Disruptive Tech and Bottom of Pyramid.ppt

Disruptive Tech and Bottom of Pyramid.ppt

1. 2008 Sem ICT4SED 1
Disruptive Disruptive
TechnologiesTechnologies
U. B. DesaiU. B. Desai
SPANN Lab.SPANN Lab.
Dept. of EEDept. of EE
IIT-BombayIIT-Bombay
www.ee.iitb.ac.in/~ubdesaiwww.ee.iitb.ac.in/~ubdesai

2. 2008 Sem 2ICT4SED

What is disruptive technology?What is disruptive technology?

Working Definition:Working Definition:

Technology which creates a major Technology which creates a major (positive)(positive)
disruption in the way society functionsdisruption in the way society functions

Best explicated thru examplesBest explicated thru examples

3. 2008 Sem 3ICT4SED
Examples of Disruptive Tech.Examples of Disruptive Tech.

Sun Microsystems Workstations: Sun Microsystems Workstations:
disrupted the market for main frame disrupted the market for main frame
computers. computers.

PCs disrupted the market for workstationsPCs disrupted the market for workstations

Xerox plain paper copier: Xerox plain paper copier: disrupted the disrupted the
market for offset printing.market for offset printing.

Cannon’s desktop photocopiers: Cannon’s desktop photocopiers:
disrupted Xerox’s high speed photo disrupted Xerox’s high speed photo
copying market.copying market.

4. 2008 Sem 4ICT4SED

Honda motorcycle of 60sHonda motorcycle of 60s

Japanese cars of 70sJapanese cars of 70s

Korean Cars of late 80sKorean Cars of late 80s

Wireless telephony (GSM, CDMA): Wireless telephony (GSM, CDMA):
disrupted the market for wire-line disrupted the market for wire-line
telephony.telephony.

Nirma …Nirma …

……

5. 2008 Sem 5ICT4SED
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Impacting technologies are disruptiveImpacting technologies are disruptive

Disruptive innovations are products and Disruptive innovations are products and
services that services that initially aren't as good asinitially aren't as good as those those
that historically have been used by that historically have been used by
customers in mainstream markets, and customers in mainstream markets, and
therefore can take root only in new or less-therefore can take root only in new or less-
demanding applications, amongst demanding applications, amongst non-non-
traditional customerstraditional customers
Stuart Hart and Clayton ChristensenStuart Hart and Clayton Christensen

6. 2008 Sem 6ICT4SED
Historically:Historically:
Major waves of growth
thru forays at the bottom
of the developed markets
(DM)
DM

7. 2008 Sem 7ICT4SED
The World PyramidThe World Pyramid
Tier 1
Tier 2 & 3
Tier 4
Population in millions
~ 200 mil
~ 800 mil
~ 5000 mil
Purchasing Power Parity (PPP)
>$20,000
$2000 to $20,000
less than $2000

8. 2008 Sem 8ICT4SED
The PyramidThe Pyramid

Examples of Xerox, Cannon copiers, Examples of Xerox, Cannon copiers,
PCs, Cell phones, etc. represent PCs, Cell phones, etc. represent
technologies developed for the second technologies developed for the second
Tier (to some extent Tier 3) Tier (to some extent Tier 3)

To date most disruptive technologies To date most disruptive technologies
have been attacking Tier 2have been attacking Tier 2

9. 2008 Sem 9ICT4SED
Advocated by C. K. PrahaladAdvocated by C. K. Prahalad
Attack the bottom of the
pyramid. Likely to create
greater disruption
bottom of
the pyramid

10. 2008 Sem 10ICT4SED
Pyramid for IndiaPyramid for India
T1
T2
T3
T4
T6
Population in million
10 mil
50 mil
150 mil
200 mil
550 mil
Purchasing Power
> 5 lakhs
3 to 5 lakhs
1 to 3 lakhs
50K to 1 lakh
less than 50K

11. 2008 Sem 11ICT4SED
Opportunities at the Opportunities at the
Bottom of the PyramidBottom of the Pyramid

Nearly ½ billion in India (4 to 5 billion Nearly ½ billion in India (4 to 5 billion
world wide) at the bottom of the world wide) at the bottom of the
pyramidpyramid

Need to develop new technologies for Need to develop new technologies for
Tier T4 and T5Tier T4 and T5

New business models are needed New business models are needed

12. 2008 Sem 12ICT4SED
Examples of Attacking the Examples of Attacking the
Bottom of the PyramidBottom of the Pyramid

New Business ModelsNew Business Models

PCO-STD-ISD booths PCO-STD-ISD booths
(Pitroda)(Pitroda)

Hindustan Lever (Chache Hindustan Lever (Chache
Story)Story)

Amul DairyAmul Dairy

Grameen Bank, SEWA Grameen Bank, SEWA
Bank (Micro-financing)Bank (Micro-financing)

Grameen Telecom Grameen Telecom
(Bangladesh)(Bangladesh)

Microfinance (Vikram Microfinance (Vikram
Akula)Akula)

TechnologiesTechnologies

N-Logue (Village Internet N-Logue (Village Internet
Kiosk using CorDect Kiosk using CorDect
Wireless Tech.) Wireless Tech.)

