How India builds: Cheaper, faster, local

What do a hybrid distributed power project in Bihar, an intelligent transportation management system and a uterine balloon tamponade kit have in common? More than you’d think. All three are developed in India, though not invented from scratch here. All three are exceptionally low-priced projects/products, now being sold worldwide. And all three have either saved or drastically improved countless lives. All three are copybook examples of reverse innovation, commonly known as trickle-up or bottom-up innovation.

Gone are the days when corporates exclusively focussed on innovation in rich countries like the US or Germany and sold products in poor, emerging markets like India and Africa. The heart of reverse innovation is about harnessing abundantly available local know-how and ingenuity and packaging the product/service in a manner that is easy to use and easy to repair. Instead of waiting for advanced foreign technology to become affordable or be donated by charitable institutions, reverse innovation combines the best of domestically available resources and techniques, and creates from it a product or service that can give foreign technology a run for its money.

Reverse innovation can transform healthcare in India, and the world. Ayushman Bharat (National Health Protection Scheme) is said to be the world’s largest government-funded health insurance programme covering 100 million families up to ₹5 lakh every year. The scheme allows 500 million Indians to avail secondary and tertiary care at any empanelled hospital, anywhere in India. Albeit well-intentioned, meeting this enormous demand is a formidable challenge considering we have so few hospitals and doctors, with a majority of them in tier-I cities. The only way to fix the demand-supply gap is by promoting breakthrough innovations in healthcare delivery. Such innovations can be exported to rich countries like the US. That is the potential of reverse innovation.

We have numerous exemplars of breakthrough innovation like Narayana Health, Healthcare Global (HCG) Oncology, Aravind Eye Care, LV Prasad Eye Institute, Care Hospital and others that we can replicate. Narayana Health offers open heart surgery for ₹1.3 lakh, Aravind Eye Care provides cataract surgery for ₹6,500, and Care Hospital provides total knee replacement for ₹2.5 lakh. In the US, similar procedures cost more than ₹1 crore, ₹2.6 lakh and ₹21 lakh, respectively. Despite their ultra-low prices, medical outcomes of these exemplars are as good as any in the world. In addition, they are highly profitable.

Nevertheless, closing supply gaps in healthcare requires substantial funding and support from the government. Reverse innovation will address three of the country’s most pressing agendas: economic growth, job creation (especially in rural India), and reduction of income inequality.

CONTROLLING COSTS

Healthcare innovations of India can be diffused to the developed world through reverse innovation because countries like the US are struggling to control soaring healthcare costs. Take the case of Chandra (Kuppuswamy Chandrasekhar) who in 2010 founded Forus Health, a for-profit startup.

India has less than 20,000 ophthalmologists. In 2011, Forus launched its first product, 3netra Classic, which screens cornea and retina for four major conditions—cataracts, diabetic retinopathy, glaucoma, and cornea issues. In the US, the same tests require three expensive instruments. 3netra is portable and can be taken on motorcycles; screening can be done in five minutes by a minimally trained technician; the physician can diagnose via telemedicine. 3netra is priced at $10,000.

Competitive offerings from multinationals are $30,000, are not portable and require trained technicians.

By using 3netra, hospitals are able to develop a hub-and-spoke model. This model reduces the burden on expensive hospital infrastructure since simple cases can be handled at the community level (spokes), while only those needing specialized treatment need to come to the hospitals (the hub). 3netra also lowers the non-medical expenses for patients—loss of wages when they are away from work, cost of travel and room and board. The device completed the reverse innovation loop with regulatory approvals in Canada, Mexico, Thailand, Malaysia, Saudi Arabia and the US.

MADE IN INDIA FOR THE WORLD

India faces unsustainable levels of income inequality. The best way to reduce income inequality is through income mobility, giving the opportunity for the poor to earn more.

When you provide access to good healthcare, you extend the productive life of an individual. That is the promise of reverse innovation. Take the case of Dr. Vishal Rao, an oncology surgeon in HCG Oncology, who saw the problems of patients with throat cancer, the majority of whom earn less than $2 a day. Stage-IV cancer patients had their voice box removed but were unable to pay for a replacement prosthetic voice box that can cost up to $1,000.

“Speech is a right and not a privilege,” he says. In 2015, Dr. Rao created AUM, an $1 ultra-low cost voice prosthesis device. One of his patients, who had his voice box removed and lost his job as a security guard, was able to speak again. “Without AUM, I would have not been able to go back to work,” he says.

Dr. Rao is solving the wicked problem of income inequality by extending the productive life of his patients and empowering them to earn more.

BEYOND HEALTHCARE

Can reverse innovation travel beyond healthcare? The answer is a resounding yes. While reverse innovation has potential in all industries, two are ripe for application: education and energy. The only industry that is more broke in the US than healthcare is education. The cost of higher education keeps soaring. The very rich do not mind the high cost and the very poor get outright scholarships. It is the large middle class that is squeezed out of high-quality American universities. How can America offer high-quality education at ultra-low costs? The solution will not come from America but from developing countries like India. We need to educate millions in India. We cannot follow the American education model in India, with the principle of exclusion.

India must come up with breakthrough education delivery models that can provide world-class education to the masses at very low costs. Once India fine-tunes such business models, they can be adapted in the US.

The second industry is energy. Since crude oil prices have declined, the pressure has declined in the US to innovate renewable energy. Yet, global warming is a real threat. Given the carbon emissions of petrol, India has no choice but to do radical innovations to generate energy from wind and sun. India has the potential to be a global leader in wind and solar energy.

From ultra-affordable healthcare to power solutions to transportation and to futuristic technologies like augmented reality, 3D printing and robotics, the potential of reverse innovation is endless. And India has the rare opportunity to lead this revolution.

Vijay Govindarajan is the Coxe distinguished professor at Dartmouth’s Tuck School of Business and Mahesh Sriram is CEO of I-India, a leadership development and innovation consulting firm.

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