India Leads on Bertelsmann’s Inclusive Innovation

India is leading the way on inclusive innovation, according to a recent study by the Bertelsmann Stiftung, writes John West

Conventional wisdom would have it that emerging economies start their climb up the development ladder by absorbing knowledge and copying ideas from the world’s advanced economies. In other words, they are “copycat economies”.

But the closer that emerging economies get to the global technological frontier, the more they need to generate innovation to drive their economies forward. According to the OECD, innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations.

In recent times, however, India has turned the theory of innovation on its head. Indian innovators are coming up with low-cost solutions to improve the lives of poor people. This is popularly known as “frugal innovation” (or in Hindi, “Jugaad”, meaning an improvised fix, a clever solution born in adversity).

A popular example of frugal innovation is the terracotta clay refrigerator, developed in India, that keeps milk, fruits and vegetables cool without using a single watt of electricity. Other examples include using high tech to make services more affordable and more accessible to more customers, such as in the healthcare industry.

The Bertelsmann Stiftung have further expanded our understanding of innovation and development in their very recent publication on “inclusive innovation”, which is presented as a related, but the different concept from frugal innovation.

What exactly is inclusive innovation?

The Bertelsmann authors, Henning Kroll and Peter Neuhäusler, argue that “As an objective, inclusive innovation seeks to provide sustainable solutions to those who would otherwise remain excluded from access to offers as a result of their social, economic or environmental context. As an activity and business model, it reconciles the goals of commercial viability with sustainable societal development.”

Thus, while frugal innovation – in a first step – focuses on commercial viability, inclusive innovation is more directly associated with “doing good” or at least with taking a societal perspective when starting activities.

A country’s potential to generate inclusive innovation comes from two dimensions — “challenges” and “capacities”. Inclusive innovation comes from “people or organizations seeking to address perceived needs or challenges in their environments”. But this environment also plays a role. It “must facilitate the development of concepts into marketable products or services; that is, overly restrictive or unstable conditions will tend to hinder such activities”.

Most interestingly, Bertelsmann’s Inclusive Innovation Atlas reveals that India, followed by the Philippines, lead on the overall level of inclusive innovation activities. The authors argue that a high level of political attention on inclusive innovation matches an equally high level of entrepreneurial activities.

At the bottom end of the scale are Iran, Laos and Uzbekistan “where limited entrepreneurial activities are matched by a low level of interest at the policy level”. The curious result is that of China which is estimated to have the highest level of relevant capacity among the surveyed countries. Its “leadership has recently attributed increased importance to inclusiveness, while actual activities in this domain remain underdeveloped, or have at least escaped the Atlas’ survey”.

Bertelsmann’s analysis leaves one with much to ponder. Those countries with the greatest challenges did not score well for the overall level of inclusive innovation activities, nor did those with the greatest capacity. It seems that when a sufficient degree of challenges co-exists with a sufficient capacity it can ignite the genie of inclusive innovation.

It is to be hoped that philanthropists, and impact investors, as well as policymakers, can be inspired by this analysis to improve countries’ capacity to deal with the manifold challenges they face. There is much scope for other countries to follow India’s lead.

All things considered, this report on the Inclusive Innovation Atlas makes an important contribution to our understanding of the role of innovation in promoting globally inclusive well-being. The Bertelsmann Stiftung is to be commended for continuing its excellent work on the social dimensions of Asia’s economic renaissance.

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The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of The Kootneeti Team

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Professor John West

Professor John West is the author of the recent book, “Asian Century … on a Knife-edge,” and executive director of the Asian Century Institute. He is also an adjunct professor at Tokyo’s Sophia University where he teaches Japanese Business and Economy and Asia’s Economic Development. He can be reached at john.mangwest@gmail.com

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