee first and Employee second has also supported the innovation strategy. In 2010, HCL Tech also formed a unit called 'ecosystem and business incubation organisation', which has identified five new ideas like cloud computing, mobility, social media, etc. with potential to become $100 million businesses in three years, and almost $300 million in five years, said Anant Gupta, HCL Technologies. In an interview with ET Now, Vineet Nayar, Vice Chairman and Chief Executive Officer, HCL Technologies Ltd, said “vendors like HCL are winning because of the uniqueness in proposition and constant innovation.”

Discussion Points:

1. What is the role of Innovation in the success of HCL technologies?

2. How do the various tools and platforms adopted by HCL Technologies for Innovation and collaboration promote grassroots level innovation in the company?

3. How the need for Innovation is transforming the Indian IT Vendor’s Organizations?