TVS (Kirana Shop TVS (Kirana Shop
Computers)Computers)

13. 2008 Sem 13ICT4SED
N-Logue: corDECT Village KioskN-Logue: corDECT Village Kiosk

Consists of Consists of

Wireless corDECT wall-setWireless corDECT wall-set for Internet and telephone for Internet and telephone, ,
PC, dot matrix printer, battery back up, web-cam, PC, dot matrix printer, battery back up, web-cam,
speakers, microphone --- for Rs.50Kspeakers, microphone --- for Rs.50K

Local entrepreneur operates the kiosk Local entrepreneur operates the kiosk

These kiosks becoming community centersThese kiosks becoming community centers

Expect cities to outsource their work to villagesExpect cities to outsource their work to villages
((Indian villages could become back office to Indian Indian villages could become back office to Indian
urban centers ~ a hyperboleurban centers ~ a hyperbole))

RTBI: Rural Technology Business Incubator RTBI: Rural Technology Business Incubator

14. 2008 Sem 14ICT4SED
TVS Kirana ComputersTVS Kirana Computers

For Kirana stores with sales of For Kirana stores with sales of
Rs.100,000 per monthRs.100,000 per month

A rugged PC A rugged PC

No out right purchase of software or No out right purchase of software or
hardware: Pay Rs.2,500.00 per month.hardware: Pay Rs.2,500.00 per month.

Software for accounting, inventory, etc. Software for accounting, inventory, etc.

In 180 days there was a 3.9% increase in In 180 days there was a 3.9% increase in
profitprofit

15. 2008 Sem 15ICT4SED
Change of Mindset ...Change of Mindset ...
(from C. K. Prahalad(from C. K. Prahalad))
Poor as a Problem
Poor as Wards of State
Old Technologies
Old Technologies F Follow
the West
Resource Constraints
Poor as an opportunity
Global Market of 4.5 billion?
Poor as Active Market

Innovation and Innovation and
development of new development of new
technologies with technologies with
usefulness to the Poorusefulness to the Poor

Imagination ConstraintImagination Constraint
Information Access will be a great asset

16. 2008 Sem 16ICT4SED
The Poor of
India is an
Intractable
Problem
Change of Mindset …Change of Mindset …
(from CK Prahalad)(from CK Prahalad)
The Poor of
India is a
Potential
Market
The Poor of
India can be
A Source of
Innovation
Poverty
Alleviation,
Subsidies
Creating a New Market,
Innovation, Growth

17. 2008 Sem 17ICT4SED
ChallengesChallenges
The Market is Very Fragile:
(Monsoons, Subsidies,
….)
Middlemen and Moneylenders
Fragmented Experiments
Lack of a Global database
Traditional Ways of Thinking

18. 2008 Sem 18ICT4SED
ReferencesReferences

C. K. Prahalad and Allen Hammond, Serving C. K. Prahalad and Allen Hammond, Serving
the World’s Poor, Profitably, the World’s Poor, Profitably, Harvard Business Harvard Business
Review, September 2002Review, September 2002

C K Prahlad, spoke about at the annual session C K Prahlad, spoke about at the annual session
of the Confederation of Indian Industry, held of the Confederation of Indian Industry, held
recently in Bombay. Prahlad said the Indian recently in Bombay. Prahlad said the Indian
economy has the potential to grow 10 to 15%. economy has the potential to grow 10 to 15%.
http://www.moneycontrol.com/promos/prahlahttp://www.moneycontrol.com/promos/prahla
d.htmld.html


The Great Leap Downward: The Great Leap Downward:
http://idbdocs.iadb.org/wsdocs/getdocument.ahttp://idbdocs.iadb.org/wsdocs/getdocument.a
spx?docnum=996849spx?docnum=996849

19. 2008 Sem 19ICT4SED
Home Work: QuestionsHome Work: Questions

Why is there so little technological Why is there so little technological
innovation and development, where the innovation and development, where the
need is maximum?need is maximum?

Why has Fortune at the bottom of the Why has Fortune at the bottom of the
Pyramid not taken off?Pyramid not taken off?

Is there something wrong with the theory?Is there something wrong with the theory?

Think of three disruptive technologies that Think of three disruptive technologies that
can change the lives of poor in India can change the lives of poor in India

20. 2008 Sem 20ICT4SED